Page 35 - FINAL CFA SLIDES DECEMBER 2018 DAY 6
P. 35
Session Unit 5:
20. Currency Exchange Rates, p156
LOS 20.a: Define an exchange rate and distinguish between nominal and real exchange rates
and spot and forward exchange rates.., p.156
Currency exchange rates is the Price of 1 unit of currency in terms of another.
1.44 USD/EUR is $1.44 per euro (USD = Price and the EUR as the Quantity/Base currency).
An increase (decrease) in an exchange rate represents an appreciation (depreciation) of
the base currency relative to the price currency.
So = spot exchange rate for immediate delivery; F1 for future date!
A real exchange rate measures changes in relative purchasing power over time.
