Purchase Solution

foreign exchange market

Not what you're looking for?

Ask Custom Question

Please explain and answer this question.

Does the foreign exchange market actually provide credit?

Purchase this Solution
Solution Summary

Whether the foreign exchange market actually provide credit is determined.

Solution Preview

A foreign exhcnage market provides credits to traders in the currency futures in the sense that the trader only needs to pay a certain percentage of the whole transaction value for taking a position in any of the traded currency futures.

Essentially, when a trader trades on margin he is using a free short-term credit allowance from the institution that is offering the margin. This short-term credit allowance is used to purchase an amount of currency that greatly exceeds the ...

Solution provided by:
Sandeep Bardia, MBA
Education
  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
Recent Feedback
  • "Thank you. "
  • "Thank you"
  • "Thank you. I got 20/20 last week for my discussion you help me out with."
  • "Thank you. Great Job. "
  • "Thank you. Great Job. "
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Production and cost theory

Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.

IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Operations Management

This quiz tests a student's knowledge about Operations Management

View More Free Quizzes
Related BrainMass Solutions

  • Financial Management

    Apart from this, foreign exchange market performs hedging function, in order to cover the risk on the foreign market transactions (Foreign Exchange Market: What Is It?).

  • Foreign Exchange Market and Financial Management

    Who are the market participants in the foreign exchange market? How are foreign exchange transactions between international banks settled? Give a full definition of the market for foreign exchange.

  • Foreign Exchange Market - How is it determined?

    500586 Foreign Exchange Market - How is it determined? A. How is the Foreign Exchange Rate for a country Determined? B. Is the Foreign Exchange Market Efficient? Discuss. Step 1.

  • demand for foreign currency

    At the expiry of forward contracts requiring delivery of foreign exchange there is an increase in demand for foreign currency in the spot foreign exchange market.

  • Two major segments of the foreign exchange market

    457806 Two major segments of the foreign exchange market What are the two major segments of the foreign exchange market, and what types of foreign exchange instruments are traded within these markets?

  • What is 'foreign exchange market.'?

    32759 What is 'foreign exchange market.'? This solution contains six definitions of foreign exchange market and some references where you can find material relating to foreign exchange market. What is foreign exchange market? 1.

  • International Finance Multiple Choice Questions

    Sell dollars for pounds in the foreign exchange market and the Bank of England should sell dollars for pounds in the foreign exchange market. b.

  • Primary functions of the foreign exchange market and global companies

    Primary functions of foreign exchange market: The following are the three major functions of the foreign exchange market. 1.

  • foreign exchange market anomalies

    437983 foreign exchange market anomalies Why doesn't the rational efficient markets paradigm provide a satisfactory explanation for many foreign exchange market anomalies?

  • Foreign Exchange Market Functions

    132376 Foreign Exchange Market Functions What are the primary functions of the foreign exchange market? Who are the participants in the market? How do global companies use the foreign exchange market to hedge against foreign exchange risks?

View More Related Solutions