Describes the operation of the foreign exchange markets including bid-offer spreads, cross rates, forward rates and reciprocal rates. Provides some examples of the calculation of forward rates quoted almost with discount and premium items in the Financial Times of London demonstrate. Other examples show interest parity and hedging foreign debt with long maturities forward.

Describes the operation of the foreign exchange markets including bid-offer spreads, cross rates, forward rates and reciprocal rates. Provides some examples of the calculation of forward rates quoted almost with discount and premium items in the Financial Times of London demonstrate. Other examples show interest parity and hedging foreign debt with long maturities forward.
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Scott P. Mason,
William B. Allen
15 pages.
Release Date: 04 February, 1986. Prod #: 286067-PDF-ENG
Note for Foreign Exchange HBR case solution