CFA Level I · CFA Level I Exam · Capital Flows and the FX Market
An exchange rate is quoted as EUR/USD = 1.0800. In this quotation, the euro is most likely the:
The euro is the base currency in a quote of 1.0800 USD per EUR. One unit of the base currency, the euro, is priced at 1.0800 units of the price currency, the US dollar. The first option states this correctly.
- Abase currency, with USD as the price currencyCorrect
- Bprice currency, with USD as the base currency
- Cnumerator currency, with one USD priced in euros
Explanation
In a price/base (A/B) quotation, the first currency is the price currency and the second is the base. EUR/USD = 1.0800 means 1 EUR costs 1.08 USD, so the euro is the base. Under the convention in the curriculum the quote is written as price currency over base currency, so USD is the price currency.
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