Summary of the Chapter 本章要点
1.Definition of foreign exchange
2.Types of foreign exchange:
free exchange, account exchange
trade exchange, invisible trade exchange
spot exchange, forward exchange
3.Foreign exchange rate:
term currency/price currency
unit currency/base currency
direction quotation/indirect quotation
4. system of foreign exchange rate: fixed~ floating~
5.Definition of foreign exchange market
6.Main participants in the foreign exchange rate:
largest commercial banks and securities dealers
small banks/multi-national corporations
large hedge funds/retail market makers/central banks
7.Foreign exhcange transactions:
spot transactions
forward transactions
futures
options
8.Theories of exchange rate determination:
PPP (purchasing power parity)
Interest rate parity
Balance of Payments Model
Asset Market Model

