...FINANCE FINAL EXAM HOW THE TRANSACTION (SUPPLY AND DEMAND) OF CURRENCY TAKES PLACE IN THE FOREIGN EXCHANGE MARKET By ABIOLA BAKARE MONROE COLLEGE MBA FINANCE Foreign exchange markets facilitate the trade of one foreign currency for another. Most exchanges are made in bank deposits and involve U.S. dollars. Over a trillion dollars in foreign exchange trades take place every day; foreign exchange dealers handle most transactions. Businesses, financial institutions, governments, investors, and individuals use the foreign exchange markets to adjust their currency holdings. The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. In terms of volume of trading, it is by far the largest market in the world. The main participants in this market are the larger international banks. Financial centers around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market”...
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...What is Stock Exchange? , Features of Stock Exchange | 4-5 | Stock Market in Bangladesh, Securities and Exchange Commission | 5-6 | Dhaka Stock Exchange (DSE)& Chittagong Stock Exchange (CSE) | 5-6 | Structure of Bangladesh Stock Market & Settlement | 6-7 | Stock market crash in 1996 | 7-8 | Reasons Behind the Stock market crash in 1996 | 8-9 | Stock market crash in 2010 | 09-12 | Reasons behind share market crash (2010) | 12-15 | Suggestions to improve the activities of Stock Market | 16-17 | Conclusion | 17 | References | 18 | | ACKNOWLEDGEMENT First of all I want to pay my gratitude to the Almighty Allah for helping me in preparing this paper successfully. Secondly, I want to express my gratefulness to our respective faculty, Dr. Jamal Uddin Ahmed, for providing us continuous support and guidelines to prepare a collaborative formal paper. His contribution to us can only be acknowledged but never be compensated. Furthermore, i want to convey my heartiest thanks to my friends and classmates especially who have helped me a lot with their kind views, assistance and encouragement. At last I want to give thanks to our respected faculty, Dr. Jamal Uddin Ahmed once again for giving me such an opportunity, which has obviously enhanced my Financial Markets and institution’s knowledge and skills to a great extent. Sincerely Yours. Tahasin Monabil Haq 21005 What is Stock Exchange? Stock...
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...Outline features of a futures transaction Review the types of futures contracts available through a futures exchange Identify why participants use derivative markets and how futures are used to hedge price risk Identify risks associated with using a futures contract hedging strategy Explain and illustrate the use of an FRA for hedging interest rate risk 19.1 Derivative contracts- futures and FRA • Future contracts and forward rate agreement (FRAs) are called derivatives because they derive their price form an underlying physical market product • A futures contract is the right to buy or sell a specific item at a specified future date at a price determined today • The risk management function of a derivative-based strategy is to lock-in price today that will apply at a future date. • Two main types of derivative contracts 1. commodity (e.g. gold, wheat and cattle) 2. Financial (e.g. shares, government securities and money market instruments) Hedging using futures contracts • Hedging involves transferring the risk of unanticipated changes in prices, interest rates or exchange rates to another party • The change in the market price of a commodity or security is offset by a profit or loss on the futures contract • Derivative contracts enable investors and borrowers to protect assets and liabilities against the risk of changes in interest rates, exchange rates and share prices • Basic futures strategy rule: conduct a transaction in the futures market today...
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...States is the most significant nation in the world when it comes to international trade. For decades, it has led the world in imports while simultaneously remaining as one of the top three exporters of the world. Main exports are: machinery and equipment, industrial supplies, non-auto consumer goods, motor vehicles and parts, aircraft and parts, food, feed and beverages. U.S. imports non-auto consumer goods, fuels, production machinery and equipment, non-fuel industrial supplies, motor vehicles and parts, food, feed and beverages. Main trading partners are: Canada, European Union, Mexico, China and Japan. |Country |Interest Rate |Growth Rate |Inflation Rate |Jobless Rate |Current Account |Exchange Rate | [pic][pic][pic] |[pic][pic] to |[pic][pic] [pic] [pic][pic] | [pic] | |Jan |Feb |Mar |Apr |May |Jun | |Year | | | | |...
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...stock exchanges namely Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) and an over-the counter exchange operated by CSE. It also consists of a dedicated regulator, the Securities and Exchange Commission (SEC),since, it implements rules and regulations, monitors their implications to operate and develop the capital market. It consists of Central Depository Bangladesh Limited (CDBL), the only Central Depository in Bangladesh that provides facilities for the settlement of transactions of dematerialized securities in CSE and DSE. 2.1 Functions of capital market: The functioning of an efficient capital market may ensure smooth floatation of funds from the savers to the investors. When banking system cannot meet up the total need for funds to the market economy, capital market stands up to supplement. To put it in a single sentence, we can therefore say that the increased need for funds in the business sector has created an immense need for an effective and efficient capital market. It facilitates an efficient transfer of resources from savers to investors and becomes conduits for channeling investment funds from investors to borrowers. T 2.2 Product of capital market: • Shares, • Debentures, • Mutual funds, • Bonds, • Derivatives, • Future and options. 2.3 Player of capital market: • Investors, • PLCs, • Stock Exchange, • Broker & Dealers, • Merchant banks, • Securities and Exchange Commission...
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...American Depositary Receipts (ADRs) | BUS 536 Fall 2012 | 9/12/2012 | Definition American Depositary Receipt (ADR) is a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. Introduction First introduced by the investment house of JP Morgan in 1927, ADRs are simple in concept. In the most basic terms, A United States bank or investment institution places a certain amount of stock of a foreign company into its vaults - the "depositary" part of the name - then allows investors to buy shares in that collection of stocks, priced in US dollars. Those shares, or receipts, can then be traded on regular stock markets almost as though they were shares held directly in the foreign company itself, only the arrangement is better for US investors. Since ADRs are traded in US dollars and are securities that originate within the United States, they carry none of the cross-border fees or other hassles that might ensue if an investor from Peoria were to try to buy stock directly in a South Korean steel mill. The worst most investors have to worry about are small fees, often a few pennies per ADR per year, charged by the depository institution to cover their costs...
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...to place on record our grateful thanks & sincere gratitude to those who gave us valuable advice & inputs for our studies. Our study could not have been completed if we had not have been completed if we had not been able to get the reference material from the company. Whenever & whatever we present today has been made possible by true efforts & kind support of our project guide Mr. Akhilesh Rathi, Head, SNR Securities & Finance, Indore. We express our sincere regards & feel paucity of word to express our utmost gratitude toward him for providing us the necessary resources, worthwhile suggestions & constant guidance. We also like to express our thanks towards other staff members of SNR Securities & Finance who inspired us to put in our best efforts for the completion of the project. PREFACE Financial system is the mirror reflection of an economy. The performance of any economy to a large extent is dependent on the performance of the Financial Institution. Financial system plays an important role by mobilizing saving and allocating them to the most profitable activities, and enables society to make more productive use of its scarce resources. The Financial system consist of many institution, instruments, and markets. Financial Institution range from moneylender to banks, pension funds, insurance companies brokerage house, investment trust and stock exchange. Financial markets are, by nature, extremely volatile and hence the risk factor...
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...Martha Miranda, and Liliana Puentes ECO/372 February 6th ‘13 Moises Rodriguez Abstract The central thesis of this paper is to address the main ideas of how and why the United State’s deficit, surplus and debt have an effect on today’s current events. This paper, will discuss the effects from taxpayer’s, future social security and Medicare users. Also, the unemployed individuals, even our fellow University of Phoenix peers have part in today’s politics. This essay will address the United State’s financial reputation on an international level, a domestic automotive manufacturing, and an Italian clothing company, and the importance behind the Gross Domestic Product (GDP). Fiscal Policy Economics is a daily issue that concerns personal and business financial activity. The United States is known as one of the strongest financial countries. It is complicated to understand how the United States deficit, surplus, and debt can affect the population economy. The economy can affect different areas and individuals, such as taxpayers, unemployment individuals, GDP, importer and exporter companies, college students, social security and Medicare users. The economic is not affecting only the present but will influence in the future financial activity. Unemployed individuals A deficit is a loss under payments and surplus is the excess over payments. Debt is equal to deficit minus surpluses. If the government has a surplus on the budge, it means there is money...
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...STOCK MARKET: Stock Exchange (also called Stock Market or Share Market) is one important constituent of capital market. Stock Exchange is an organized market for the purchase and sale of industrial and financial security. It is convenient place where trading in securities is conducted in systematic manner i.e. as per certain rules and regulations. It performs various functions and offers useful services to investors and borrowing companies. It is an investment intermediary and facilitates economic and industrial development of a country. Stock exchange is an organized market for buying and selling corporate and other securities. Here, securities are purchased and sold out as per certain well-defined rules and regulations. It provides a convenient and secured mechanism or platform for transactions in different securities. Such securities include shares and debentures issued by public companies which are duly listed at the stock exchange, and bonds and debentures issued by government, public corporations and municipal and port trust bodies. STOCK MARKET OF BANGLADESH: Bangladesh has two Stock Exchanges, Dhaka Stock Exchange (DSE), where trading is conducted by Computerized Automated Trading System and Chittagong Stock Exchange (CSE), which is also conducted by Computerized Automated Trading System . All exchanges are self-regulated, private sector entities which must have their operating rules approved by the SEC. The Chairman and Members of the Commission are appointed by...
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...IJAR-BAE ISSN: 1839-8456 Vol. 01. Issue 03. Article No. 05 International Journal of Applied Research in BUSINESS ADMINISTRATION & ECONOMICS Identifying the Critical Issues of Stock Market: A Study on Dhaka Stock Exchange (DSE) Md. Moniruzzaman Sarker1*, Nusrat Nargis2* 1 2 Senior Lecturer, School of Business & Economics, United International University, Bangladesh. Senior Lecturer, Department of Business Administration, Daffodil International University, Bangladesh. *Corresponding author’s email: mrajib.sarker@gmail.com, mishu_fin@yahoo.com Article History Received: 19-05-2012 Accepted: 13-06-2012 Available online: 31-07-2012 ABSTRACT Bangladeshi Stock Market has experienced a big crash twice from its inception. In 1996, the market was crashed because of speculative bubble whereas; it was an asset bubble in the year 2011. The stock price was overvalued this time. Price was inflated about 500-700 percent compare to the face value. DGEN Index climbed at point 8918.51 on December 05, 2010 which signaled a steeper bubble. Our study postulates the present scenario of Bangladesh Stock Market through various quantitative and qualitative data which are extracted from the secondary sources. Quantitative data are gathered from the web site of Dhaka Stock Exchange and other qualitative data are collected from published research journals, newspapers, websites etc. This study has revealed that, Gap between the Demand and Supply of stock, extraordinary over pricing of stock, market...
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...Analysis of return of Bharti Airtel: 6 4. Measurement of central tendency: 6 4.1 Mode: 7 4.2 Median: 7 4.3 Mean 7 5. Conclusion: 8 REFERENCES 10 1.0. Introduction: Generally shares are issued in the primary market and new issued shares are traded in the secondary market. BSE and NSE are two renowned stock exchanges which plays an important role in Indian stock market. Most of the big companies in India are listed in these stock exchanges. The companies are enlisted with these stock exchanges as per rules and regulation specified by particular stock exchanges (Greer and Kolbe, 2008). In Indian context the company distributes the shares in lieu of capital with the help of these stock exchanges. It is an essential pillar of private sector companies. Mallin and Ow–Yong (2009) commented that capital formation is the main function of stock exchanges. Beside the main function stock exchanges in India do lots of work. It provides a place where all the securities are traded. Security market provides a linkage between saving sector and corporate sector. Stock market generally provides the all the information about price and trading of the securities altogether. The author selects three big companies i.e. Reliance industries ltd, ONGC, Bharti Airtel Ltd, to compare as required in the assignment. In this report the author collects financial and statistical data of these companies and analyse them to make reasonable comments on the above companies (CACEIS, 2010). 2.0. Calculations...
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...The United States securities laws and corporate governance system requires that a board of directors supervise the management of each public corporation. The Securities Exchange Act of 1934 created the US Securities and Exchange Commission (SEC). The primary mission of the US Securities and Exchange Commission is to protect investors and maintain the integrity of securities markets. The SEC oversees corporate disclosure of information to the investing public. Public companies in the United States with more than $10 million in assets and whose securities are held by more than 500 owners are required to file annual and quarterly statements (Forms 10K and 10Q) with the SEC. These forms are supposed to disclose information about such public companies financial condition and business practices. This disclosure is expected to help investors make informed investment decisions. To restore the investing public’s faith in capital markets, Congress passed the Securities Act of 1933 and Securities Exchange Act of 1934. These laws were designed to restore investor confidence in U.S. capital markets by providing for more structure and oversight. American Journal of Business Fall 2002: Vol. 17 No. 2 The Social Impact of Business Failure: Enron Uma V. Sridharan, Lander University Lori Dickes, Lander University W. Royce Caines, Lander University According to Merriam Webster Online, law is "a binding custom or practice of a community; a rule of conduct or action prescribed or formally...
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...Nominal interest rate-the growth rate of your money. Real interest rate- the growth rate of your purchasing power. the real rate of interest is the nominal rate reduced by the loss of purchasing power resulting from inflation. the approximation rule overstates .The approximation rule is more exact for small inflation rates and is perfectly exact for continuously compounded rates. rr=rn-i ;rr=(rn-i)/1+i; conventional certificates of deposit offer a fuaranteed nominal rate of interest; Because future inflation is risky, the real rate of return is risky even when the nominal rate is risk free. Supply, Demand and governement actions determine the real interest rate. The nominal interest rate is expected inflation. Increase the government's budget deficit, increasing borrowing demand, shift right; a forecast higher than previously expected, shift supply right.rn=rr+E(i) Fisher equation when real rates are stable, changes in nominal rate ought to predict change in flation rates. rn(1-t)-i= (rr+i)(1-t)-i=rr(1-t)-it EAR effective annual rate defined as the percentage increase in funds invested over a 1 year horizon.1+EAR=(1+ rate per period)*n=(1+APR/N)*n=(1+rf(T))*1/T. Annualized rates on short-term investment often reported using simple rather than compound interest.APR=!!! Continuous compounding, the total return scales up in direct proportion to the time period. HPR-holding-period-return, rate of return over given investment period HPR=Ending price-Beginning price+Dividend/Beginning...
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...e Finance Notes: Week 1 (Chapter 1) The Financial System Chapter Aims • Outline the functions of the Australian financial system • Identify the elements of the Australian financial system Overview of Financial Systems • A financial system facilitates financial transactions through the creation and transfer of financial assets • The key elements of the Australian financial system are □ Financial instruments □ Financial markets □ Financial institutions Functions of a Financial System • Facilitates the efficient flow of funds between lenders and borrowers via financial instruments • Allows individuals to allocate funds according to current and future consumption • Facilitates the implementation of government monetary policy Financial Instruments • Attributes of financial instruments □ Return or yield □ Risk □ Liquidity □ Time pattern of cash-flows 1. Equity □ Shares represent an ownership position □ An entitlement to share in the profits of the organisation □ Equity types – Ordinary shares – Preference shares – Quasi-equity instruments 2. Debt □ Debt instruments represent a contractual claim on the borrower to make specific payments in the form of interest and principal amounts □ Debt may be issued with a fixed or floating interest rate, or at a discount, secured or unsecured, short or long-term 3. Derivates □ Derivate instruments...
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...long positions of 1 million US dollars and 1 million Swiss Francs. The closing exchange rates yesterday were AU$1.5/US$ and AU$1/SWF. The historical average value of daily exchange rate return is zero for both AU$/US$ and AU$/SWF. The standard deviations of daily exchange rate return for AU$/US$ and AU$/SWF are 50 basis points and 100 basis points respectively. The historical correlation between the two exchange rate returns is 0.5. a) If the daily exchange rate returns for both AU$/US$ and AU$/SWF follow a normal distribution and independent across dates (i.e., the serial correlation in daily exchange rate returns is zero), what is 10-day VaR for the bank’s aggregate holdings of two currencies? b) Assume for this question that the daily exchange rate returns for AU$/SWF do not follow a normal distribution and not independent across dates either. Based on the historical data, there is typically 5% of chance that SWF will depreciate by more than 150 basis points relative to AU$ in 10 days, and there is also 5% of chance that SWF will appreciate by more than 100 basis points relative to AU$ in 10 days. What is 10-day VaR for the bank’s SWF position? 2. Foreign exchange risk a) OZ Bank issues a one-year Australian certificate of deposit to finance a US$1 million investment in one-year fixed rate U.S. bonds. The interest rate of AU$ CD is 5% per annum. and the yield to maturity of the US bond is 10% per annum. Currently, spot exchange rates are...
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