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FOREIGN EXCHANGE TRADING 1

www.llv.edu.vn

C O P R P O R AT E L I N K
This course provides fundamental concepts about foreign exchange trading, foreign exchange market and foreign exchange rate. Emphasis is put on understanding the movement of exchange rate and four basic derivative operations in the market. Level Hours of teaching Time of Class Pre-intermediate 40 hours To be informed

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Teaching and learning methods:
Learning process comprises of formal lectures, group discussions and seminars. Formal lectures will be built upon the main textbooks and some updated online sources to help participants keep track with theoritical and practical sides of the foreign exchange. Seminars will be about case study which you can apply the theory to analyse by yourself and improve your knowledge. In addition, you should prepare in advance the solution for case study if you are given it as homework. Group discussions will be taken if participants have any issues about what we have studied in the class. Lecture notes and textbook will be delivered during the class at least one week in advance. Participants are required to read them before class in order to be ready for the new concepts.

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36 Cát Linh, Đống Đa, Hà Nội 64-64Bis, Võ Thị Sáu, Quận 1, TP Hồ Chí Minh

Tel: 04. 3577 2020 Fax: 04. 3577 2017 Tel: 08. 3820 7225 Fax: 08. 3820 7226

11th Edition. the participants should be able to: • Explain the basics of foreign exchange.. Boston.. Pilbeam.. Alternative: Course Objectives: On sucessful completion of this course. Palgrave Macmillan. Stonehill.K. • Understand the movement of exchange rate in the market • Be able to forecasting the short term movement of exchange rate • Identify the foreign exchange risks in the market • Know how to use derivative operations to hedge foreign exchange risks Course content Foreign Exchange basics Definition Types of foreign exchange Convertibility of Currencies Exchange rate basics Definition History of international currency systems Exchange rate based on Classical gold parity Exchange rate based on Gold exchange parity Exchange rate based on Purchase Power Parity and One price law Exchange rate quotation Types of exchange rate Determination of exchange rate in the open market The demand for foreign currency The supply of foreign currency The equilibrium exchange rate determintion Alternative exchange rate regimes Fixed exchange rate regimes Floating exchange rate regimes Managed exchange rate regimes How economic factors affect the movement of exchange rate The difference in inflation rate between 2 countries Interest rate Balance of Payment Monetary Policy Fiscal policy Foreign exchange risk Transaction risk Translation risk Economic risk Foreign Exchange Market Characteristic of Foreign Exchange Market Participants Operations in the market Course content . International Finance. Pearson. A. Multinational Business Finance. 3rd Edition. Moffett. K. (2006). M. exchange rate and currency derivative operations • Understand the characteristics as well as the trading mechanism in the foreign exchange market.Course Information Text book(s) Main textbook: Eiteman.I.. (2007). D.H. New York.

. • Understand the movement of exchange rate in the market • Be able to forecasting the short term movement of exchange rate • Identify the foreign exchange risks in the market • Know how to use derivative operations to hedge foreign exchange risks Text book(s) Main textbook: Eiteman. (2006). Pearson. Pilbeam. M. K.K. the participants should be able to: • Explain the basics of foreign exchange.I.Course Information Course Objectives: On sucessful completion of this course. Boston. Alternative: Course content Foreign Exchange Market Characteristic of Foreign Exchange Market Participants Operations in the market Foreign exchange market for interbank transactions Basic concept General regulations for interbank trading in foreign exchange market Interbank foreign exchange operations Forward Operations Basic concept Characteristic of Currency forward contracts How to calculate the Forward rate based on Spot rate? Counter party risk in forward contracts Profit/ Loss position of Forward contracts Futures Operations Basic concept Characteristic of Future contracts Trading future contracts on the exchange center The difference between future and forward contracts Advantages and disadvantages of future contracts Option Operations Basic concept Type of option contracts Characteristic of Option contracts Option payoff for the writers and the buyers Swap Operations Basic concept Characteristics of Swap contracts The mechanism of currency swap How to hegde foreign exchange risk by derivative operations Hedge by forward contracts Hedge by future contracts Hedge by option contracts Course Content . Multinational Business Finance.H. D. International Finance. Moffett.. A. 3rd Edition. 11th Edition.. Palgrave Macmillan. exchange rate and currency derivative operations • Understand the characteristics as well as the trading mechanism in the foreign exchange market. (2007).. New York. Stonehill.