Bid-ask spread: A foreign exchange dealer is willing to buy the New Zealand dollar (NZ$) at $0.7621/NZ$ and will sell it at a rate of $0.7714/NZ$. What is the bid-ask spread on the Danish krone?

Question

Quizplus · Accepted Answer

Bid-ask spread can be calculated as [(Ask price - Bid price)/Ask price] x 100.
Here,
Bid price for NZ$ = $0.7621/NZ$
Ask price for NZ$ = $0.7714/NZ$
Bid-ask spread = [(Ask price - Bid price)/Ask price] x 100
= [(0.7714 - 0.7621)/0.7714] x 100
= 1.21%
Therefore, the bid-ask spread on the New Zealand dollar is 1.2%. The closest option is D (1.2%).

Bid-Ask Spread: a Foreign Exchange Dealer Is Willing to Buy