Exchange Rate Pass-Through / Pip Value Calculator

Inspectable records

Ledger state

The current ledger marks this instrument verified clean within the source-bound verification corpus.

Area

Finance, Economics & Business (educational only — never individualized investment, tax, or legal advice)

Tranche

tranche-5

Evidence ID

t5-200

Ledger rows

1

No ledger note is attached.

Review findings

The arithmetic formula is valid only under the explicitly stated account-per-quote exchange-rate interpretation. The current specification does not identify the account currency or define current_rate orientation, so it cannot be verified as a generally correct account-currency pip-value calculator without those constraints and inputs.

Formula and scope findings

• The formula is only correct when position_size is measured in base-currency units and exchange_rate is expressed as account-currency units per quote-currency unit. The spec does not define that rate orientation.
• If the quote currency is already the account currency, the standard formula is pip_value=pip_size*position_size; dividing by the pair rate is incorrect unless exchange_rate is explicitly 1 quote-currency unit per account-currency unit.
• The account currency is missing from the required inputs, so the claimed output in account currency cannot be determined for arbitrary currency pairs.
• For an account currency different from both pair currencies, the required conversion rate or cross-rate is unspecified.
• The phrase 'quote-currency dependent' is ambiguous and does not state whether current_rate is the currency-pair rate, an account/quote conversion rate, or its inverse.

Unit assumptions

• position_size is the number of base-currency units, not standard lots or notional account-currency value.
• pip_size is quoted in quote-currency units per one base-currency unit; typical conventions are 0.0001 for most pairs and 0.01 for JPY-quoted pairs.
• exchange_rate must be account-currency units per quote-currency unit for the supplied formula to produce account-currency value.
• The account currency and the rate's currency orientation must be explicitly supplied or derived from a clearly documented conversion pair.
• Rates are positive decimal exchange rates; no spread, commission, leverage, contract-size adjustment, or fractional-pip convention is included.

Boundary hardening

BREAK_CLAIMED · SELF_FLAGGED

A zero exchange rate causes an undefined division and must be rejected. The specification also leaves the pip-size regime for JPY pairs, the sign convention for position size, and conversion from the formula's quote-currency-dependent result into account currency insufficiently specified.

Errata and corrections

No applied erratum is attached to this unique-name record.

Inspectable example

4 review vectors are recorded. One source-bound sample is shown below.

{
  "inputs": {
    "currency_pair": "EUR/GBP",
    "account_currency": "USD",
    "position_size": 100000,
    "pip_size": 0.0001,
    "current_rate": 1.25,
    "current_rate_definition": "USD per GBP"
  },
  "expected_outputs": {
    "pip_value": 8
  },
  "working": "pip_value=(pip_size/exchange_rate)*position_size\n=(0.0001/1.25)*100000\n=0.00008*100000\n=8 USD per pip"
}

Related workflows

No source-defined multi-instrument workflow membership is recorded.

Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

• VERIFIED_LEDGER.json · VERIFIED_CLEAN
• evidence-tranche5/tranche5-results.json
• BOUNDARY_HAZARD_CATALOG.json