Compare and contrast a currency forward contract and a currency futures contract

Q: Define each following terms: i. American terms; European terms j. Direct quotation; indirect…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Explain pegged exchange rates

A: Exchange rate is the value of one country’s currency in exchange of other country’s currency.

Q: The two major translation methods currently used are:      a. Historical exchange rate and…

A: correct option is D i.e. current rate and temporal

Q: What are forward contracts? How can they beused to manage foreign exchange risk?

A: Risk refers to the uncertainty regarding the implications of any activity.

Q: Which of the following refers to the transaction in which the exchange of currencies takes place at…

A: Introduction: Foreign exchange: Buying and selling of different countries currencies called as…

Q: What can be understood from Foreign Exchange Rates?

A: Foreign exchange rate: A foreign exchange rate is the comparative value among two currencies. Merely…

Q: What is basis risk in relation to futures contract hegding?

A: Basis Risk:Basis risk is a financial risk which arises from the incompatibility in the positions of…

Q: In the foreign exchange market, a ‘contract date’ is     the expiry date of a forward contract.…

A: Foreign exchange market is a market place where exchange rate of foreign currencies are determined…

Q: Explain in detail the pricing applications of commodity derivatives.

A: Commodity Derivatives are the financial instruments which are traded on commodity as underlying…

Q: direct and indirect relationships between balance of payment and inflation rate.

A:

Q: Under the fixed exchange rate system, what was the currency against whichall other currency values…

A: Answer: Foreign exchange rate is the currency exchange rate system in which a country’s central bank…

Q: Select the correct definition of indirect exchange rate. O Foreign currency per unit of domestic…

A: The exchange rate is quoted directly and indirectly. 1. Direct Quote means price of one unit of…

Q: What are pegged exchange rates?

A: Pegged exchange rate: It is otherwise called a fixed exchange rate, which is a kind of conversion…

Q: What is foreign trade balance?

A: Answer: A foreign trade balance is nothing but the net dollar value of commodity exports minus…

Q: How is credit risk managed in case of foreign exchange futures contracts? Discuss with the use of an…

A: Credit risk management in foreign exchange (forex) futures contracts is a crucial aspect of…

Q: Define spot rate (foreign exchange)

A: Spot rate (foreign exchange):  Spot rate is the present exchange rate at which a pair of currency…

Q: Broadly defined, the foreign exchange (FX) market encompasses: O a. Foreign trade financing. Ob.…

A: The foreign exchange market is the place where various countries' currencies are purchased and sold…

Q: A foreign currency swap is simply an agreement between two parties to exchange one currency for…

A: Swap is a financial derivative between two parties who agrees to exchange their payment flows for…

Q: What are the main differences between forward contracts and futures contracts. b) What is meant by…

A: Since you have asked multiple questions, we will solve the first question for you. Please ask…

Q: Spot rate; forward exchange rate; discount on foreign currency forward rate; premium on foreign…

A: According to the rule, we will only answer the first three subparts, for the remaining subparts,…

Q: Explain what a currency instrument is? Give examples of such currency instrument

A: Currency Instrument - Currency Instruments are those Instrument which is used globally for the…

Q: Explain the mode of delivery in foreign contracts.

A: It is defined as the delivery as a part of the contract of trade between the seller and the buyer.…

Q: Address the similarity and differences between option and forward/futures contracts.

A: An option contract is referred to as the promise, which used to meet the requirements regarding the…

Q: Differentiate between foreign bonds and Eurobonds.

A: Foreign bonds are generally considered to be unstable as their value is always influenced by various…

Q: What is a convertible currency?

A: Introduction: A convertible currency that might be swapped for a foreign currency. Currency…

Q: How does a futures contract differ from a forward contract?

A: Derivatives: A derivative is defined as a financial instrument whose value is derived from the value…

Q: The holder of a put currency option has the obligation to

A: Option The financial instruments that allow investors to make a profit from the speculations that…

Q: Demonstrate how interest rate and currency swaps are constructed and discuss the comparative…

A: Two parties can exchange cash flows based on various interest rates or currencies using financial…

Q: What is meant by spot rate in case of foreign currency transaction?

A: Spot rate is the rate at which currencies can be exchanged right away. It is the current market…

Q: What is the main purpose of a hedging strategy using a forward contract or a futures contract?…

A: Hedging-It is a risk management strategy undertaken by individuals, investors, corporates to offset…

Q: Factors that determine the value of a currency (exchange rate).

A: The value of a currency, or its exchange rate, is influenced by various economic, political, and…

Q: Briefly discuss the relative advantages and disadvantages of an exchange-traded futures contract…

A: Futures contract is referred to as the legal agreement for purchase or sell of the specified or…

Q: What is a difference between Futures Contract and Forwards Contract?

A: Forward contract: This is an agreement between two parties to trade on a asset at a specified price…

Q: explain the structure of a pay-fixed, receive-fixed currency swap, and describe the cash flows at…

A: It seems like there may be a typo in your question. A pay-fixed, receive-fixed currency swap would…

Regulations Of Foreign Exchange Market