UNIT 5 - FOREIGN EXCHANGE

Foreign exchange market

The market in which currencies are bought and sold and in which currency prices are determined is called

Currency hedging

The practice of insuring against potential losses that result from adverse changes in exchange rates is called

Currency arbitrage

is the instantaneous purchase and sale of a currency in different markets for profit.

(kinh doanh chênh lệch giá)

Currency speculation

is the purchase or sale of a currency with the expectation that its value will change and generate a profit.

Quoted currency

In a quoted exchange rate, the currency with which another currency is to be purchased is called the

Base currency

In a quoted exchange rate, the currency that is to be purchased with another currency is called the

Spot rate

The exchange rate requiring delivery of the traded currency within two business days is called

Forward rate

The exchange rate at which two parties agree to exchange currencies on a specified future date is called the

Forward contract

is a contract requiring the exchange of an agreed-upon amount of a currency on an agreed-upon date at a specific exchange rate.

Currency swap

A ______ is the simultaneous purchase and sale of foreign exchange for two different dates.

convertible currency/ hard currency

Currency that trades freely in the foreign exchange market, with its price determined by the forces of supply and demand is called a

Gold standard

An international monetary system in which nations linked the value of their paper currencies to specific values of gold was called the

Fixed exchange rate system

A system in which the exchange rate for converting one currency into another is fixed by international agreement is called a

Bretton Woods Agreement

The ______ was an accord among nations to create a new international monetary system based on the value of the U.S. dollar.

World Bank

The agency created by the Bretton Woods Agreement to provide funding for national economic development efforts is called the

The IMF

was the agency created by the Bretton Woods Agreement to regulate fixed exchange rates and enforce the rules of the international monetary system.

Managed float system

An exchange-rate system in which currencies float against one another with governments intervening to stabilize currencies at a particular target exchange rate is known as a

(chế độ tỷ giá thả nổi có quản lý)

Free float system

is an exchange - rate system in which currencies float freely against one another, without governments intervening in currency markets.

Currency option

A ______ is a right, or option, to exchange a specific amount of a currency on a specific date at a specific rate.

Currency Futures contract

is a contract requiring exchange of a specific amount of currency on a specific date at a specific exchange rate with all of these conditions fixed and not adjustable.