216k views
2 votes
It is common practice among currency traders worldwide to both price and trade currencies against the U.S. dollar. Consider a currency dealer who makes a market in 5 currencies against the dollar. If he were to supply quotes for each currency in terms of all of the others, how many quotes would he have to provide?

1 Answer

4 votes

Answer:

It is common practice among currency traders worldwide to both price and trade currencies against the U.S. dollar. If a currency dealer who makes a market in 5 currencies against the dollar. If he were to supply quotes for each currency in terms of all of the others, he would have to provide 30 different quotes. There are 6 total currencies including U.S. dollar, therefore, he would be providing 5 different quotes for one single currency, therefore, to provide quotes for 6 currencies, he would have to provide 30 different quotes as six multiplied by 5 comes 30.

User Koso
by
5.2k points