MGCR 382 Lecture Notes - Lecture 6: The Forward, Spot Contract, Danish Krone

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The foreign currency exchange rate: is the price of any one country"s currency in terms of another country"s currency (ex. . 12/ means that one euro is worth . 12 us) Direct quote : home currency price per unit of foreign currency (ex. 5. 04 danish krone / can is a direct quote in denmark) Indirect quote : foreign currency price of the home currency (ex. 0. 68 eur / 1$ can is an indirect quote in canada) The bid rate : the price at which an fx dealer is willing to buy currency (the dealer will pay you. The ask rate : the price at which an fx dealer is willing to sell currency (you will pay the dealer. The spread: the difference between the bid and ask rates as quoted by an fx dealer. 1. 4738-1. 4718 = 0. 0020 aud = profit for the dealer.

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