ch07 - 1 Multinational Financial Management Alan Shapiro 9...

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Unformatted text preview: 1 Multinational Financial Management Alan Shapiro 9 th Edition J.Wiley & Sons Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton 2 CHAPTER 7 The Foreign Exchange Market 3 INTRODUCTION I. INTRODUCTION A. The Currency Market Definition: a place where money denominated in one currency is bought and sold with money denominated in another currency 3 4 INTRODUCTION B. International Trade and Capital Transactions: facilitated with the ability to transfer purchasing power between countries 4 5 INTRODUCTION C. Location 1. OTC-type: no specific location 2. Most trades by phone, telex, or SWIFT SWIFT: Society for Worldwide Interbank Financial Telecommunications 5 6 ORGANIZATION OF THE FOREIGN EXCHANGE MARKET I. PARTICIPANTS IN THE FOREIGN EXCHANGE MARKET A. Participants at 2 Levels 1. Wholesale Level (95%)- major banks 2. Retail Level- business customers 6 7 ORGANIZATION OF THE FOREIGN EXCHANGE MARKET B.Two Types of Currency Markets 1. Spot Market:- immediate transaction- recorded by 2nd business day 7 8 ORGANIZATION OF THE FOREIGN EXCHANGE MARKET 2. Forward Market:- transactions take place at a specified future date 8 9 ORGANIZATION OF THE FOREIGN EXCHANGE MARKET C. Participants by Market 1. Spot Market a. commercial banks b. brokers c. customers of commercial and central banks 9 10 ORGANIZATION OF THE FOREIGN EXCHANGE MARKET 2. Forward Market a. arbitrageurs b. traders c. hedgers d. speculators 10 11...
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This note was uploaded on 01/24/2011 for the course FINS 5516 taught by Professor A during the Three '10 term at University of New South Wales.

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ch07 - 1 Multinational Financial Management Alan Shapiro 9...

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