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Foreign Exchange Markets Vocab
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Foreign Exchange Markets Vocab
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13 Questions

1. Triangular arbitrage - Temporary disequilibrium among the different F.X. markets makes this possible

2. Transferring purchasing power from one currency to another currency

3. Rate applied for forward contract (customarily quoted in multiples of 30 days) - exchg rate for future delivery is locked in at the time of FWD contract markets best estimate of future spot rate as of today

4. # of F.C. for 1 unit of M.C.(

5. Locational arbitrage - Temporary disequilibrium among the regional banks makes this arbitrage possible

6. Transaction in FWD market designed to minimize potential loss from ex. rate fluctuation

7. Settlement - Speculation - Arbitrage (2 & 3 point) - Hedging

8. Using one of the instruments in the F.X. market (spot - forward - future)

9. # of M.C for 1 unit of F.C.($0.005/

10. Exchange rate between two foreign currencies x rate for Euro: :

11. Option 1: do nothing - sell X amount in future spot (uncertain) - Option 2: Hedging - Sell fwd X amount now (locked in rate)

12. Agreement to deliver/ to take delivery of certain # of F.C. immediately ( 2 buss Days)

13. Agreement to deliver/ to take delivery of certain # of F.C. in the future

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