CFA Level I · CFA Level I Exam · Exchange Rate Calculations
An interbank dealer quotes EUR/USD (price/base) as 0.9200/0.9206. The bid-offer spread, expressed in pips (one pip = 0.0001), is most likely:
The spread is 6 pips. The difference between the offer of 0.9206 and the bid of 0.9200 is 0.0006, and since one pip equals 0.0001, that difference equals six pips.
- A6 pipsCorrect
- B12 pips
- C60 pips
Explanation
The spread is 0.9206 - 0.9200 = 0.0006. Dividing by 0.0001 gives 6 pips. 60 results from misplacing the decimal.
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