Foreign Exchange Markets

Free GARP FRM Part I lesson in Financial Markets and Products. 23 min read, ~3,388 words.

Spot quotes trade for two-day settlement; forward quotes lock a future rate; futures trade on exchanges (CME) with standardized maturities. Bid-ask spread = ask − bid; spreads widen for thinner pairs and longer-dated forwards. Three FX risks: transaction (contracted future cash flow at uncertain rate), translation (consolidating foreign-subsidiary financials), economic...

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