Foreign Exchange Arithmetic in International Finance

This session is on " Foreign Exchange Arithmetic" under International Finance Subject. Foreign Exchange market is influential for economic development of each of the countries in the World. Every country relying on other Foreign currency for their Transactions such as Export/ Imports and other international transactions. So it is very imperative to understand how these  Foreign Exchange Rates have been decided,  represented and calculated in the Financial markets. This session is for B.Com,  BBA, BMS, MMS, MBA students to understand basic Foreign Exchange Arithmetics.

This Module will contain below topics 

• Rules for Foreign Exchange Rates calculation
• Types of Exchange Rate Quotations
1. Bid/Ask Prices of Currencies - Buy/Sell a Unit of another currency 
2. Indirect Quotes - Unit of Home currency in terms of Foreign currency 
3. Direct Quotes - Unit of Foreign currency quoted in terms of Domestic currency 
4. Spot Exchange Rates- Sell /Purchase transactions in Foreign Exchange in which payment/Receipts are processed on Spot
5. Forward Exchabge Rates- Foreign Exchange transaction to be executed on specified future date 
6. Cross Exchange Rates - Exchange Rates between two inactivity traded Currencies involves use of Third Currency widely traded in market.
7. Inter-Bank Quotations - Professional dealers and brokers atate Foreign Exchange Rates 
8. Spread/Cost of Transaction - Ask/ Bid Differential 

Next Class will be on Derivatives- "Swaps" and "Options" (Call/Put)...