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Explain how derivative trading works throughout the world
and the effect of derivative trading on global financial development.
Step by step
Solved in 2 steps
- Critically discuss key functions and role of international derivative marketsexplain the nature of potential risk in international transactions and critically discuss how international traders might manage such risks via the derivative marketsWhat is the difference (term of investment) between Money Market, Bond Market, Equity Market, Foreign Exchange Market and Derivatives Market?
- What is an arbitrage opportunity? What types of arbitrage strategies are used by foreign exchange traders? Describe and discuss.Explain the key characteristics of trading in the foreign exchange market, according to the BIS(Bank for International Settlements) surveysDiscuss the requirements for the establishment of the commodities and derivatives markets. In your discussion, evaluate the extent of European Stock Market readiness for investment in commodities and derivatives trading
- Explain how changes in interest rates are likely to affect exchange rates.Explore the concept of arbitrage on the currency exchange markets and critically evaluate with examples.What is the difference (description) between Money Market, Bond Market, Equity Market, Foreign Exchange Market and Derivatives Market?
- Briefly describe the reasons for the development and growth of the European money market. Explain how the international money, credit, and bond markets differ from one another.What is the difference (financial instruments traded) between Money Market, Bond Market, Equity Market, Foreign Exchange Market and Derivatives Market?Explain the nature of potential risks in international transactions and critically discuss how international traders might manage such risks via the derivative markets. b. Critically examine why a firm should consider hedging net payables or net receivables with currency options rather than: (i) forward contracts, and (ii) future contracts. c. What are the advantages or the disadvantages of hedging with currency options as opposed to future contracts in international financial transactions?(Give examples and use relevant financial charts to illustrate your answer).
