Forward Quotations from Forward Points
Forward Quotations The points on a forward rate quote are the differences between the spot exchange rate quote and the forward exchange rate quote. These points are scaled to relate to the last decimal in the spot quote. It is…
Calculate and Interpret Currency Cross-rates
Spot Exchange Rates It is possible to back out the cross rates given two exchange rates involving three currencies. Considering a foreign exchange market with the exchange rate between the South African rand and the Chinese yuan, this market can…
Percentage Change in a Currency Relative to Another Currency
Calculating Percentage Appreciation/Depreciation To calculate the percentage change, one needs to clearly understand the base currency and the price currency. Let’s take the Chinese Yuan (CNY) and South African Rand (ZAR) example. The ZAR/CNY exchange rate increased from 1.6459 to…
The Foreign Exchange Market
Functions of the Foreign Exchange Market The foreign exchange market facilitates the international trade of goods and services. Companies and individuals from different countries need to conduct business transactions in foreign currencies.
Exchange Rates
The term exchange rate refers to the price of one currency in relation to another currency. For example, the exchange rate between the Chinese Yuan (CNY) and the South African Rand (ZAR) is 1.93. This means that the base currency,…
Calculate the Forward Rate in Each Currency
Spot market currencies are exchanged for immediate delivery in the forward rate market, whereas contracts are made to sell or buy currencies for future delivery. For example, when a company in the U.S. buys goods from England valued in British…
Movements Along and Shifts in Aggregate Demand and Supply Curves
Aggregate demand (AD) and aggregate supply (AS) curves address economic issues such as expansions and contractions of the economy, causes of inflation, and changes in unemployment levels. Movements along these curves are caused by price level variations, while shifts of…
Hedge Funds
Hedge funds employ strategies to offer their investors absolute returns (net of fees and taxes). These private funds are actively managed and employ aggressive strategies across asset classes. Characteristics of Hedge Funds Hedge funds invest in many different asset classes,…
Natural Resources
Commodities and raw land are the two main categories of natural resources for investment purposes. Commodities Commodities are tangible goods that can be standardized in quality, location, and delivery in the process of investing. Commodities may be classified as hard…
Infrastructure Investments
Infrastructure investments consist of real, long-lived, and capital-intensive assets. They provide essential services to the public. Examples include airports and healthcare facilities. Infrastructural investments have increased due to demand-side growth as well as supply-side growth. Many investors are investing in infrastructure…
