Bid-Ask Spread: a Local Bank Has Requested Foreign Exchange Quotes

question 66

Multiple Choice

Bid-ask spread: A local bank has requested foreign exchange quotes for the Swedish krona from Citibank. Citibank quotes a bid rate of $0.1652/SK and an ask rate of $0.1667/SK. What is the bid-ask spread?

• A) 1.2%
• B) 2.1%
• C) 0.9%
• D) 0.65%

Describe the subprocesses of negotiations according to Walton and McKersie.

Relate the process of labor negotiations to a theatrical play and understand its dynamics.

Contrast public sector bargaining with private sector bargaining.

Explain the influence of BATNA/MLATNA on bargaining incentives.

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Definitions:

Annually Compounded

A compound interest calculation where the interest is added to the principal at the end of each year.

Nominal Rate

The stated interest rate of a bond or loan, without accounting for compounding or inflation.

Mortgage Loan

A loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty.

Compounded Monthly

A method where the interest is calculated on a monthly basis and added to the principal sum, allowing the interest to grow over time through compounding.