A bid is the price in one currency at which a dealer will buy another currency. An ask is the price at which a dealer will sell the other currency
Dealers bid (buy) at one price and ask (sell) at a slightly higher price, making their profit from the spread between the prices. List and explain three reasons/factors that could make the spread small.
What will be an ideal response?
Answer: The bid-ask spread may be quite large for currencies that are traded infrequently, in small volumes, or both. The spread in wholesale transactions between banks and large corporations is normally smaller than in the retail market. Competition among dealers worldwide narrows the spread between bids and offers and so contributes to making the foreign exchange market "efficient" in the same sense as are securities markets. Other factors that affect the spread are the cost of processing orders, the cost of maintaining an inventory of a particular currency, and the volatility in the value of a currency.
You might also like to view...
In the United States, the regulation of "deceptive" and "unfair" advertising is the responsibility of the Federal Trade Commission.
Answer the following statement true (T) or false (F)
Although True Ion Inc. and One Electro Inc. operate in the same consumer electronic industry, True Ion Inc. has better sales and brand equity. This is attributed to True Ion Inc.'s commitment to innovation. The company has adequate financial and human capital to invest in research and development, an area in which One Electro Inc. lags behind. In this scenario, which of the following critical assumptions of the resource-based view of a firm has been illustrated?
A. resource value B. resource imitation C. resource immobility D. resource heterogeneity
Universalism is the belief that ideas and practices can be applied everywhere without modification.
Answer the following statement true (T) or false (F)
The producers of Imperial Sugar sell cane sugar in five-pound bags, one-pound bags, and one-pound boxes. When developing its advertising strategy, Imperial will most likely use a(n) ____ approach in defining a target market.
A. undifferentiated B. differentiated C. product strategy D. cost-benefit E. demographic