Question

If the $/€ bid and ask prices are $1.25/€ and $1.26/€, respectively, the corresponding €/$ bid and ask prices are O A €0.6667 and €0.6623 OR $1.51 and $1.50 €0.7937 and €0.8000 on cannot be determined with the information given.

Answer 1

The corresponding bid and ask prices are computed as follows:

$\epsilon$ / $ = 1 / 1.25

= $\epsilon$ 0.8000

$\epsilon$ / $ = 1 / 1.26

= $\epsilon$ 0.7937

Now, we know that the ask price is always greater than the bid price.

Hence the ask price will be $\epsilon$ 0.8000

The bid price will be $\epsilon$ 0.7937

So, the correct answer is option c.

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