What Is the "Bid-Ask Spread" and How Does It Affect

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The Answer is The bid price is what someone who is seeking to buy a specific foreign currency on the foreign exchange market is willing to pay for that currency,and the ask price is what someone who is seeking to sell a specific currency on the foreign exchange market is willing to accept for that currency.The bid-ask spread is the difference between the two prices,and,if a dealer can find an ask price that is less than a bid price,the bid-ask spread represents the profit that the deal can make by buying the currency at the ask price and selling it at the bid price.Liquid currencies (those that are bought and sold easily)have low spreads since they are regularly traded and bid and ask prices are essentially the same,but illiquid currencies (those that are not bought and sold as easily)have higher spreads since there are not as many buyers and sellers of those currencies.When an MNC seeks to buy or sell on the foreign currency market,it typically conducts those transactions through a dealer in foreign currency,and the bid-ask spread for the particular currency that the MNC is seeking to buy or sell will be the dealer's profit on the transaction,paid by the MNC.

What Is the "Bid-Ask Spread" and How Does It Affect

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