Bid-Ask Spread: Banco Herrero Wants to Make a Bid-Ask Spread

question 46

Multiple Choice

Bid-ask spread: Banco Herrero wants to make a bid-ask spread of 0.55 per cent on its foreign exchange transactions. If the ask rate on the Mexican peso (MP) is MP10.4192/$, what does the bid rate have to be?

• A) MP10.3619/$
• B) MP10.4192/$
• C) MP10.4249/$
• D) MP10.2165/$

---

Definitions:

Zero Profit

A situation where a firm's total revenue is exactly equal to its total costs, resulting in no net profit.

Maximum Profit

The highest possible financial gain a business can achieve from its operations under given market conditions.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit.

Efficient Scale

The level of production at which a firm or an industry can produce at the lowest average cost.