Ch 8 - Foreign Exchange & International Financial Markets

Ch 8 - Foreign Exchange & International Financial...

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CHAPTER 8 Foreign Exchange = a commodity that consists of currencies issued by countries other than one’s own Demand for Japanese Yen: Demand for Japanese Yen is derived from Foreigner’s demand for Japanese products Supply for Japanese Yen is derived for Foreign Products Foreign Exchange Rates: Direct Exchange Rate: o Direct Quote o Price of the Foreign Currency in terms of home currency Indirect Exchange Rate: o Indirect Quote o Price of the home country in terms of the foreign currency The Role of Banks: Wholesale market for foreign exchange Retail market for foreign exchange Clients: o Commercial Customers o Speculators o Arbitrageurs Currencies Involved in Foreign Exchange Market Transactions: Tokyo is the 3 rd Lending and Purchasing on credit Spot market: foreign-exchange transactions that are to be consummated immediately
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This note was uploaded on 04/18/2008 for the course MGCR 383 taught by Professor Karlmoore during the Winter '08 term at McGill.

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Ch 8 - Foreign Exchange & International Financial...

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