Question

All else equal, currency pairs that have greater order costs will have lower bid/ask spreads

a) True
b) False

Answer 1

False. Currency pairs that have greater order costs will have higher bid/ask spreads.

Step-by-step explanation:

False. Currency pairs that have greater order costs will have higher bid/ask spreads, not lower. Order costs refer to the transaction costs associated with buying or selling a specific currency pair, such as fees charged by brokers or exchange rates offered by banks. These costs can influence the bid/ask spread, which 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 specific currency pair. When order costs are higher, the bid/ask spread tends to be wider as well.