Question: Using an example, explain why the bid-ask spread in the FX market is a cost for international trade. Show that when the bid-ask spread becomes

Using an example, explain why the bid-ask spread in the FX market is a cost for international trade.

Show that when the bid-ask spread becomes wider, the cost of converting back and forth increases.

Provide some factors that have an influence on the bid-ask spread. Explain your thoughts and arguments as much as possible.

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