Define how fx futures market be used for price discovery, Financial Management

Assignment Help:

How can the FX futures market be used for price discovery?

Answer:  To the amount that FX forward prices are an unbiased predictor of future spot exchange rates, the market anticipates if one currency will be grateful for or depreciate versus another.  Since FX futures contracts trade in an expiration cycle, dissimilar contracts expire at different periodic dates into the future.  The pattern of the prices of these contracts offers information like to the market’s current belief about the relative future value of one currency versus other at the scheduled expiration dates of the contracts.  One will usually see a steadily appreciating or depreciating pattern; though, it may be mixed at times.  So, the futures market is useful for price discovery that is obtaining the market’s forecast of the spot exchange rate at dissimilar future dates.


Related Discussions:- Define how fx futures market be used for price discovery

Assignment, 1. If Robinson wishes to maximize its total market value, would...

1. If Robinson wishes to maximize its total market value, would you recommend that it issue debt or equity to finance the land purchase? Explain. 2. Construct Robinson’s market va

What is the requirement of working capital, Q. What is the requirement of W...

Q. What is the requirement of Working Capital? Ans. Meaning of Working Capital: - Working capital management is a significant aspect of financial management. In business money

Exchange rate uncertainty affect firm exchange risk exposure, The exchange ...

The exchange rate uncertainty may not essentially mean that firms face exchange risk exposure. Describe why this may be the case. Answer:  A firm can comprise a natural hedging p

How cash flow problems arise, Q. How cash flow problems arise? It is si...

Q. How cash flow problems arise? It is significant first to distinguish between profitability and cash availability. The key scheme relates to insolvency since even profitable

Working capital mini qs, Q. Working capital mini Qs? During January 20X...

Q. Working capital mini Qs? During January 20X4, Gazza Ltd made credit sales of £30,000 that have a 25% mark up. It also purchased £20,000 of inventories on credit. Calculat

Case study.., This case has been framed in order to test the skills in eval...

This case has been framed in order to test the skills in evaluating a credit request and reaching a correct decision. Perluence International is large manufacturer of petroleum and

Problems arising due to the existing structure, Problems Arising Due to the...

Problems Arising Due to the Existing Structure The problems that arise as a result of an increase in the population of older generation is universal in nature. Unless there are

What is the modigliani-miller''s irrelevance hypothesis, What is the Modigl...

What is the Modigliani-Miller's irrelevance hypothesis in dividend decision making? Critically evaluate its assumption.

13 basic ratios, What its the net income? Total current assets, plant and e...

What its the net income? Total current assets, plant and equipment, net plant and equipment, our net account receivable?

Examine about the risk-based auditing, Examine about the Risk-based auditin...

Examine about the Risk-based auditing A risk based audit will be reviewing the risk management process and considering main risks of the organisation as a whole. Risk manage

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd