Improving Student Learning in International Finance Using an Alternative Currency Quotation Paradigm

Authors

Abstract

International fmance textbooks assume direct term quotations as a basis for all exchange rates. All equations, including bid-ask choice, currency conversion, parity equations, options, futures hedging, and percentage change, rely on that assumption to calculate the result. This assumption is unnecessary and limits the usefulness of the above formulas. Ignoring indirect and cross-rate quotes can cause misunderstanding and confusion. This paper proposes a more general approach using a base currency vs. quote currency framework that works for all currency quotation methods. This new method generates significantly higher learning outcomes when compared to the traditional method.

Recommended Citation

(2026) "Improving Student Learning in International Finance Using an Alternative Currency Quotation Paradigm," Journal of Economics and Finance Education: Vol. 21: Iss. 1, Article 3.
Available at: https://scholarship.rollins.edu/jefe/vol21/iss1/3