Professional Documents
Culture Documents
CH 07
CH 07
Financial Markets
Learning Objectives
To understand how currencies are traded and quoted on world financial markets To examine the links between interest rates and exchange rates To understand the similarities and differences between domestic sources of capital and international sources of capital To examine how the needs of individual borrowers have changed the nature of the instruments traded on world financial markets in the past decade To understand how the debt crises of the 1980s and 1990s are linked to the international financial markets and exchange rates
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Every market, every country, and every firm may have its own set of currency symbols
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Indirect quotation:
when the subject currency is stated second
Forward rates:
when the currency exchange takes place at a later date and at an agreed upon exchange rate
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rate
simply the rate that equalizes the price of the identical product or service in two different currencies
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Under this standard, each countrys currency would be set in value per ounce of gold
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Monetary Fund
The establishment of a bank, the World Bank, that would provide funding for long-term development projects
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The Euro
On December 31, 1998, the final fixed rates between the 11 currencies and the euro were put into place On January 1, 1999,the euro was officially launched as a single currency for the European Union The monetary policy for the EMU will be conducted by the European Central Bank (ECB) and has a single responsibility of safeguarding the stability of the euro On January 4, 1999, the euro began trading on world currency markets
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Representative bank:
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Private Placements
One of the largest and unpublicized capital markets A private placement is the sale of debts or equity to a large investor
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