Forex or foreign exchange is the financial trading system that cultivates the international currency market.
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June 27, 2009 at 8:34 pm · Filed under Uncategorized and tagged: adverse selection, asymmetric information, financial system, financial systems, function of financial system, moral hazard
Asymmetric information occurs when one party knows more about an economic transaction or asset than the other party does.
Adverse selection occurs before a transaction takes place. If unmitigated, lenders and insurers will attract the worst risks.
Moral hazard occurs after a transaction takes place. If unmitigated, borrowers and the insured will take advantage of lenders and insurers.
Financial systems help to reduce the problems associated with both adverse selection and moral hazard.
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June 27, 2009 at 11:55 am · Filed under Uncategorized and tagged: business, finance, interest rates, money and banking, prices of bonds
People who understand the principles of money and banking are more likely to lead happy, successful, fulfilling lives than those who remain ignorant about them.
Here are simple crucial facts about money:
When the supply of money increases faster than the demand for it, prices rise and inflation ensues.
When inflation increases, so too do nominal interest rates. And when interest rates rise, the prices of bonds (and many other types of assets that pay fixed sums) fall.
You need to understand the basics of money, banking, and finance to succeed in your business.
June 27, 2009 at 11:49 am · Filed under Uncategorized and tagged: currency, exchange rate, national currencies, units of account
Foreign exchange is the trading of different national currencies or units of account.
It is important because the exchange rate, the price of one currency in terms of another, is a major determinant of a nation’s economic health and hence the well-being of all the people residing in it.
