Currency terminology - part 1

In this lesson

1. 0:00 Understanding exchange rate terminology
2. 1:00 Direct and indirect exchange rate presentations
3. 3:03 Currency spreads and bid-offer rates
4. 5:27 Applying exchange rates to company transactions
5. 8:46 Choosing the correct rate for calculations

About this lesson

You'll work through a practical example showing how to convert between currencies using the right rate—and discover the golden rule: the bank always wins, so you pick the rate that's worst for the company. This first part of our currency series focuses on building your confidence with the fundamentals. Exchange rates can feel fiddly at first, but once you understand the structure—base currency, variable currency, and the spread between buying and selling rates—the calculations become straightforward. We'll show you simple tricks to remember which rate to use and how to check your answer, so you can approach these questions with clarity rather than confusion. By the end, you'll be able to identify whether an exchange rate is written in pounds, euros, dollars, or any other currency, understand what the offer price and bid rate represent, and confidently convert foreign currency amounts into your home currency. This foundation is essential for tackling more complex hedging and forecasting questions later in your studies.

Duration: 10m