EC249 Lecture Notes - Lecture 8: The Foreign Exchange, Ask Price, Swiss Franc
Document Summary
The foreign exchange (fx) market is an otc market where otc stands for. Is better than the military in terms of speed and efficiency. That a trader can make a riskless profit. The domestic currency is in the numerator. Consider the following spot (s(cad/sfr)) and 3 months forward (f90(cad/sfr));s=1. 056, f90=1. 052. The cad is expected to appreciate vis-a-vis the sfr over the next 3 months. Is the price a dealer is willing to pay you for something. Is the amount the dealer wants you to pay for the same thing. Australasia (sydney, tokyo, hong kong, singapore, bahrain) Europe (zurich, frankfurt, paris, brussels, amsterdam, london) North america (new york, montreal, toronto, chicago, san francisco, Los angeles: trading is especially active when market segments overlap, a two-tier market. International banks provide the core of the market. The other 86% of trading volume is from interbank trades between international banks and nonbank dealers.
