International Finance at Keele University | Flashcards & Summaries

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Lernmaterialien für International Finance an der Keele University

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What are currency swaps?

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Agreement between two parties to exchange two differing forms of payment obligations denominated in two different currencies

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How can you fix the exchange rate?

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Central banks need to sell/buy the exacte difference in the respected currencies

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In which five countries is the foreign exchange trade concentrated?

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1. UK

2. USA
3. Hong Kong

4. Singapore

5. Japan

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What is the structure of the Foreign Exchange Market?

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-Does not have a specific geographical location

-used to be used by traders for goods and services

-Now trades are computer-based

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Define appreciation/depreciation

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Appreciation: one currency's price increases with respect to another currency

Depreciation: one currency's price decreases with respect to another currency 

If a currency's price increases the other currency's price has to decrease

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TESTE DEIN WISSEN

What is the structure of the Foreign Exchange Market?

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TESTE DEIN WISSEN

-Does not have a specific geographical location

-used to be used by traders for goods and services

-Now trades are computer-based

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TESTE DEIN WISSEN

What is the trade flow model?

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-explains the equilibirum value of the exchange rate between two currencies based on the supply and demand of currency

-supply and demand of currencies are in turn based on the international trade between the two countries

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What is the financial account?

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-purchases and sales of financial assets and direct investment

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What is the general rule for cross-currency arbitrage?

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Multiply all factors and if outcome < 1 = buy currencies in denominator and if outcome >1 = sell currencies in denominator

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TESTE DEIN WISSEN

What is the Balance of Payments?

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-records a country's trade in goods, services, and financial assets with the rest of the world

-if all transactions are included, the sum of all credits must equal to the sum of all debits

-credit: entries bring foreign exchange into the country

-debit: entries that foreign exchanges leave the country

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What is the current account?

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-sometimes called balance of trade 

-good imports and good exports + service imports and service exports + primary income + secondary income

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What is the Gold Standard?

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-Metal-based system

-currencies maintain a fixed price relative to gold

-1880-1914

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Beispielhafte Karteikarten für deinen International Finance Kurs an der Keele University - von Kommilitonen auf StudySmarter erstellt!

Q:

What are currency swaps?

A:

Agreement between two parties to exchange two differing forms of payment obligations denominated in two different currencies

Q:

How can you fix the exchange rate?

A:

Central banks need to sell/buy the exacte difference in the respected currencies

Q:

In which five countries is the foreign exchange trade concentrated?

A:

1. UK

2. USA
3. Hong Kong

4. Singapore

5. Japan

Q:

What is the structure of the Foreign Exchange Market?

A:

-Does not have a specific geographical location

-used to be used by traders for goods and services

-Now trades are computer-based

Q:

Define appreciation/depreciation

A:

Appreciation: one currency's price increases with respect to another currency

Depreciation: one currency's price decreases with respect to another currency 

If a currency's price increases the other currency's price has to decrease

Mehr Karteikarten anzeigen
Q:

What is the structure of the Foreign Exchange Market?

A:

-Does not have a specific geographical location

-used to be used by traders for goods and services

-Now trades are computer-based

Q:

What is the trade flow model?

A:

-explains the equilibirum value of the exchange rate between two currencies based on the supply and demand of currency

-supply and demand of currencies are in turn based on the international trade between the two countries

Q:

What is the financial account?

A:

-purchases and sales of financial assets and direct investment

Q:

What is the general rule for cross-currency arbitrage?

A:

Multiply all factors and if outcome < 1 = buy currencies in denominator and if outcome >1 = sell currencies in denominator

Q:

What is the Balance of Payments?

A:

-records a country's trade in goods, services, and financial assets with the rest of the world

-if all transactions are included, the sum of all credits must equal to the sum of all debits

-credit: entries bring foreign exchange into the country

-debit: entries that foreign exchanges leave the country

Q:

What is the current account?

A:

-sometimes called balance of trade 

-good imports and good exports + service imports and service exports + primary income + secondary income

Q:

What is the Gold Standard?

A:

-Metal-based system

-currencies maintain a fixed price relative to gold

-1880-1914

International Finance

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