Chapter Four The market for 4 Foreign Exchange Chapter objectives This chapter serves to introduce the student to the institutional framework within which exchange rates are determined This chapter lays the foundation for much of the discussion throughout the remainder of the text, thus it deserves your careful attention
INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition 4 Chapter Four The Market for Foreign Exchange Chapter Objectives: •This chapter serves to introduce the student to the institutional framework within which exchange rates are determined. •This chapter lays the foundation for much of the discussion throughout the remainder of the text, thus it deserves your careful attention
Chapter outline o Function and structure of the forex market ° The spot market The Forward market McGraw-Hilylrwoin 4-1 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-1 Chapter Outline ⚫ Function and Structure of the FOREX Market ⚫ The Spot Market ⚫ The Forward Market
Chapter outline o Function and structure of the forex market FX Market Participants Correspondent Banking Relationships ● The Spot market ● The Forward market McGraw-Hilylrwoin 4-2 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-2 Chapter Outline ⚫ Function and Structure of the FOREX Market ◼ FX Market Participants ◼ Correspondent Banking Relationships ⚫ The Spot Market ⚫ The Forward Market
Chapter outline o Function and structure of the foreX market ● The spot market a Spot rate Quotations The Bid-Ask Spread Spot FX Trading Cross Exchange Rate Quotations Triangular Arbitrage Spot Foreign exchange market Microstructure ● The Forward market McGraw-Hilylrwoin 4-3 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-3 Chapter Outline ⚫ Function and Structure of the FOREX Market ⚫ The Spot Market ◼ Spot Rate Quotations ◼ The Bid-Ask Spread ◼ Spot FX Trading ◼ Cross Exchange Rate Quotations ◼ Triangular Arbitrage ◼ Spot Foreign Exchange Market Microstructure ⚫ The Forward Market
Chapter outline o Function and structure of the foreX market ● The Spot market The Forward market a Forward Rate Quotations Long and short Forward positions Forward Cross-Exchange Rates Swap transactions forward Premium McGraw-Hilylrwoin 4-4 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 4-4 Chapter Outline ⚫ Function and Structure of the FOREX Market ⚫ The Spot Market ⚫ The Forward Market ◼ Forward Rate Quotations ◼ Long and Short Forward Positions ◼ Forward Cross-Exchange Rates ◼ Swap Transactions ◼ Forward Premium