FNCE-404 Midterm: Chapter 5
9 Aug 2016
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Document Summary
The forex is the mechanism by which participants: transfer purchasing power between countries, obtain/provide credit for international trade transactions, minimize exposure to the risks of exchange rate changes hedge. There are four main dimensions of the forex: structure, transactions, size, methods of stating exchange rates, quotations, and changes in exchange rates. Geographically, the forex spans the globe with prices moving and currencies trading every hour of every business day. Major world trading starts each morning in sydney and tokyo. Then moves west to hong kong and singapore. Continuing to europe and finishing on the west coast of the u. s. The forex consists of two tiers: the interbank or wholesale market, and, the client or retail market. Five broad categories of participants operate within these two tiers: bank and nonbank foreign exchange dealers, individuals and firms conducting commercial or investment transactions, speculators and arbitragers **liquidity is key*, central banks and treasuries, foreign exchange brokers.
