If the current offer price is P2.50 and the bid-offer spread is 4%, what is the bid price?

To determine the bid price in relation to the offered price and the bid-offer spread, it's important to understand how the spread impacts the bid price.

The offer price (also known as the ask price) is given as P2.50. The bid-offer spread is stated to be 4%, which means that the difference between the bid price and the offer price is a percentage of the offer price.

To calculate the spread in monetary terms, multiply the offer price by the percentage of the spread:

• The spread in value is calculated as: P2.50 x 0.04 = P0.10.

The bid price is then derived by subtracting this spread from the offer price:

• Bid price = Offer price - Spread = P2.50 - P0.10 = P2.40.

Therefore, the calculated bid price of P2.40 aligns with the initial question, confirming that A is the correct answer. Understanding how the spread operates is critical for accurately determining bid and offer prices in financial contexts.