Question

The following quote is given for the MXN/USD: 0.4637/40. What is closest to the bid-ask spread in percentage terms?

a) 0.065%
b) 0.0650%
c) 0.0651%
d) 0.0652%

Answer 1

The bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for a financial instrument. To calculate the bid-ask spread in percentage terms, divide the difference between the bid and the ask by the ask price and multiply by 100. In this case, the closest option to the bid-ask spread in percentage terms is 0.065% (option a).

Step-by-step explanation:

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a financial instrument. To calculate the bid-ask spread in percentage terms, you need to divide the difference between the bid and the ask by the ask price and multiply by 100. In this case, the bid-ask spread would be:

(0.4640 - 0.4637) / 0.4637 * 100 = 0.0648%

Therefore, the closest option to the bid-ask spread in percentage terms is 0.065% (option a).