Fundamentals of Financial Management, Third Edition

25

International Financial Management

OBJECTIVES

To explain the concept of fixed and floating exchange rate regime

To describe how exchange rate is quoted

To explain how the exchange rate in the spot market is determined and the factors influencing such process

To discuss exchange rate determination in the forward market and the relevance of interest-rate parity theory in this context

To describe the distinctive features of the foreign exchange market and the various activities in it, such as, arbitrage, hedging and speculation

To explain the features of the market for derivatives, that is, the market for currency futures and for currency options

With growing liberalisation and globalisation of economic policies, corporate financial decisions ...