IBUS 462 Lecture Notes - Lecture 7: Foreign Exchange Risk, Foreign Exchange Market, Foreign Exchange Spot
5 Dec 2018
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Document Summary
Three main objectives: explain foreign exchange market, examine the forces that determines exchange rates and forecast, implication of foreign exchange for international market. The foreign exchange market is a market for converting the currency of one country into that of another country. An exchange rate is simply the rate at which one currency is converted into another: the function of the foreign exchange market. The foreign exchange market serves two main functions. The first is to convert the currency of one country into the currency of another. The second is to provide some insurance against foreign exchange risk, or the adverse consequences of unpredictable changes in exchange rates. Paricipants in the foreign exchange market: tourist (minors), companies (major). Foreign exchange market is a global network of bank, brokers, and foreign exchange dealers connected by electronic communications systems. Companies usually enter that market through their banks. The most important trading centres, london (37%), new-york (18%), zurich, tokyo, &
