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Minimal disclosure of negative information Verspreiden niet toegestaan | Gedownload door Sybe klaas Kappe ([email protected])lOMoARcPSD|105219
§Green washing ›Disclosures insufficient and low in credibility §Lack independent verification of performance §Numbers inconsistent thought the years ›Difference between accountability and forced accountability, where spirit of the latter may not exist Chapter 8 – The Market for Foreign Exchange (Week 5) Foreign Exchange means the money the money of a foreign country; that is, foreign currency bank balances, banknotes, checks and drafts. A foreign exchange transactionis an agreement between a buyer and a seller that fixed amount of one currency will be delivered for another currency at a specified rate. Market Participants • Foreign exchange dealers • Individuals and firms • Speculators and arbitragers • Central bank • Foreign exchange brokers A foreign exchange quotation (or quote) is a statement of willingness to buy or sell at an announced rate. • Direct vs. Indirect • American vs. European • Bid vs. Ask • Spot vs. Forward and Swap Verspreiden niet toegestaan | Gedownload door Sybe klaas Kappe ([email protected])lOMoARcPSD|105219
A direct quote is a home currency price of a unit of foreign currency. An indirect quote is a foreign currency price of a unit of home currency. Home currency appears on top àDirect quote Home currency appears on bottom àIndirect quote The foreign currency price of one dollar àEuropean terms The dollar price of a unit of foreign currency àAmerican terms A bid is the price (i.e. exchange rate) in one currency at which a dealer will buy another currency. An ask is the price (i.e. exchange rate) at which a dealer will sell the other currency. Dealers bid at one price and ask at a slightly higher price, making their profit from the spread between the buying and selling prices. Forward rates are typically quoted in points, which is the deviation from the spot rate. A forward quotation expressed in points is not a foreign exchange rate as such. • Forward quotations may also be expressed as the percent-per-annumdeviation from the spot rate. • The forward premium or discountis the percentage difference between the spot and forward exchange rate, stated in annual percentage terms. Verspreiden niet toegestaan | Gedownload door Sybe klaas Kappe ([email protected])lOMoARcPSD|105219
• Many currency pairs are only inactively traded, so their exchange rate is determined through their relationship to a widely traded third currency (cross rate). • What is the exchange rate between Argentina Peso (Ps) and Chinese Yuan (CN¥)? If we know about Ps/$ and ¥/$, then we can calculate Ps/CN¥ Verspreiden niet toegestaan | Gedownload door Sybe klaas Kappe ([email protected])lOMoARcPSD|105219
Chapter 9 – International Parity Relationships (Week 5) The economic theories that link exchange rates, price levels (inflation rates), and interest rates together are called international parity conditions. If the identical product or service can be: