University:
McMaster University
Course:
COMMERCE 3FC3 | International Finance
Academic year:

2022
Views:

373

Pages:

4
Author:

Sabrina S.

Chapter 5 Broadly defined, the Power from one market includes the conversion of purchasing. currency into another, bank deposits of foreign currency, the extension of credit denominated in a foreign currency, foreign trade financing, trading in foreign currency options and futures contracts, and currency swaps. Foreign Exchange The structure of the foreign exchange market is an outgrowth of one of the primary functions of a(n) Conduct of international commerce. banker to assist clients. in the Commercial Match the FX market participant with its description International Banks Financial institutions that buy sell foreign currency for their own account to serve retail clients.. Bank Customers Multinational corporations, money managers, and private speculators. NonBank Dealers - Large financial institutions Such as investment banks, mutual funds, pension funds, and hedge funds.. FX Brokers - Match dealer orders to buy and sell currencies for a fee, but do not take a position themselves. Central Banks A national monetary authority. The currencies that are dollar are said to be in by convention priced in terms of the U.S.. terms. American. Drag and drop to match the country with its currency. Egypt pound India rupee Indonesia - rupiah Israel Shekel Japan yen Jordan dinar Which of the following statements about the foreign Exchange market is correct? It is the largest and most active financial market in the world. It is open somewhere in the world 24 hours a day, 365 days a year. If £1 costs $1.50 and €1.00 costs $1.20, then the €12 cross-rate is 1.25 Foreign exchange is traded in a(n) market, not in a central marketplace where buyers and sellers congregate. Over the Counter (OTC) Currency market-makers buy at the price. price and sell at the Bid; Higher Ask Which are the tiers of the foreign exchange market? •Retail or Client market Wholesale or Interbank market A zero-risk, zero-investment strategy from which a profit is guaranteed is called Arbitrage The almost immediate (two-day) purchase or sale of foreign exchange occurs on the market. Spot When the forward price is than the spot price, it is said to be at a Higher Premium Lower; Discounl The currency of Germany is the Euro FN (1) -8(1) In the formula fuj == S(1) represents dollars, in American terms? x 360/ days, which of the variables What are ways that cross-exchange rates can be calculated? The quotient of two American term exchange rates. The product What are ways that cross-exchange rates can be calculated? The quotient of two American term exchange rates. The product of an American term and a European term exchange rate.. Suppose that the interbank bid for a ask is $1.0545. currency is $1.0543 and the The retail bid could be 1.0542. The big figure for the bid is 1.05. The cash settlement of non-deliverable forward contracts is based on the difference between NDF rate and the amount of contract. rate times the notional Spot Exchange A shorthand method for expressing forward quotes from spot rate quotations is the use of forward Points