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| is a market for converting the currency of one country into that of another country |
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| is simply the rated at which one currency is converted into another |
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| or the adverse consequences of unpredictable changes in exchange rates |
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| typically involves the short-term movemnet of funds from one currency to antoher in the hopes of profiting from shifts in exchange rates. |
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| A kind of speculation thta has become more common in recent years |
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| the rate at which a foreign exchange dealer converts one currency into another curency on a particular day. |
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| occurs when two parties agree to exchange currency and execute the deal at some specicfic date in the future |
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| exchange rates governing such future transactions |
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| is the simultaneous purchase and sale of a given amount of foreign exchange for thwo differet value dates. |
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| buying a currency low and selling it high |
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| states that in competitive markets free of transportation costs and barriers to trade (such as tariffs) identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency |
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| has no impediments to the free flow of goods and servieces such as trade barriers |
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states that a countrys "nominal" intrest rate (i) is the sum of th erequired "real" rate of intrest (r) and the expected rate of inflation over the period for which the funds are to be lent (I). More formally
i=r+I |
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| International Fisher Effect |
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Definition
| states that for any two countries the spot exchange rate should change in an equal amount but in the oppsite direction to th edifference in nominal intrest rates bwtwwen the two countries. |
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| traders moving as a herd in the same direcetion at the same time |
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| is one in whihc prices do not reflect all available information |
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| when country's government allows both residents and nonresidents to purchase unlimited amounts of a foreign curreny with it. |
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| when only nonresidents may conbert it into a foreign currency without any limitations |
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| when neither residents nor nonresidents are allowed to convert into a foreign currency |
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| occurs when residents and nonresidents rush to convert their holdings of domestic currency into foreign currency |
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| refers to a rangew of barter like agreements by which goods and services can be traded for other goods and services |
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