Lecture 19 - International Corporate finance part 1 Flashcards
1
Q
Bid price
A
Price at which a trader will buy a currency
2
Q
Offer Price
A
The offer/ask price is the price at which a trader will sell a currency
3
Q
Cross rate
A
The implicit exchange rate between two currencies when both are quoted in a third currency
4
Q
Triangular arbitrage
A
The ability to make a riskless profit from converting money across three countries
5
Q
4 types of transactions
A
Spot trade
Forward transaction
Forward rate
Spot exchange rate
6
Q
Spot trade
A
An agreement to exchange currency on the spot within two business days
7
Q
Forward rate
A
An agreement to exchange currency at some time in the future
The exchange rate is agreed now and called the forward exchange rate
8
Q
A
