1. In what ways might the following be affected by sudden, unexpected changes in exchange rates?
a An American holder of US Treasury bonds
b An American holder of GM stock
c An American on vacation in Mexico
d An American holder of Honda stock
e A Canadian on vacation in the United States
2. What is meant by “shrinkage of economic space”?
3. What are the possible implications of adoption of a common currency such as the euro?
. What are the possible implications of adoption of a common currency such as the euro?
Why are some governments been concerned with the growing importance of multinational corporations?
Do you think that the costs of moving bank notes back to their country of circulation, buying foreign currency bank notes could sometimes be cheaper than buying foreign currency bank notes could sometimes be cheaper than buying bank drafts? Could there be a seasonal pattern in exchange rates for bank notes? (Hint: Think of what is involved in shipping US dollars arising from American spending summers in Europeans vacationing in America)
What do you think that banks give bid and rates when dealing with each other?
Check a recent business newspaper or the business page for spot exchange rates. Form an nxn exchange-rate matrix by computing the cross rates, and check whether S($/£) = 1/S (£/$) and so on.
What is a forward rate?the risk to variability in the amount in the account and in the interest ratethese are the margins and pay a transaction feestandardized contracts that trade like conventional commodity futures on the floor of a futures exchange.the extent to which futures are used to speculate rather than to hedge
How does an ''outright''forward contract differ from a ''swap?''an agreement to exchange consists simply of an agreement to exchange currencies at an agreed price at a future date. , a swap on the other hand, has two components, usually a spot transactions plus a forward transactions in the reverse direction, although a swap could involve two forward transactions in opposite directions.a swap -in Canadian consists of an agreement to buy Canadian dollar spot, and also an agreement to sell Canadian dollars spot, and also an agreement to sell Canadian dollars forward; a swap-out consists of an agreement to sell Canadian dollars spot and to buy Canadian dollars forward.for some dates and currencies, a bank will be short; for other dates and currencies, a bank will be short, having agreed to sell more of these currencies that it has to agree to buy.Forward exchange trades in both outright and swap form, where the latter involves the purchase/sale and subsequent sale /purchase of a curreny.What is an options ''writer?''Do you think that a limit on daily price movements for currency futures would make these contracts more or less risky or liquid? Would a limitation on price movement make the futures contracts difficult to sell during highly turbulent times?Your answerSubmit