Final answer:
From the perspective of the Canadian client, the Canadian dollar (CAD) has depreciated when the exchange rate quote is 0.7700 CAD/USD and the inverse is 1.2987, as it now takes more CAD to buy 1 USD.
Step-by-step explanation:
When a dealer in NYC provides a spot exchange rate quote of 0.7700 CAD/USD to a client in Quebec, Canada, we need to understand what this means in terms of currency value. If the inverse of this rate is 1.2987, this directly measures how many Canadian dollars (CAD) are needed to purchase one U.S. dollar (USD). As the exchange rate quote measures the value of one currency in terms of another, moving from 0.7700 to 1.2987 implies that it takes more CAD to buy 1 USD. Therefore, from the perspective of the Canadian client, the most accurate statement is that the Canadian dollar (CAD) has depreciated. Exchange rates are relative measures, meaning that if one currency depreciates, the other currency in the pair appreciates. In this instance, the CAD has lost value relative to the USD.