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Bid-offer spread in an exchange-rate quotation represents:
ACommission paid to the customer by the bank
BThe interest rate differential of the two currencies
CThe difference between buy and sell rates of the bank
DTax levied on the FX transaction by RBI
Answer & Solution
Correct answer: C. The difference between buy and sell rates of the bank
1. Identify what the question asks: this concept maps to bidoffer (§5.3).
2. Apply the framework or formula relevant to the topic.
3. Eliminate distractors and arrive at the correct option (C).
_Source: ICAI BoS CA Final Paper 2, Ch 10 "Foreign Exchange Exposure and Risk Management"_
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