Financial Markets and Institutions

Financial Markets and Institutions Essay example
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Finance & Accounting
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Financial Markets and Institutions Table of Contents Introduction 3 Foreign Exchange Market 3 Types of Transaction and their benefits 3 Factors Affecting Interest Rates 4 Forecasting Interest Rate Changes 5 Role of Federal Reserve 6 Recent Monetary Policy 6 Bond Markets Strategy 7 Conclusion 7 Reference 8 8 Introduction The financial markets of United States (U.S.) consist of different markets for diverse products which are offered on a range of trading platforms and exchanges…

Introduction

economy, impact of recent monetary policy on U.S. economy and the strategy for the use of bond markets. Foreign Exchange Market The foreign exchange market is an over-the-counter (OTC) market. The participants of foreign exchange markets are portfolio managers, importers and exporters, commercial banks, central banks, and foreign currency brokers. Types of Transaction and their benefits There are three types of foreign exchange transactions: spot transaction, forward transaction and swaps. A spot transaction includes deliver of the exchange by the seller of the foreign exchange to the buyer, on the spot, and the settlement of deal is within two business days. A forward transaction involves an agreement between the seller and buyer of currency to purchase or sell a preset amount of currency for a rate which is determined in advance at a specified date in the future. A currency swap is defined as a conversion of one currency into another with an agreement to revert it back at some date in the future. Forward transactions are valuable to the U.S. and global economies in several ways. ...
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