The difference between bid (buying) rates and ask (selling) rates is called the ?
Correct answer: C. spread
- A. profit
- B. arbitrage
- C. spread
- D. forward transaction
Explanation
The spread is the difference between the dealer’s bid price, at which it buys currency, and its ask price, at which it sells currency. It compensates the dealer for providing the foreign-exchange service and bearing risk.
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