Difference between Red Clause LC and Green Clause LC
What is Red Clause LC? A Red Clause LC is a documentary credit with a special clause incorporated in it, authorizing the advising bank or the conforming bank to make…
Difference Between Overbought and Oversold
Overbought and Oversold Overbought means that a bank’s assets and purchases of a particular foreign currency exceed its liabilities and sales of that currency. Where oversold means that a bank’s…
Difference Between Interest rate and Exchange rate
Interest rates and Exchange rates The question of interest rate arises when currencies are borrowed or lent; whereas exchange rates are involved when different currencies are being bought or sold.…
Difference Between Hedging and Speculating
Hedging & speculating: Hedging means avoiding or covering foreign exchange risk. The need for hedging arises because exchange rates fluctuate continuously. Accordingly, individuals, companies and banks who expect to make…
Difference between Pips and Points
Pips & points: A point is a unit of decimal, the fourth place to the right of the decimal () whereas a pip is the fifth place to the right…
How to register Domain Name?
Online Beginners Start small and spend less. Choose Your Domain Name Every website starts with a great domain name. What is a domain name? What is a TLD? Think of…
Types of Options
There are two basic types of options: Put Option and Call Option CALL OPTION: This option gives the buyer the right to purchase or “call away” a specified amount of…
Foreign Currency Options
We have examined the two main methods of covering an exchange rate fluctuations risk The traditional forward exchange contract, andThe currency futures contract. An option is an agreement between two…
Buying and Selling Foreign Currency Future
Mechanics of buying and selling foreign currency future Foreign Exchange Futures: Let us assume that in January an importing firm requires Swiss Franc 125,000 in three-month time. It purchases a…
Financial Futures Market
These are the markets that were “derived” from other markets. The first financial future contracts were derived from the foreign exchange market. A financial future contract is a contract to…
Risks inherent in Spot and Forward transactions
In spot transactions, settlements are effected within two working days of striking the deal. Although both payments are to be made simultaneously, because of geographical distance, the differing timing zones…
Forward Contracts and Futures contracts
Forward contracts versus Future contracts Commodity brokers use forward and futures contracts for which reason? Points of difference between forward contracts and financial futures are as under: Forward contracts are…
Correspondent Bank
Correspondent Banking The term “correspondent banking” is defined as informal arrangement whereby a smaller bank maintains deposit balances with larger banks in nearby cities and looks to them for a…
Types of Letter of Credit
Standby Letter of Credit Standby letter of credit is a guarantee and is mainly used in USA where according to local laws American Banks are not permitted to issue guarantees.…
Difference between Financial Documents and Commercial Documents
Differentiate between “Financial Documents” and “Commercial Documents” Financial documents Financial documents mean bills of exchange, promissory notes, checks or other similar instruments used for obtaining the payment of money. Commercial…
Cross Rate
What is Cross Rate? The exchange rate of major international currencies are quoted with reference to their base currencies in London with reference to Pound sterling and in New York…