Question

#2?

Bid-Ask spread on currency quotation will be wider if the currency exhibits more volatility than others because of the country's uncertain economic conditions?

true or false

3. Licensing is an international business method in which involves taking ownership of foreign operations

true or false

Answer 1

2. The given statement is true

· Bid-ask spread refers to the difference between the highest price a buyer can pay and the lowest price a seller would accept for the product in a market

· It can be considered as a measure of supply and demand for a particular asset where the bid represents the demand and ask represents the supply

· The increase of depth between the bid and ask would widen the bid-ask spread. Also thinly traded stocks have a wider bid-ask spread.

· As the currency volatility increases, the market makers would try to take advantage in the market to increase the profits which would result in widening of the bid-ask spread

3. The given statement is false

· Licensing is defined as a business arrangement in which a company would authorize another company to manufacture its products within a foreign nation for a temporary or specified period of time.

· It gives limited access to the Intellectual property rights, manufacturing process, patent. Technology, trademark etc under specified agreements by charging a fee for the same

· It is a rental system where the licensor has no control over the licensee in terms of production, distribution and sales.

· Thus, it can be seen that Licensing doesn’t result in the transfer of ownership, instead it follows a rental pattern for a specified period of time with proper agreements.