Question

compare and contrast between arbitrager and speculators. what are their roles in today’s currency market

Answer 1

Ans Compare and Contrast between arbitrage and speculators is Chues Arbitrage - mis pricing of mis pricing of commodities are an advantage to seekers. If the commodity is being traded at more than one exchange then the Price has to be equal. The difference between the spot and future can only consist of: - Risk free date of return. Cost of carry. en if in reference to our two cases, there exists any Mispricing then there exists an arbitrage opportunity. & liquidity Plays an important hole in the opportunity & Arbitrage can be of two types: - ① Cosh and carry Reverse cash and carry Generally large amount are involved in this. And hence large institutions are more prevalent then the retail investors. speculators: es Taking benefit of a perceived movement, an

nderssual takes a Position, then it is called speculation. t is solely for the Purpose of making profit, un - hedging & It is generally is generally done for the short term. There is always a risk in the two faced activity (buy and sell ), standing against the Chance of some reward. is. It is not limited in the types of securities s it can involve the trading of instrument such as bonds. Commodities currencies and derivatives. involved. * Their Rotes in today currency Markets e volatility is back in Indian currency Markets, and so are big-time arbitrage opportunities for trades as Rupee are offering traders the schope to exploit Pricing differences between offshore and one shore rupee-dollor forwarrels and exchange -traded futures Market. foreign gain from Portfolio investors or Jewellers kuch to such trading opportunities ,

down Currency units Play a major role in arbitrage with their offshore units. les distinctions between various measures of the & exchange rate. s its clescribe the links between the current spot rate and Contracts to buy or sell foreign Exchange in the future. - Arbitrage have interest rate Polity & Purchasing Power Parkcity, s speculator is use them Prices are going to change. While they put their money at risk. Then trying to best of their ability whether Prices are moving up or down. a speculator analyze the Market future Price Morement speculator expected that the Prices were move clown word, then it would want to sell non and if all goes as Red Planned, buy back later that the Prices were going to at a lower price.