Across
- 3. An option whose exercise price is the same as the spot price of he underlying currency
- 4. The agreed upon rate of exchange within an option contract
- 6. The potential exposure any individual firm bears that the second party to any financial contract may be unable to fulfill its obligations under the contract's specifications
- 9. A position in which foreign currency assets exceed foreign currency liabilities
- 10. A theory that nominal interest rates in two or more countries should be equal to the required real rate of return to investors
Down
- 1. The difference between spot and forward rates, expressed as an annual percentage, also known as the forward discount
- 2. The possibility that political events in a particular country will influence the economic well-being of firms in that country
- 5. The theory that provides the link between the foreign exchange markets and the international money markets
- 7. The size of a derivative contract, in total currency value, as used in futures contracts, forward contracts, option contracts, or swap agreements
- 8. The process by which investors borrow in countries and currencies exhibiting relatively low interest rates