"I heard Mary say that she heard that Sandy said that Adam said that he overheard Mikala say that she liked Austin." One kind of indirect quote.
Another kind involves foreign currency trading.
Prices in forex trading (forex meaning "foreign exchange") are given in currency pairs. Since there's no central world currency that can be used as an independent standard, all currency prices only exist as a transfer of one currency into another. Pounds into dollars. Yen into euros. Etc.
Any currency pair can be presented in two ways. You want to know the exchange rate of dollars to pounds. You can either say how many dollars it would take to buy a single pound, or you can say how many pounds it would take to buy a single dollar. The same information is given either way...the numbers (dollars-to-pounds vs. pounds-to-dollars) are just inverses of each other.
A direct quote is where the domestic currency is the base currency, meaning the currency that gets the "one" attached to it. If you're in the U.S., the direct quote would let you know how many pounds could get exchanged for one dollar.
The indirect quote is the inverse of that. The foreign currency (the pound in this case) becomes the base currency. The number given is how many dollars it would take to get a single pound.
Related or Semi-related Video
Finance: How does foreign exchange work?11 Views
Finance allah shmoop how does foreign exchange work All right
Well there's risk when you buy and sell goods and
services outside of the u s that isn't there when
you buy and sell goods inside the u s your
smoothies and absence a major chain of a thousand smoothie
shops you buy a million bananas a year the customers
believe that they have a peel you buy all of
them plantains actually these little guys from uganda and just
agreed to pay in ugandan shillings One u s dollar
buys about four thousand ugandan shillings and that's a lot
of bananas You take the risk on the foreign exchange
currency because well you don't like hedging your bets you're
just going to take the risk if the currency moves
up or down it's on you horse at another way
Yeah if you were nervous about relative currency valuation fluctuations
well you could be a kind of currency life insurance
in paying a ten or twenty percent premium above where
the relative currencies air trading today that for thousands of
one thing and you could sleep pretty well at night
knowing that your rates were fixed like you're basically paying
Someone else to take the risk of uganda suddenly getting
its financial act together in its currency skyrocketing so that
a u s dollars only buys you three thousand or
two thousand ugandan shillings or things go the other way
But you don't like buying insurance You know how nice
the jets are that insurance executives fly and you know
about warren buffett He didn't get there for free so
you didn't had you didn't do anything to worry about
currency but then all of a sudden china decides to
adopt uganda as its new financial partner agreeing toe underwrite
all of uganda's debts basically in return for well uganda
Yeah they liked owning uganda way better weather and they
also got the highly prized you r l uganda dot
com So then almost literally overnight the ugandan shilling becomes
highly more valued under the deeply respected and feared auspices
of the chinese banking system So instead of a dollar
buying you for thousand schillings while now a u s
dollar only buys you one thousand so your cost of
bananas just went from four hundred bucks a ton to
sixteen hundred bucks and the marginal cost of those banana
Plantain Things in your shakes went from thirty cents over
a dollar twenty and with profit margin per shake it
only two fifty to start with twelve new profit margins
suddenly dropped almost in half Eventually you'll have to find
another banana supplier or raise prices or figure out a
substitute But well for now it looks like this Foreign 00:02:29.253 --> [endTime] exchange deals Profits will get eating
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