You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). You would decrease your bid price and increase your ask price for S(USD/AUD). You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). None of the other answers.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible
for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large
quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease
your net position in this market? Answer with respect to bids and asks for the spot rate that is
directly quoting for AUD.
You would decrease both your bid price and your ask price for S(USD/AUD).
O You would decrease your bid price and increase your ask price for S(USD/AUD).
You would increase your bid price and decrease your ask price for S(USD/AUD).
You would increase both your bid price and your ask price for S(USD/AUD).
O None of the other answers.
Transcribed Image Text:You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). O You would decrease your bid price and increase your ask price for S(USD/AUD). You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). O None of the other answers.
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