CFA Level I · CFA Level I Exam · Capital Flows and the FX Market
A dealer quotes USD/CHF at 0.9100 bid and 0.9106 ask. A client buys 1,000,000 USD from the dealer. The amount of CHF the client most likely pays is closest to:
The client pays about CHF 910,600. Buying the base currency USD from the dealer occurs at the dealer's ask of 0.9106 CHF per USD, so 1,000,000 times 0.9106 gives 910,600 Swiss francs.
- ACHF 910,000
- BCHF 910,600Correct
- CCHF 1,098,000
Explanation
The client buys the base currency (USD) from the dealer, so the dealer's ask applies: 1,000,000 × 0.9106 = CHF 910,600. Using the bid gives CHF 910,000, which is the dealer's purchase price. The 1,098,000 figure inverts the rate.
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