Transcription of Chapter 1 International Financial Markets: Basic Concepts
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Chapter 1 International Financial Markets: Basic ConceptsIn daily life, we find ourselves in constant contact with internationally traded goods. If youenjoy music, you may play a manufactured CD of music by a Polish composer througha Japanese amplifier and British speakers. You may be wearing clothing made in China oreating fruit from Chile. As you drive to work, you will see cars manufactured in half a dozendifferent countries on the visible in daily life is the International trade in Financial assets, but its dollar volumeis much greater.
Foreign exchange is highly liquid assets denominated in a foreign currency. In principle these assets include foreign currency and foreign money orders. However most foreign ex-change transactions are purchases and sales of bank deposits. A foreign exchange rate is the price of one nation’s currency in terms of another’s.
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