When interpreting the meaning of an exchange rate, the first step is to always:
A) know exactly what the exchange rate signifies in terms of which currency is the denominator.
B) watch for ways the currency might lose value.
C) learn about recent behavior of the exchange rate.
D) know exactly what the rate is at any moment in time.

Question

Quizplus · Accepted Answer

Understanding which currency is the denominator is crucial in correctly interpreting the meaning of an exchange rate. Without this knowledge, it can be difficult to understand the value of the exchange rate in relation to the currencies being exchanged.

When Interpreting the Meaning of an Exchange Rate, the First