Why does continental risk bid

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Reference no: EM132559006

Suppose you see five banks quoting EUR against USD, as follows:

Citibank                 USD/EUR 1.3450-52

Bank of America       USD/EUR 1.3450-52

Continental Bank         USD/EUR 1.345.1-53

Deutsche Bank            USD/EUR 1.3450-52

Banca da Roma            USD/EUR 1.3449-51

Question a) Which bank(s) is (are) keen on buying EUR? Keen on selling EUR? Not interested in dealing?

Question b) Why does Continental rise both its bid and its ask, rather than just its bid?

Question c) If we would look at these banks' quotes every five minutes, do we always expect to see the same pattern, i.e. Continental quoting higher and Roma lower than the majority?

Reference no: EM132559006

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