4-The spot exchange rate of OMR/USD is less than the forward exchange rate. What is your understanding on the forward exchange rate? a. OMR and USD both will be trading at discount b. None of the options c. OMR will be trading at discount and USD is trading at premium d. OMR will be trading at premium and USD is trading at discount

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A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…

Q: 47

A: Interest rate parity states that the difference between the interest rate of two currencies would b…

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A: Swap is an option-like derivative product that is traded between the two parties and there are no…

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A: Uncovered Interest rate Parity As per uncovered interest rate parity theory the difference in…

Q: What is the concern for credit risk in anover the counter market versus the credit risk in an…

A: Over-the-counter (OTC) exchange is a decentralized form of the market. In this, two parties trade…

Q: 14. True or False: The value of a swap contract is generally zero at origination and can change…

A: A swap contract is a derivative instrument where the signing parties exchange cash flows or…

Q: A. are only used by foreign currency traders to speculate on currency fluctuations. B. are generally…

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Q: d. Forward contracts are not traded in any exchanges across the world.

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Q: What are the differences between an exchange and an over-the counter market?

A: Over the counter market is customized market. Exchange is standardized.

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A: From third relation, 1 Pound = 1.40 Euro

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Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.