The document summarizes the concepts of international arbitrage and interest rate parity. It defines different types of arbitrage opportunities including locational, triangular, and covered interest arbitrage. It also derives the formula for interest rate parity and shows how it ensures arbitrage profits are not possible. The document notes that while interest rate parity generally holds, deviations may exist due to transaction costs, political risk, and tax differences across countries. It concludes by discussing how arbitrage forces can impact the valuation of multinational companies.
here we are explaining exchange rate movements, how the equilibrium exchange rate is determined, what kind of factor that affect the equilibrium exchange rate
here we are explaining exchange rate movements, how the equilibrium exchange rate is determined, what kind of factor that affect the equilibrium exchange rate
this chapter we are going to explain key, components of the BoP, and explain how the international flow of funds is influenced by economic factors and other factors
presentation slides on international funds flow prepared by the group members in a new way thanks guys for providing such a beneficial, knowledgeable slides.
explain about techniques for hedging transaction exposure, how to used hedge future, option, money market for payable and receivable, comparing techniques for hedging vs not-hedging
describing the exchange rate systems, explaining how government uses direct and indirect intervention to influence exchange rates, and how government intervention in the forex markets.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
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this chapter we are going to explain key, components of the BoP, and explain how the international flow of funds is influenced by economic factors and other factors
presentation slides on international funds flow prepared by the group members in a new way thanks guys for providing such a beneficial, knowledgeable slides.
explain about techniques for hedging transaction exposure, how to used hedge future, option, money market for payable and receivable, comparing techniques for hedging vs not-hedging
describing the exchange rate systems, explaining how government uses direct and indirect intervention to influence exchange rates, and how government intervention in the forex markets.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
Discuss the difference between international finance and domestic finance. Explain the most traded currencies in the world and the reason of their popularity
Balance of Payment Disequilibrium and CausesNeema Gladys
1.Balance of Payment
The balance of payment of a country is a systematic accounting record of all economic transactions during a given period of time between the residents of the country and residents of foreign countries.
2.Componets of BOP
Current Account
It includes imports and exports of goods and services and unilateral transfer of goods and services.
Capital Account
Under this are grouped transactions leading to changes in foreign assets and liabilities of the country.
3. Accounting Treatment of Items (Debit and Credit Items)
Any item which gives rise to a sale of foreign exchange (an inflow) is recorded as a credit item (+) in the accounts e.g. export of goods and services
Any item which gives rise to the purchase of foreign exchange (an outflow) is recorded as a debit item (-) in the accounts e.g imports of goods and services.
4. BOP Disequilibrium
BOP is a double entry accounting record, then apart from errors and omissions, it must always balance.
The BOP deficit or surplus indicate imbalance in the BOP.
This imbalance is interpreted as BOP Disequilibrium.
A country’s balance of payments is said to be in disequilibrium when its autonomous receipts (credits) are not equal to its autonomous payments (debits).
5.BOP Deficit
A deficit or an unfavorable balance exists when the value of autonomous debit items exceeds the value of autonomous credit items.
6. BOP Surplus
A surplus or a favourable balance exists when the value of autonomous credit items exceeds the value of autonomous debit items.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
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how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
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Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
2. Chapter Objectives
• To explain the conditions that will
result in various forms of international
arbitrage, along with the realignments that
will occur in response; and
• To explain the concept of interest rate
parity, and how it prevents arbitrage
opportunities.
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3. International Arbitrage
• Arbitrage can be loosely defined as
capitalizing on a discrepancy in quoted
prices. Often, the funds invested are not
tied up and no risk is involved.
• In response to the imbalance in demand
and supply resulting from arbitrage
activity, prices will realign very quickly,
such that no further risk-free profits can
be made.
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4. International Arbitrage
• Locational arbitrage is possible when a
bank’s buying price (bid price) is higher
than another bank’s selling price (ask
price) for the same currency.
• Example:
Bank C Bid Ask
NZ$ $.635 $.640
Bank D Bid Ask
NZ$ $.645 $.650
Buy NZ$ from Bank C @ $.640, and sell it to
Bank D @ $.645. Profit = $.005/NZ$.
A7 - 4
5. International Arbitrage
• Triangular arbitrage is possible when a
cross exchange rate quote differs from the
rate calculated from spot rates.
• Example:
Bid
Ask
British pound (£)
$1.60
$1.61
Malaysian ringgit (MYR) $.200
$.202
£
MYR8.1 MYR8.2
Buy £ @ $1.61, convert @ MYR8.1/£, then
sell MYR @ $.200. Profit = $.01/£. (8.1×.2=1.62)
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6. International Arbitrage
• When the exchange rates of the
currencies are not in equilibrium,
triangular arbitrage will force them back
into equilibrium.
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7. International Arbitrage
• Covered interest arbitrage is the process
of capitalizing on the interest rate
differential between two countries, while
covering for exchange rate risk.
• Covered interest arbitrage tends to force a
relationship between forward rate
premiums and interest rate differentials.
A7 - 7
8. International Arbitrage
• Example:
£ spot rate = 90-day forward rate = $1.60
U.S. 90-day interest rate = 2%
U.K. 90-day interest rate = 2%
Borrow $ at 3%, or use existing funds which
are earning interest at 2%. Convert $ to £ at
$1.60/£ and engage in a 90-day forward
contract to sell £ at $1.60/£. Lend £ at 4%.
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9. International Arbitrage
• Locational arbitrage ensures that quoted
exchange rates are similar across banks
in different locations.
• Triangular arbitrage ensures that cross
exchange rates are set properly.
• Covered interest arbitrage ensures that
forward exchange rates are set properly.
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10. International Arbitrage
• Any discrepancy will trigger arbitrage,
which will then eliminate the discrepancy.
Arbitrage thus makes the foreign
exchange market more orderly.
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11. Interest Rate Parity (IRP)
• Market forces cause the forward rate to
differ from the spot rate by an amount that
is sufficient to offset the interest rate
differential between the two currencies.
• Then, covered interest arbitrage is no
longer feasible, and the equilibrium state
achieved is referred to as interest rate
parity (IRP).
A7 - 11
12. Derivation of IRP
• When IRP exists, the rate of return
achieved from covered interest arbitrage
should equal the rate of return available in
the home country.
• End-value of a $1 investment in covered
interest arbitrage = (1/S) × (1+iF) × F
= (1/S) × (1+iF) × [S × (1+p)]
= (1+iF) × (1+p)
where p is the forward premium.
A7 - 12
13. Derivation of IRP
• End-value of a $1 investment in the home
country = 1 + iH
• Equating the two and rearranging terms:
p =
(1+iH) – 1
(1+iF)
i.e.
forward = (1 + home interest rate) – 1
premium
(1 + foreign interest rate)
A7 - 13
14. Determining the Forward Premium
Example:
• Suppose 6-month ipeso = 6%, i$ = 5%.
• From the U.S. investor’s perspective,
forward premium = 1.05/1.06 – 1 ≈ - .0094
• If S = $.10/peso, then
6-month forward rate = S × (1 + p)
_
≈ .10 × (1 .0094)
≈ $.09906/peso
A7 - 14
15. Determining the Forward Premium
• Note that the IRP relationship can be
rewritten as follows:
F – S = S(1+p) – S = p = (1+iH) – 1 = (iH–iF)
S
S
(1+iF)
(1+iF)
• The approximated form, p ≈ iH–iF, provides
a reasonable estimate when the interest
rate differential is small.
A7 - 15
16. Test for the Existence of IRP
• To test whether IRP exists, collect the
actual interest rate differentials and
forward premiums for various currencies.
Pair up data that occur at the same point
in time and that involve the same
currencies, and plot the points on a graph.
• IRP holds when covered interest arbitrage
is not worthwhile.
A7 - 16
17. Interpretation of IRP
• When IRP exists, it does not mean that
both local and foreign investors will earn
the same returns.
• What it means is that investors cannot use
covered interest arbitrage to achieve
higher returns than those achievable in
their respective home countries.
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18. Does IRP Hold?
• Various empirical studies indicate that IRP
generally holds.
• While there are deviations from IRP, they
are often not large enough to make
covered interest arbitrage worthwhile.
• This is due to the characteristics of
foreign investments, including transaction
costs, political risk, and differential tax
laws.
A7 - 18
19. Considerations When Assessing IRP
Transaction Costs
¤ IRP may not be feasible after taking into
consideration transaction costs.
A7 - 19
20. Considerations When Assessing IRP
Political Risk
¤ A crisis in the foreign country could cause
its government to restrict any exchange of
the local currency for other currencies.
¤ Investors may also perceive a higher
default risk on foreign investments.
Differential Tax Laws
¤ If tax laws vary, after-tax returns should be
considered instead of before-tax returns.
A7 - 20
21. Explaining Changes in Forward Premiums
• During the 1997-98 Asian crisis, the
forward rates offered to U.S. firms on
some Asian currencies were substantially
reduced for two reasons.
The spot rates of these currencies
declined substantially during the crisis.
Their interest rates had increased as their
governments attempted to discourage
investors from pulling out their funds.
A7 - 21
22. Impact of Arbitrage on an MNC’s Value
Forces of Arbitrage
m
E ( CFj , t ) × E (ER j , t )
n ∑
j =1
Value = ∑
(1 + k ) t
t =1
[
]
E (CFj,t )
=
expected cash flows in
currency j to be received by the U.S. parent at the
end of period t
E (ERj,t )
=
expected exchange rate at
which currency j can be converted to dollars at
the end of period t
A7 - 22
24. Chapter Review
• Interest Rate Parity (IRP)
¤
¤
¤
¤
¤
¤
Derivation of IRP
Determining the Forward Premium
Test for the Existence of IRP
Interpretation of IRP
Does IRP Hold?
Considerations When Assessing IRP
A7 - 24