Answer:
Buying pounds t spot rate and reselling it thereafter gives a loss of $52631.58 ,which is the amount eaten by the bid-ask spread.
Explanation:
Eaten as used in the question is a technical word which implies the loss incurred by selling pounds at bid rate which earlier bought at the spot rate.
Spot rate $1.90=£ 1
Bid rate $1.89=£ 1
By buying £ using $10000000 I get :
$10000000/$1.9 = £5263157.89
By selling the pounds thereafter at bid rate gives:
£5263157.89 *$1.89=$9947368.42
In other words, there is a loss of $52631.58
