Which one of the following is the rate that most international banks charge when they loan Eurodollars to other banks?   Multiple Choice   ADR   LIBOR   Cross-rate

Q: critically discuss main causes of exchange rate volatility in the foreign exchange markets. Please…

A: Exchange rate volatility- It refers to the tendency of a currency of one country  to appreciate or…

Q: Suppose you observe the following exchange rates and interest rates for the USD and THB:    Bid…

A: According interest parity concept forward rate should be in equilibrium with interest rates.

Q: If the spot exchange between Euro and pound is Euro 1.1/Pound, and the UK Guilt returns a 0.5%…

A: Net Yield is the return earned over investment irrespective of any appreciation or depreciation in…

Q: Discuss the possible effects of Ghana’s rising public Debt on the cedi to dollar exchange rate.

A: An exchange rate is the rate at which the currency of home country can be exchanged with the single…

Q: Why do nations use a crawling peg exchange rate system? What role does speculation play in this…

A: A crawling peg is a rate zone within which a fixed-rate exchange rate currency is permitted to vary.…

Q: Which is the rate at which major international banks are willing to offer term Eurodollar deposits…

A: International banks do deposits with each other between Euro and dollar currencies.

Q: If the euro depreciates against the U.S. dollar, can a dollar buy more or fewer euros as aresult?…

A: Answer: Any currencies other than the currency held by the countries are known as international or…

Q: the spot exchange between Euro and pound is Euro1.1/Pound, and the UK Guilt returns a 0.5% yield. It…

A: The formula to compute net yield is as follows:

Q: h of the following is the most likely if the interest rate of the U.S. is lower relative to the…

A: The arbitrage opportunity exist if the interest are not same and if the spot rate and forward are…

Q: How can we obtain a pay-domestic-floating, receive-foreign-fixed currency swap by using a…

A: A currency swap is the exchange of interest (and occasionally principal) in one currency for the…

Q: A bank is quoting the following exchange rates against the dollar for the Swiss franc and the…

A: Cross Rate: Cross Rate is the rate calculated when the direct exchange rate between the currency are…

Q: e the real exchange rate is constant – say, at the level required for net exports (or the current…

A: Nominal exchange rate includes the exchange rate after consideration of inflation and real exchange…

Q: Does interest rate parity imply that interest rates are the same in all countries?

A: Introduction: When an interest rate on a domestic bond is equivalent to the interest rate on a…

Q: How does the deposit insurance help the depositors? What are the pitfalls of the scheme? Can it help…

A: Deposit Insurance is a type of insurance in which the deposit holders are protected from losses if a…

Q: Assume that the U.S. interest rate is 7 percent and the euro’s interest rate is 4 percent. Assume…

A: US interest rate = 7% Euro's interest rate (e) = 4% Euro's forward rate (f) = 2%

Q: _______________ and _____________ are offered by a foreign borrower to investors in a national…

A: Foreign bond: It is the bond issued to holders of bonds by foreign institutions in the domestic…

Q: When European Central Bank, increases the supply of Euro in the forex markets Select one: a. Major…

A: The foreign exchange market is the market where trading of all the currency is take place.

Q: What is the value of a unit of domestic currency against foreign currency? A) Parity B) Exchange…

A: The exchange rate is the percentage of foreign currency in domestic currency units, or, in another…

Q: As a trader in New York's financial district, you are interested in three currencies: US Dollars…

A: Arbitrage means the simultaneous buying and selling of assets in different markets to gain from the…

Q: From your understanding, discuss the advantages and disadvantages of a fixed change rate regime.…

A: The fixed exchange rate regime is an exchange rate that is determined by the government and it will…

Q: Critique the distinctions between foreign bonds and Eurobonds, and explain why the Eurobonds have…

A: A foreign bond is a debt instrument issued in the domestic market by a foreign company in the local…

Q: Generally speaking, how is the dollar price of euros determined? Cite a factor that might increase…

A: Since you have asked multiple questions we will answer first three questions. Repost the remaining…

Q: Define each of the following terms: Multinational corporation Exchange rate; fixed exchange rate…

A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…

Q: Imagine an American MNC. Why it might decide to borrow in a country such as Brazil, where interest…

A: In a region like Brazil with very large interest rates, a multinational company might choose to…

Q: Imagine that the UK had an interest rate of 0.5% and the USA had an interest rate of 0.75%. Which of…

A: Interest rate parity states that the exchange rate between two country's currency depends on the…

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.