Q51
The price at which a market maker is prepared to buy a currency or borrow money is termed as
A.
spot rate
B.
bid rate
AnswerC.
ask price
D.
forward rate
Answer: Option B
Solution
Answer: Option B
Solution:
The price at which a market maker is prepared to buy a currency or borrow money is termed as bid rate. The bid rate is thus the rate at which the dealer is willing to buy the base currency and the ask rate is the one at which the dealer is willing to sell the base currency. The difference between the ask rate and the bid rate is called the bid-ask spread and is the profit of the dealer.