MGCR 382 Lecture Notes - Lecture 5: Demand Curve, The Foreign Exchange, Foreign Exchange Market
22 Jan 2015
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Document Summary
Mgcr 382: international business - lecture 5: exchange rates. Exchange rate: the price of one currencies units in terms of another. Bid rate: the price at which banks/companies are buying the certain currency. Ask rate: the price at which the certain currency is being sold at. Bidrate < ask rate, as the company/bank/organizations wish to make a profit from their the occurrence of these transactions. This difference is a range of currencies, which is called the spread. Determined with the intersection of the demand and supply of the foreign currency. Investment opportunities present in the foreign/domestic land (include goods, services etc) Goods and services can only be bought with the currency of the nation the good/service is being sold, thus there is an act of conversion of currencies that takes place. A certain good appreciates or depreciates using the normal laws of demand and supply.
