IB 150 Lecture Notes - Lecture 14: Credit Suisse, Forward Contract, Australian Dollar
31 May 2017
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Document Summary
When the payments they receive for exports, the income they receive from foreign investments, or the income they receive from licensing agreements with foreign firms are in foreign currencies. When they must pay a foreign company for its products or services in its country"s currency. When they have spare cash that they wish to invest for short terms in foreign money markets. When they are involved in currency speculation - the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates. Currencies and other financial instruments of payment denominated in foreign currencies. The number of units of one currency needed to acquire one unit of another currency: a ratio. The exchange rate for immediate delivery of the currency (in 2 business days) The rate for currency delivered in the future. Forward exchanges occur when two parties agree to exchange currency and execute the deal at some specific date in the future.
