Question : Which of the following is an example of an indirect exchange rate quotation?
Option 1: USD/INR = 75.50
Option 2: EUR/USD = 1.20
Option 3: GBP/AUD = 1.80
Option 4: JPY/GBP = 0.0075
Correct Answer: JPY/GBP = 0.0075
Solution : The correct answer is d) JPY/GBP = 0.0075
An indirect exchange rate quotation is a method of quoting exchange rates where the domestic currency is the base currency and the foreign currency is the quote currency. In an indirect quotation, the domestic currency represents one unit, and the foreign currency represents the variable amount needed to exchange for one unit of the domestic currency.
In this example, the Japanese Yen (JPY) is the base currency, and the British Pound (GBP) is the quote currency. The exchange rate indicates how many British Pounds are needed to purchase one Japanese Yen.
