FINE 482 Midterm: Midterm-1-Cheat-Sheet
Document Summary
If is the study of cross country money management, inter- national capital flows and intl flows of goods: assets: debt securities issued by governments (low or risk free), foundation of creating, trading and pricing other financial assets. Increase in inflation: in fc in terms of hc can lead to . N(d) r(d), n(d) r(i), n(d) r(=: decrease in inflation: in fc in terms of hc can lead to . Forex: forex: system of banks, brokerage firms, dealers that bring buyers and sellers of foreign exchange together. Allows individuals/institutions to transfer purchasing power, engage in intl transactions, manage er risk exposure: major markets: uk, us, japan, singapore, hk, switzerland, Asian polar currency as it becomes more in demand. Determination: er: market-clearing price where d=s of local and foreign currency. Eq occurs when qd for fc = qs. Fc(cid:859)s de(cid:373)a(cid:374)d for lo(cid:272)al goods. (cid:894)the (cid:373)ore fc i(cid:373)ports, the higher the dc/fc er, the greater the supply of fc)
