GMS 724 Study Guide - Final Guide: International Monetary Fund, Foreign Exchange Market, The Foreign Exchange
30 Nov 2011
School
Department
Course
Professor
Document Summary
Foreign exchange : money dominated in the currency of another nation or group of nations. Can be form of cash, funds available on credit and debit cards, traveler"s checks, bank deposits, or other short-term claims. Foreign exchange market: market in which these transactions take place. Traditional foreign exchange instruments: spot transactions: immediate exchange currency, generally made on second business day after the date on which two foreign-exchange dealers agree to transaction. Spot rate: rate at which transaction is settled: outright forward transactions: exchange of currency on future date, forward transaction will be settled at forward rate no matter what actual spot rate is at time of settlement. Hedge funds: funds typically used by wealthy individuals and institutions that are allowed to use aggressive strategies unavailable to mutual funds. Five major reasons why the dollar is so widely traded. It"s an investment currency in many capital markets. It"s a reserve currency held by many central banks.
