A Foreign exchange
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Treasury Investment and Risk Management — Treasury Investment and Risk Management.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the foreign exchange market?
The foreign exchange market (forex) is a global decentralized market where national currencies are bought and sold against each other, operating 24 hours a day across different time zones.
What is the 'purchasing power parity' (PPP) theory in foreign exchange?
Exchange rates adjust to equalize purchasing power across countries.
What does the term 'exchange rate' mean in foreign exchange?
An exchange rate is the price of one country's currency expressed in terms of another country's currency, determined by supply and demand forces in the forex market.
What is 'interest rate parity' (IRP) in the context of foreign exchange?
Forward rate reflects interest rate differential between two currencies.
What is a 'spot transaction' in the foreign exchange market?
A spot transaction is an agreement to buy or sell foreign currency for immediate delivery, with settlement typically occurring within two business days (T+2) of the deal date.
What does 'revaluation' of a currency mean?
Official increase in a fixed exchange rate's value by the government.
How is a 'forward exchange contract' defined?
A forward exchange contract is an agreement to buy or sell a specified amount of foreign currency at a predetermined exchange rate on a future date, used to hedge against exchange rate risk.
What is 'devaluation' of a currency?
Official reduction in fixed exchange rate's value by the government.
Video classes for this chapter
More chapters in [UPDATED] Treasury Investment
Master the full TREASURYINVE syllabus
Every chapter of Treasury Investment and Risk Management — videos, tests, notes and one-liner decks in one place.