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13 Cards in this Set
- Front
- Back
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Foreign exchange rate |
The price for a currency denominated in another currency. |
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Foreign exchange (FX or forex) market |
A market in which currencies are traded that has no central physical location. |
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Floating rate |
An exchange rate that changes constantly depending on the supply and demand for each currency in the market. |
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Currency forward contract |
A contract that sets a currency exchange rate, and an amount to exchange, in advance. |
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Forward exchange rate |
The exchange rate set in a currency forward contract; if applies to an exchange that will occur in the future. |
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Currency timeline |
Indicates time horizontally by dates (as in a standard timeline) and currencies (as in dollars and euros) vertically. |
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Spot exchange |
The current foreign exchange rate. |
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Cash-and-carry strategy |
A strategy used to lock in the future cost of an asset by buying the asset for cash today, and storing (or "carrying") it until a future date. |
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Covered interest parity equation |
States that the difference between the forward and spot exchange rates is related to the interest rate differential between the currencies.
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Internationally integrated capital markets |
When any investor can exchange currencies in any amount at the spot or forward rates and is free to purchase or sell any security in any amount in an country at its current market prices. |
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Repatriated |
Refers to the profits from a foreign project that a firm brings back to its home country. |
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Segmented capital markets |
Capital markets that are not internationally integrated. |
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Currency swaps |
A contract in which parties agree to exchange coupon payments and a final face value payment that are in different currencies. |
