An indirect exchange rate can be converted to a direct exchange rate by:
A)dividing the indirect rate by number of U.S.Dollars required to purchase one unit of the other currency.
B)dividing the indirect rate by 100.
C)multiplying the indirect rate by the spot rate.
D)taking the inverse of the indirect rate.

Question

Quizplus · Accepted Answer

To convert an indirect exchange rate to a direct exchange rate, we need to take the inverse of the indirect rate. This is because an indirect rate represents the number of units of foreign currency per one unit of domestic currency, while a direct rate represents the number of units of domestic currency per one unit of foreign currency. So, by taking the inverse of the indirect rate, we get the direct rate.

An Indirect Exchange Rate Can Be Converted to a Direct