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Basic Question 10 of 19
A bank/dealer with a shortage of a currency and a customer that needs the currency to pay an accounts payable might be tempted to:
B. raise its bid price
C. lower its ask price.
A. lower its bid price
B. raise its bid price
C. lower its ask price.
User Contributed Comments 5
| User | Comment |
|---|---|
| vatsal92 | This question needs to be answered from Bank's point of view. |
| ars2011 | The Dealer buys at lower price sells at a higher price.Since now he needs currency he will offer better terms to the client i.e raise his bid to entice him |
| Inaganti6 | supply chain deficit leads to increased willingness to procure fx at higher price for resale... |
| jejemike | The dealer is at an advantage because he has a base currency that is in short supply but highly demanded for. The bid price, which is the price at which he will buy the price currency from the customer will rise |
| jzty | This question should be answer from both perspectives. Both the bank and the customer are in need of the currency. So they need to pay more for what they want. |
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Learning Outcome Statements
calculate and interpret the bid-ask spread on a spot or forward foreign currency quotation and describe the factors that affect the bid-offer spread;
identify a triangular arbitrage opportunity and calculate its profit, given the bid-offer quotations for three currencies;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.