A difference arises between the bid and offer rates of foreign currency because:
A) the rates are between different dealer banks.
B) of arbitrage opportunities between currencies.
C) foreign exchange dealers need to earn income.
D) it takes time to find buyers or sellers of foreign currency.

Question

Quizplus · Accepted Answer

The difference between the bid and offer rates, also known as the spread, is primarily because foreign exchange dealers need to earn income. This spread compensates them for the service of providing liquidity and taking on the risk of holding currency positions.

A Difference Arises Between the Bid and Offer Rates of Foreign