Currency Exchange Rates: Understanding Equilibrium Value (2024 Level II CFA® Exam–Economics–Module1)

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Topic 3 – Economics
Module 1 – Currency Exchange Rates: Understanding Equilibrium Value
0:00 Introduction and Learning Outcome Statements
6:30 LOS: Calculate and interpret the bid-offer spread on a spot or forward currency quotation and describe the factors that affect the bid-offer spread.
10:23 LOS: Identify a triangular arbitrage opportunity and calculate the profit, given the bid-offer quotations for three currencies.
18:05 LOS: Distinguish between spot and forward rates and calculate the forward premium/discount for a given currency.
26:40 LOS: Calculate the mark-to-market value of a forward contract.
30:47 LOS: Explain international parity conditions (covered and uncovered interest parity, forward rate parity, purchasing power parity, and the international Fisher effect).
42:21 LOS: Describe the relations among the international parity conditions.
46:17 LOS: Evaluate the use of the current spot rate, the forward rate, purchasing power parity, and uncovered interest parity to forecast future spot exchange rates.
LOS: Explain approaches to assessing the long-run fair values of an exchange rate.
48:13 LOS: Describe the carry trade and its relation to uncovered interest rate parity and calculate the profit from the carry trade.
51:56 LOS: Explain how flows in the balance of payment accounts affect currency exchange rates.
57:20 LOS: Explain the potential effects of monetary and fiscal policy on exchange rates.
1:04:13 LOS: Describe objectives of the central bank or government intervention and capital controls and describe the effectiveness of the intervention and capital controls.
1:08:33 LOS: Describe warning signs of a currency crisis.