A local community bank has requested foreign exchange quotes for the Swiss Franc from Citibank. Citibank...

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A local community bank has requested foreign exchange quotes for the Swiss Franc from Citibank. Citibank...

A local community bank has requested foreign exchange quotes for the Swiss Franc from Citibank. Citibank quotes a bid rate of $1.0650/SF and an ask rate of $1.0713/SF. What is the bid-ask spread? (Round answer to 3 decimal places, e.g. 17.540%.)

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Answer 1

Answer #1

Calculation of bid-ask spread:

Spread = It is the difference between Ask rate and Bid rate.
bid price = 1.0650
ask price = 1.0713
The bid-ask spread = 1.0713 - 1.0650 = $0.00630 per SF

Hence the bid-ask spread= $0.00630 / $1.0713 = 0.59%

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Answer 2

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