Question

You observe a quotation of the Japnese yen of $0.007. You are, however, interseted in the number of yen per dollar. Thus, you calculate the ____quotation of ________yen/$. a. direct; 150 b. indirect; 150 c. indirect; 142.86 d. direct; 142.86

Answer 1

C. indirect; 142.86

Step-by-step explanation:

Simply put, quotation shows the trading relation between two currencies. There are two basic types of quotation:

- direct quotation represents the value of foreign currency compared to domestic one (in this case a dollar). So, direct quotation represents the value of foreign currency in dollars.

- indirect quotation, on the other hand, does the opposite; it compares domestic currency (a dollar) to a foreign one. Or, indirect quotation represents the number of units of foreign currency per dollar.

So, with this in mind, number of yen per dollar is indirect quotation and its value is calculated when we divide 1 with direct quotation, which is 1/0.007, which equals to 142.86