CIC2007 Money and Banking

CIC2007 Money and Banking. Lecturer: Dr. Shahrin Saaid.

What is the foreign exchange rate?. A picture containing calendar Description automatically generated.

Comparison between the price of one country's domestic currency with the other country or economic zone's currency to show their relative value..

Free Float rate. Influenced by the changes in supply and demand.

Factors influencing the foreign exchange market. Political instability Inflation Interest rate.

. WHAT IS STOCK PRICE?. THE COST TO BUY ONE SHARE IN A COMPANY VALUE OF A COMPANY’S STOCK NOT FIXED, BUT FLUCTUATES ACCORDING TO MARKET CONDITION.

. HOW ARE STOCK PRICES DETERMINED?. Initially, share prices are determined through a company’s Initial Public Offering (IPO) The price of share will be set according to the perceived supply of and demand for that company’s stock. U sually, the price will be set by a bookrunner There are lots of factor that impact the stock price. (Supply and demand factors that affect stock price).

WHY DO SOME COMPANIES WANT THEIR STOCK PRICE TO RISE?.

What is Random walk?.

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The Relationship Between the Foreign Exchange Rate and Stock Price..

Foreign exchange rate (Forex). Foreign Exchange Definition Trading Factors Forex Markets.

Impacts of the stock market on FOREX. When the domestic stock market rises, it gives the investors' confidence that the country’s economy is increasing as well, resulting in increasing foreign investor interest and demand for the domestic currency. Conversely, if the stock market underperforms, the confidence of investors drops, and the international investors will take their funds back to their own currencies. Example: Nikkei stock exchange in Japan has historically exhibited an inverse relationship with the USD/JPY currency pair, which means that a rally in the Nikkei often results in a strengthening of the yen against the dollar..

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Differences and Similarities Between the Foreign Exchange Rate and Stock Price.

The market influences. Foreign Exchange Rate. Trade Political news like election or change in government.

Close-up of a pen writing on a chart. Should foreign exchange follow a random walk?.

Adherence of foreign exchange to the random walk.

IS it possible for foreign exchange rates to fully comply with the random walk ?.