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Assume a bank's bid rate for the Danish kroner (DKK) is $0.1875, while its ask rate...

Assume a bank's bid rate for the Danish kroner (DKK) is $0.1875, while its ask rate is $0.1895. Assume you convert $1,000 to Danish kroner to take on your trip to Denmark. Immediately after conversion, a family emergency arises, and you are unable to go on your trip. Thus, you convert the Danish kroner back to dollars.

What is the bank's bid/ask percentage spread?

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Answer #1

Bid/ Ask percentagespread = Ask Rate – BidRate * 100 Ask Rate

Bid/ Ask percentagespread =- 0.1895 – 0.1875 0.1895 -* 100

= 0.01055 OR 1.055%

bid/ask percentage spread is 1.055%

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