跨国金融原理(第三版)教师手册 M05_MOFF9242_03_IM_C05.pdfVIP

Chapter5

TheForeignExchangeMarket

Questions

1.Definitions.Definethefollowingterms:

a.

moneyofonecountryisexchangedforthatofanothercountry,therateofexchangebetween

currenciesisdetermined,andforeignexchangetransactionsarephysicallycompleted.

b.Aforeignexchangetransactionisanagreementbetweenabuyerandsellerthatafixedamount

ofonecurrencywillbedeliveredforsomeothercurrencyataspecifiedrate.

c.

banknotes,checks,anddrafts.

2.FunctionsoftheForeignExchangeMarket.Whatarethethreemajorfunctionsoftheforeign

exchangemarket?

a.Totransferpurchasingpowerfromonecountryanditscurrencytoanother.Typicalparties

wouldbeimportersandexporters,investorsinforeignsecurities,andtourists.

b.Tofinancegoodsintransit.Typicalpartieswouldbeimportersandexporters.

c.Toprovidehedgingfacilities.Typicalpartieswouldbeimporters,exporters,andcreditors

anddebtorswithshort-termmonetaryobligations.

3.MarketParticipants.Foreachoftheforeignexchangemarketparticipantsidentifytheirmotive

forbuyingorsellingforeignexchange.

a.Foreignexchangedealersarebanksandafewnon-bankinstitutionsthat“makeamarket”

inforeignexchange.Theybuyandsellforeignexchangeinthewholesalemarketandresell

orrebuyitfromcustomersataslightchangefromthewholesaleprice.

b.Foreignexchangebrokers(nottobeconfusedwithdealers)actasintermediariesinbringing

offerpricesofmanydealersveryquickly.

c.Individualsandfirmsconductinginternationalbusinessconsistprimarilyofthreecategories:

importersandexporters,companiesmakingdirectforeigninvestments,andsecuritiesinvestors

buyingorsellingdebtorequityinvestmentsfortheirportfolios.

d.

changeintheimmediateorspec