Question

A dealer based in NYC provides a spot exchange rate quote of 1.900 EUR/USD to a client in France. From the perspective of the French client, this is a _______ and the opposing rate would be _______ USD/EUR.

a) Bid; 0.5263
b) Ask; 0.5263
c) Bid; 1.900
d) Ask; 1.900

Answer 1

From the perspective of the French client, a New York City dealer's quote of 1.900 EUR/USD is an ask rate, and the opposing rate would be approximately 0.5263 USD/EUR.

Step-by-step explanation:

A dealer based in NYC provides a spot exchange rate quote of 1.900 EUR/USD to a client in France. From the perspective of the French client, this is an ask rate since it represents the price at which the dealer is willing to sell dollars for euros. The opposing rate would be calculated by taking the reciprocal of the ask rate, which is 1/1.900 or approximately 0.5263 USD/EUR. Therefore, when a dealer quotes an exchange rate of 1.900 EUR/USD, the opposing bid rate would be 0.5263 USD/EUR, which is the price at which the French client would sell dollars to purchase euros.