Showing papers on "Spot contract published in 1969"
TL;DR: In this article, the authors present a non-mathematical, integrated model of the forward exchange market based on concepts which are applied to all foreign exchange market participants rather than upon an assigned role for each participant (speculator, arbitrager, trader).
Abstract: THIS PAPER PRESENTS a non-mathematical, integrated model of the forward exchange market. It is based upon concepts which are applied to all foreign exchange market participants rather than upon an assigned role for each participant (speculator, arbitrager, trader). The latter approach has been nearly universal among previous non-mathematical treatments. We abstract from the influence upon the foreign exchange market of the demand and supply conditions for imports and exports, and of the forces which determine the quantity of long term capital flows. The spot rate is taken as given and changes in these forces are simply considered to be exogenous disturbances to the financial equilibrium described in the model. Analysis of the forward exchange market has traditionally been conducted within an arbitrager-speculator format where it is assumed that pure speculators and pure arbitragers are the only participants in the forward exchange market. Only pure speculators assume exchange risk by dealing only in forward exchange. In contrast, arbitragers never expose themselves to exchange risk; they only conduct simultaneous and exactly offsetting spot and forward transactions. Hence, the following aggregate relationship must hold for any twocurrency model.'
2 citations