tailieunhanh - Lecture Multinational financial management - Topic 4: Institutional foreign exchange spot and forward markets

In this chapter, the learning objectives are: students understand and can recall the size and composition of institutional (interbank) forex market; students can calculate currency exchange cashflows using direct and indirect quotes and bid-ask prices, forward quotes, premiums and discounts. | Topic 4: Institutional Foreign exchange Spot and forward Markets L. Gattis The Pennsylvania State University Finance 407: Multinational Financial Management 1 Review Poll 2 You withdrawal Kr500 from an ATM in Copenhagen. The institutional market rate is $ and the banks has a markup of . Your bank charges a $10 foreign ATM fee and the foreign bank charges a Kr20 ATM fee. How many dollars were withdrawn? $2, $ $ $ None of the above. Learning Objectives 3 Learning Objectives Students understand and can recall The size and composition of institutional (interbank) forex market Students can calculate Currency exchange cashflows using direct and indirect quotes and bid-ask prices Forward quotes, premiums and discounts The Foreign Exchange (Forex) Market 4 Unlike a centralized exchange such as the NYSE, the forex market is not a physical place, but a network of banks, dealers, and brokers. Average daily value of trades Long-term corporate bonds: $20 billion | Topic 4: Institutional Foreign exchange Spot and forward Markets L. Gattis The Pennsylvania State University Finance 407: Multinational Financial Management 1 Review Poll 2 You withdrawal Kr500 from an ATM in Copenhagen. The institutional market rate is $ and the banks has a markup of . Your bank charges a $10 foreign ATM fee and the foreign bank charges a Kr20 ATM fee. How many dollars were withdrawn? $2, $ $ $ None of the above. Learning Objectives 3 Learning Objectives Students understand and can recall The size and composition of institutional (interbank) forex market Students can calculate Currency exchange cashflows using direct and indirect quotes and bid-ask prices Forward quotes, premiums and discounts The Foreign Exchange (Forex) Market 4 Unlike a centralized exchange such as the NYSE, the forex market is not a physical place, but a network of banks, dealers, and brokers. Average daily value of trades Long-term corporate bonds: $20 billion . Stock exchanges: $105 billion Mortgage-backed Securities: $250 billion Currencies: $ trillion! (includes spot, forward, and swap transactions, 2001) Forex Activity Travels Around the Globe, 24-hours per day 5 Tokyo Open London Open New York Open Forex Activity Primarily Takes Place in the ., followed by the . 6 The . Dollar Is The Most Traded Currency 7 Spot Transactions and Swaps are the most frequent Transactions – followed by forwards 8 Swaps are forward contracts with multiple delivery dates. For latest data see: Currency Dealers 9 9 Traders with The Sumitomo Bank, Ltd. specializing in yen and the German mark, work at computer terminals Wednesday, June 17, 1998 in New York. In the latest sign of the seriousness of the Asian crisis, the United States intervened in currency markets Wednesday to prop up the flagging Japanese currency. . stocks soared on what investors saw as a hopeful sign that authorities were acting to keep the