FINS 3616_Additional Week2 LectureNotes

FINS 3616_Additional Week2 LectureNotes - The image cannot...

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Unformatted text preview: The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the fle again. IF the red x still appears, you may have to delete the image and then insert it again. ¡¢£ FINS 3616 Week 2 Chapters 3 & 4 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the fle again. IF the red x still appears, you may have to delete the image and then insert it again. ¡¢£ Somewhat of an Introduc>on • Just Fnished at the University of Washington in the US and arrived in Australia the 15 th • Slides will generally be up late in the week (prior to class) • Consulta>on hours will be Wednesday, 1:00-2:00pm and by Appointment • Office: ASB 355 • Email: [email protected] The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the fle again. IF the red x still appears, you may have to delete the image and then insert it again. ¡¢¡ Week 2 • Foreign Exchange and Eurocurrency Markets – Ref: Chapter 3 • The International Parity Conditions – Ref: Chapter 4 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the fle again. IF the red x still appears, you may have to delete the image and then insert it again. ¡¢£ Chapter 3 Foreign Exchange and Eurocurrency Markets Learning objectives P The Eurocurrency market P The foreign exchange market – Foreign exchange rates and quotations – Exposure to currency risk – Hedging exposure to currency risk – The empirical behavior of exchange rates #VUMFS ¤ .VMUJOBUJPOBM 'JOBODF $IBQUFS ¡ 'PSFJHO &YDIBOHF BOE &VSPDVSSFODZ .BSLFUT The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the fle again. IF the red x still appears, you may have to delete the image and then insert it again. ¡¢£ Notation Upper Case Symbols = Prices lower case symbols = changes in a price P t d = price of an asset in currency d at time t p d = inflation rate in currency d (% change in CPI) i d = nominal interest rate in currency d é d = real interest rate in currency d S t d/f = spot exchange rate at time t between d and f s t d/f = change in the spot rate during period t F t d/f = forward exchange rate between d and f f t d/f = change in the forward rate during period t ✓ Financial markets The Eurocurrency market The foreign exchange market The empirical behavior of exchange rates Notation ✓ Moving value across currencies and over time Characteristics of financial markets #VUMFS ¤ .VMUJOBUJPOBM 'JOBODF The image cannot be displayed....
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This note was uploaded on 08/06/2011 for the course FIN 3616 taught by Professor Henry during the Three '11 term at University of New South Wales.

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FINS 3616_Additional Week2 LectureNotes - The image cannot...

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