"Square off" refers to balancing or adjusting a bank's foreign currency holdings. This can be achieved by either raising both the buy and sell rates or lowering both the buy and sell rates. Therefore, choice D is the best option.

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To "Square Off

Question 5

Multiple Choice

To "square off,"

A) a bank adjusts its buy and sell rates of a currency to receive "zero" spread.
B) a bank increases its buy rate, but decreases its sell rate.
C) a bank decreases its buy rate, but increases its sell rate.
D) a bank could raise both buy and sell rates or lower both buy and sell rates to return to its desired foreign currency holding position.

Correct Answer: