Q6. Which of the following statements about foreign currency bid-ask spreads is least accurate? Foreign currency bid-ask spreads:

A)    are not directly affected by bank and currency dealer positions.

B)    are a function of transaction volume and volatility.

C)    decrease as the size of the transaction decreases.

Q7. The percentage spread between foreign currency quotations is equal to the:

A)     ask price minus the bid price divided by the ask price multiplied by 100.

B)     ask price minus the bid price divided by the bid price multiplied by 100.

C)     ask price divided by the bid price.

Q8. Given a foreign currency quotation bid of $0.8955 and an ask of $0.9045 what is the percentage bid-ask spread, and who profits from it?

% Bid-Ask Spread             Profits?

A) 0.9950%                                   Customer

B) 1.0050%                                   Bank

C) 0.9950%                                   Bank

答案和详解如下：

Q6. Which of the following statements about foreign currency bid-ask spreads is least accurate? Foreign currency bid-ask spreads:

A)    are not directly affected by bank and currency dealer positions.

B)    are a function of transaction volume and volatility.

C)    decrease as the size of the transaction decreases.

Correct answer is C)         

Bid-ask spreads are size related in that the smaller the transaction the larger the spread.

Q7. The percentage spread between foreign currency quotations is equal to the:

A)     ask price minus the bid price divided by the ask price multiplied by 100.

B)     ask price minus the bid price divided by the bid price multiplied by 100.

C)     ask price divided by the bid price.

Correct answer is A)

% spread = [(ask price – bid price) / ask price] × 100

Q8. Given a foreign currency quotation bid of $0.8955 and an ask of $0.9045 what is the percentage bid-ask spread, and who profits from it?

% Bid-Ask Spread             Profits?

A) 0.9950%                                   Customer

B) 1.0050%                                   Bank

C) 0.9950%                                   Bank

Correct answer is C)

% spread = [(ask price bid − price) / ask price] × 100

= [(0.9045 − 0.8955) / 0.9045 ] × 100 = 0.9950%

The bid-ask spread is how banks make their profit on foreign currency transactions.