GEB 3373 Study Guide - Final Guide: Nominal Interest Rate, Real Interest Rate, Currency Future
23 Apr 2019
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Direct quotes are direct exchange rates that expresses the price of a foreign currency in terms of the home currency (ex: 1/indirect quote) Indirect quotes are indirect exchange rates that express the price of the home currency in terms of the foreign currency (ex: 1/direct quote) Us residents express british pounds on a direct basis (in terms of dollars per pound), and. Japanese yen on an indirect basis (yen per dollar) Spot transactions: one currency is exchanged for another within a period of two days considered immediate, 33-38% are these. Forward transactions: in forward market, currencies are bought and sold for delivery in the future 1,3,6 months after transaction takes place. Annualized forward premium or discount = (forward price spot price)/spot price x period of years. Future transactions: currency future is an exchange-agreement to buy or sell currency at a specific price on a particular future date, based on a standardized, exchange-traded contract.
