What is the Big Mac index?

July 7, 2024 No Comments

What is the Big Mac index?A: The Big Mac index, also known as Big Mac PPP, is a survey done by The Economist magazine that is used to measure the purchasing power parity (PPP) between nations, using the price of a McDonald’s Big Mac as

What is the correlation between U.S. stock prices and the value of the U.S. dollar?

July 7, 2024 No Comments

A: The correlation between any two variables (or sets of variables) summarizes a relationship, whether or not there is any real-world connection between the two variables. The correlation coefficient will always be between -1 and +1, which signify two opposite extremes of perfect correlations. A

What is the difference between extensive margin and intensive margin in economics?

July 7, 2024 No Comments

A: Trading on margin is not commonly done in stock trading except by professional investors and institutional traders. However, trading on margin is standard practice in the futures markets and forex trading. The ability to trade on relatively low margin, with high leverage, is part

What is the difference between inflation and stagflation?

July 7, 2024 No Comments

A: Inflation is a term used by economists to define broad increases in prices. Inflation is the rate at which the price of goods and services in an economy increases. Inflation also can be defined as the rate at which purchasing power declines. For example,

What is the difference between LIBID and LIBOR?

July 7, 2024 No Comments

A: Both LIBID and LIBOR are reference rates set by banks in the London interbank market. The London interbank market is a wholesale money market in London where banks exchange currencies either directly or through electronic trading platforms. The acronym LIBID stands for London Interbank

What economic indicators are most used when forecasting an exchange rate?

July 7, 2024 No Comments

A: The economic indicators used to forecast an exchange rate are the same ones used to determine the overall economic health of a country. The gross domestic product (GDP), consumer price index (CPI), producer price index (PPI), employment data and interest rates are all key

What is the difference between pips, points, and ticks?

July 7, 2024 No Comments

A: Point, tick and pip are terms used to describe price changes in the financial markets. While traders and analysts use all three terms in a similar manner, each is unique in the degree of change it signifies and how it is used in the markets.

How often do exchange rates fluctuate?

July 7, 2024 No Comments

A: Exchange rates float freely against one another, which means they are in constant fluctuation. Currency valuations are determined by the flows of currency in and out of a country. A high demand for a particular currency usually means that the value of that currency

In the forex market, how is the closing price of a currency pair determined?

July 7, 2024 No Comments

A: The foreign exchange market, or forex, is the market in which the currencies of the world are traded by governments, banks, institutional investors and speculators. The forex is the largest market in the world and is considered a 24-hour market because currencies are traded

Is it possible to trade forex options?

July 7, 2024 No Comments

A: Yes. Options are available for trading in almost every type of investment that trades in a market. Most investors are familiar with stock or equity options, however options are available to the retail forex currency trader as well. Currency Option Trading There are two

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