Which of the following is true of the bid rate in foreign exchange markets?
A) It is always higher than the offer rate.
B) It is always lower than the offer rate.
C) It is always equal to the offer rate.
D) It does not affect the spread of the exchange.

Question

Which of the following is true of the bid rate in foreign exchange markets? 
A) It is always higher than the offer rate. 
B) It is always lower than the offer rate. 
C) It is always equal to the offer rate. 
D) It does not affect the spread of the exchange.

Quizplus · Accepted Answer

The bid rate is the rate at which a trader can sell a currency pair, and it is always lower than the offer rate, which is the rate at which a trader can buy a currency pair. The difference between the bid and offer rates is called the spread, and the bid rate plays a significant role in determining it. Therefore, option D is incorrect. Option A is incorrect because the bid rate is not always higher than the offer rate. Option C is also incorrect because the bid rate is not always equal to the offer rate.

Which of the Following Is True of the Bid Rate