MAF101 Lecture 9: Finance week 9

• School: Deakin University
• Department: Business and Law
• Course: MAF101
• Professor: All

Document Summary

You can t borrow or make loans from the fx market, you can only convert. Dealer: an organization like a major bank that has been licensed to trade in fx. Broker: not involved in the transaction, only introduce the buyer to the clients. Aud/jpy = 80 (1 aud is equivalent to 80 jpy) Carry trade: borrowing when interest rates are low and investing when rates are high. Fx contracts: agreeing to exchange amount of one currency for an agreed amount of another. Spot contracts: exchange of currencies in 2 business days (t+2) based on the agreed spot exchange rate. *where everyone had to follow one fixed exchange rate system. Currency board arrangement : each unit of domestic currency is backed by a foreign currency unit. If you are exporting products a low exchange rate is good , as product will be sold in foreign country for cheaper therefore more sales.