FMI7e_ch16Foreign Exchange Derivative Markets(金融市场好机构—7e, by Jeff Madura)).pdf

Chapter 16 Foreign Exchange DerivativeDerivative MarketsMarkets Financial Markets and Institutions, 7e, Jeff Madura Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved. 1 Chapter Outline  Background on foreign exchange markets  FactorsFactors affectingaffecting exchangeexchange ratesrates  Movements in exchange rates  Forecasting exchange rates  Forecasting exchange rate volatility  Speculation in foreign exchange markets  ForeignForeign eexchangechange deriderivatiativeses  International arbitrage  ExplainingExplaining priceprice movementsmovements ofof foreignforeign exchangeexchange derivatives 2 BackgroundBackground onon ForeignForeign ExchangeExchange Markets  Foreign exchange markets consist of a global telecommunicationstelecommunications networknetwork amongamong largelarge commercialcommercial banks that serve as financial intermediaries  Banks are located in New York, Tokyo, Hong King, Singapore, FFrankfkfurtt, ZZuriichh, andd LLonddon  The bid price is always lower than the ask price  InstitutionalInstitutional useuse ofof foreignforeign exchangeexchange marketsmarkets  The degree of international investment by financial institutions is influenced by potential return, risk, and government regulations  IInstittitutitions are iincreasiing ththeiir use off ththe fforeiign exchhange markets because of reduced information and transaction costs 3 BackgroundBackground onon ForeignForeign ExchangeExchange Markets ((cont’d)) Financial