TAILIEUCHUNG - Lecture Financial markets and institutions - Chapter 16: Foreign exchange derivative markets

In this chapter you will learn: Background on foreign exchange markets, factors affecting exchange rates, movements in exchange rates, forecasting exchange rates, forecasting exchange rate volatility, speculation in foreign exchange markets, foreign exchange derivatives, international arbitrage, explaining price movements of foreign exchange derivatives. | Chapter 16 Foreign Exchange Derivative Markets Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. Chapter Outline Background on foreign exchange markets Factors affecting exchange rates Movements in exchange rates Forecasting exchange rates Forecasting exchange rate volatility Speculation in foreign exchange markets Foreign exchange derivatives International arbitrage Explaining price movements of foreign exchange derivatives Background on Foreign Exchange Markets Foreign exchange markets consist of a global telecommunications network among large commercial banks that serve as financial intermediaries Banks are located in New York, Tokyo, Hong King, Singapore, Frankfurt, Zurich, and London The bid price is always lower than the ask price Institutional use of foreign exchange markets The degree of international investment by financial institutions is influenced by potential return, risk, and government regulations Institutions are increasing their use of the foreign exchange markets because of reduced information and transaction costs Background on Foreign Exchange Markets (cont’d) Financial Institution Participation in Foreign Exchange Market Commercial banks Serve as financial intermediaries in the foreign exchange market by buying or selling currencies Speculate on foreign currency movements by taking long positions in some currencies and short positions in others Provide forward contracts to customers Offer currency options to customers, which can be tailored to a customer’s specific needs International mutual funds Use foreign exchange markets to exchange currencies when reconstructing their portfolios Use foreign exchange derivatives to hedge a portion of their exposure Brokerage firms and investment banking firms Engage in foreign security transactions for their customers or for their own accounts Background on Foreign Exchange Markets (cont’d) Financial .

• Tài chính doanh nghiệp
• Financial markets
• Lecture Financial markets
• Thị trường tài chính
• Foreign exchange derivative markets
• Foreign exchange markets
• Exchange rates
• Financial futures markets
• Valuation of financial futures
• Interest rate futures
• Financial institutions
• Lecture Financial markets and institutions
• Financial institutions markets
• Capital markets
• Money markets
• Derivative securities markets
• Futures markets
• Option markets
• Swap markets
• Bank management
• Types of Financial Markets
• Securities traded
• Valuation of securities
• Money market yields
• Bond markets
• Municipal bonds
• Mortgage markets
• Primary mortgage market
• Stock markets
• Common stock
• Foreign exchange
• Commercial banks
• Financial statements
• Risks at financial institutions
• Market risk
• Economics 252
• Efficient markets
• Excess volatility
• Efficient Markets Hypothesis
• Interest rate derivative markets
• Interest rate swaps
• Mortgage backed securities
• Globalization of mortgage markets
• Financial markets and institutions
• The financial system
• Interest rates change
• Financial markets efficient
• Term structure affect interest rates
• The stock market
• The mortgage markets
• The international financial system
• Financial regulation
• Interest rate fundamentals
• Interest rates
• Security valuation