COMMERCE 4SA3 Lecture Notes - Lecture 9: Foreign Exchange Risk, Foreign Exchange Market, The Foreign Exchange
21 Feb 2017
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Foreign exchange market: market for converting the currency of one country into that of another country. Exchange rate: the rate at which one currency is converted into another. Currency conversion: most traded currency us-worldwide currencies normally quoted against the but whe(cid:374) (cid:374)ot the(cid:374) (cid:272)alled (cid:862)(cid:272)(cid:396)oss(cid:396)ate(cid:863). E. g. , eg: = 1787yen: busiest currency trades: us$ - euro first, then us$ - yen us$ - british sterling us$ - The payment a country receives for its exports, or the incomes it receives from licensing agreements. To pay a foreign company for its products or services. Currency speculation: short-term movement of funds from one currency to another. Insuring against foreign exchange risk in hopes of profiting from shifts in exchange rates: foreign exchange risk: the risk that changes in exchange rates will hurt the profitability of a business deal, spot exchange rates. Spot exchange rate: exchange rate at which a foreign exchange dealer will convert one currency into another that particular day.
