The bid-ask spread in the foreign exchange market is the ________.

Question

Quizplus · Accepted Answer

The bid-ask spread in the foreign exchange market is the difference between the bid and ask quotes for a currency. It represents the cost of trading currencies and the profit margin for market makers, i.e. banks and other financial institutions. Option A is incorrect, as banks will both buy and sell currencies, and the bid-ask spread is the cost of that service. Option B is incomplete, as the price of currency is determined by supply and demand factors, which may change over time and affect the bid-ask spread. Option D is incorrect, as the bid-ask spread is a instantaneous measure of market liquidity, not a time-based one.

The Bid-Ask Spread in the Foreign Exchange Market Is the ________