Comments on: Profit and Loss Calculations http://www.series34exam.com/profit-and-loss-calculations/ Sun, 05 Feb 2012 03:48:39 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Big Piping http://www.series34exam.com/profit-and-loss-calculations/comment-page-1/#comment-3768 Big Piping Wed, 05 Jan 2011 22:10:36 +0000 http://www.series34exam.com/?p=145#comment-3768 Hi Jantz, The way that I read your question is that the transaction amount is 250,000 EUR and they are asking you to determine the P&L? First you must calculate the exchange rate for the closing transaction. The exchange rate conversion is 1 / Rate given, (1 /.82 = 1.21951) Sell Rate - Buy Rate = profit in pips, x Units Traded = P&L 1.21951-1.2926= (-0.07309 pips), x250,000= (-$18,272 loss) ------------------------------------------------------------------------------------------------------- *******Note the initial example of profit and loss from above is inverted******* It should read as follows: IF USD IS: Base Currency,(AKA Transaction Currency, Traded Currency, OR CCY1) Profit = Price Change in Pips x Units Traded / Exit Price IF USD IS: Secondary Currency, (AKA Quote Currency, Terms Currency”, “Variable Currency”, “Counter Currency” or "CCY2 Profit = Price Change in Pips x Units Traded Hi Jantz, The way that I read your question is that the transaction amount is 250,000 EUR and they are asking you to determine the P&L?

First you must calculate the exchange rate for the closing transaction.

The exchange rate conversion is 1 / Rate given, (1 /.82 = 1.21951)

Sell Rate - Buy Rate = profit in pips, x Units Traded = P&L

1.21951-1.2926= (-0.07309 pips), x250,000= (-$18,272 loss)
——————————————————————————————————-
*******Note the initial example of profit and loss from above is inverted*******

It should read as follows:

IF USD IS: Base Currency,(AKA Transaction Currency, Traded Currency, OR CCY1)
Profit = Price Change in Pips x Units Traded / Exit Price

IF USD IS: Secondary Currency, (AKA Quote Currency, Terms Currency”, “Variable Currency”, “Counter Currency” or “CCY2
Profit = Price Change in Pips x Units Traded

]]> By: mbtasi http://www.series34exam.com/profit-and-loss-calculations/comment-page-1/#comment-3305 mbtasi Tue, 26 Oct 2010 06:20:20 +0000 http://www.series34exam.com/?p=145#comment-3305 The computations in the answer in post #2 are in error, but the final answer is correct. In the conversion from USD to EUR, you multiplied instead of divided. If you had divided, the number of EUR's received is 193,408.63. Then, if this number is divided by the .82, it does net $235,864.19, or a loss of $14,135.81 as shown. The computations in the answer in post #2 are in error, but the final answer is correct. In the conversion from USD to EUR, you multiplied instead of divided. If you had divided, the number of EUR’s received is 193,408.63. Then, if this number is divided by the .82, it does net $235,864.19, or a loss of $14,135.81 as shown.

]]> By: Michael http://www.series34exam.com/profit-and-loss-calculations/comment-page-1/#comment-3286 Michael Thu, 21 Oct 2010 22:34:31 +0000 http://www.series34exam.com/?p=145#comment-3286 Loss of $18,272 is what I am getting... Loss of $18,272 is what I am getting…

]]> By: Jantz Hoffman http://www.series34exam.com/profit-and-loss-calculations/comment-page-1/#comment-3237 Jantz Hoffman Thu, 07 Oct 2010 16:22:25 +0000 http://www.series34exam.com/?p=145#comment-3237 In this example they do most of the work for you. You take the 250,000 and divide by the offer 1.2926 (buying EUR/USD)so you know how many EUROS you have 323.150. Next knowing that you can exchange every .82 eur for one USD, you simply divide by .82 and that will get you the USD value 235,864.19. Since the customer started with 250,000 and now has 235.864.19 there is a loss of 14,135.81 In this example they do most of the work for you. You take the 250,000 and divide by the offer 1.2926 (buying EUR/USD)so you know how many EUROS you have 323.150. Next knowing that you can exchange every .82 eur for one USD, you simply divide by .82 and that will get you the USD value 235,864.19. Since the customer started with 250,000 and now has 235.864.19 there is a loss of 14,135.81

]]> By: Jantz Hoffman http://www.series34exam.com/profit-and-loss-calculations/comment-page-1/#comment-3236 Jantz Hoffman Thu, 07 Oct 2010 16:18:58 +0000 http://www.series34exam.com/?p=145#comment-3236 The question I had here was a little different than normal. There was no need to calcualte a pip or pip value. A customer would like to purchase 250,000 of EUR/USD. The current rates for the EUR/USD are. 1.2924/1.2926 Two days later the .82 Eur can be exchanged for 1 USD. What was the customers P/L? The question I had here was a little different than normal. There was no need to calcualte a pip or pip value.

A customer would like to purchase 250,000 of EUR/USD. The current rates for the EUR/USD are.

1.2924/1.2926

Two days later the .82 Eur can be exchanged for 1 USD.

What was the customers P/L?

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