CFA Level I · CFA Level I Exam · Exchange Rate Calculations
An analyst inverts a dealer's USD/CHF quote of 0.9000/0.9010 (CHF per USD) to obtain the CHF/USD quote (USD per CHF). The bid for CHF/USD is closest to:
The CHF/USD bid is about 1.1099. When inverting a quote, the new bid is the reciprocal of the original ask, so 1/0.9010 gives 1.1099. The reciprocal of the original bid, 1.1111, becomes the new ask.
- A1.1099Correct
- B1.1111
- C1.1123
Explanation
The CHF/USD bid equals 1/(USD/CHF ask) = 1/0.9010 = 1.1099. The ask is 1/0.9000 = 1.1111. Using 1/0.9000 as the bid is the mistake, as it fails to swap bid and ask.
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