ForeGMarket

Market Arbitrage

Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets.

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Outward Arbitrage

A form of arbitrage involving the rearrangement of a bank's cash by taking its local currency and depositing it into eurobanks. The interest rate will be higher in the interbank market, which will enable the bank to earn more on the interest it receives for the use of its cash.

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London Interbank Offered Rate (LIBOR)

An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers' Association. The LIBOR is derived from a filtered average of the world's most creditworthy banks' interbank deposit rates for larger loans with maturities between overnight and one full year.

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Soft Money

1. The "one-time" funding from governments and organizations for a project or special purpose.

2. Paper currency, as opposed to gold, silver, or some other coined metal.

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Hard Money

1. Funding by a government or organization that is repetitive, rather than a one-time grant. Examples include ongoing government daycare subsidies or firms that pay annual scholarships to post-secondary students.

2. Describes gold/silver/platinum (bullion) coins. A government that uses a hard money policy backs the value of the currency it uses with a hard, tangible and lasting material that will retain its relative value over time.

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