Teoria

Chapter 5
SWIFT: The Society for Worldwide Interbank Financial Telecommunications.
CHIPS: Clearing House Interbank Payments System
ECHO Exchange Clearing House Limited, the first globalclearinghouse for settling interbank FX transactions.
Market Microstructure refers to the mechanics of how a marketplace operates.
The Forward Market
Forward Rate Quotations, Long and Short ForwardPositions, Forward Cross Exchange Rates, Swap Transactions, Forward Premium
A swap is an agreement to provide counterparty with something he wants in exchange for something that you want.
A forwardcontract is an agreement to buy or sell an asset in the future at prices agreed upon today
The forward market for FX involves agreements to buy and sell foreign currencies in the future at prices agreedupon today.
Chapter 6
The term arbitrage can be defined as the act of simultaneously buying and selling the same or equivalent assets or commodities for the purpose of making certain, guaranteedprofit.
Interest Rate party (IRP) is an arbitrage condition that must hold when international financial markets are in equilibrium
LOP- LAW OF ONE PRICE --- IRP is a manifestation of the LOP applied tointernational money market instruments and can be derived by constructing and arbitrage portfolio, which involves no net investments and no risk.
FISHER EFFECT – holds that an increase (decrease) inthe expected inflation rate in a country will cause a proportionate increase (decrease) in the interest rate in the country
The efficient market hypothesis: Suppose that the foreign exchange marketsare efficient, this means that the current exchange rate has already reflected all relevant information, the exchange rate will then change only when the market receives new information.
Chapter 8Forward Market Hedge
If you are going to owe foreign currency in the future, agree to buy the foreign currency now by entering into long position in a forward contract.
If you are going to receive...