Financial market is a physical or virtual space for exchanging financial assets. Markets fix prices through supply and demand forces. Provide liquidity and efficient resource allocation. Channel funds between savers and investors
Financial markets consist of debt, equity, money, and capital markets. Interest rates affect bond prices and are influenced by risk and term structure. Financial markets are generally considered efficient according to the Efficient Market Hypothesis
NDF is a short-term cash-settled forward contract for differences between contracted and spot rates. Contracts typically range from one month to one year, with IMM dates most common. Settlement is usually made in US dollars. Notional amount is never exchanged, only difference between rates is settled
Money market provides short-term funds for borrowing and lending up to one year. Trading occurs over-the-counter and is wholesale. Includes instruments like treasury bills, commercial paper, and repurchase agreements
Established by U.S. Federal Reserve in 1973 after Bretton Woods dissolution. Index tracks dollar's value relative to basket of six major currencies. Euro remains largest component at 57.6% weight. Only updated once in 1999 when euro replaced several European currencies
USDX measures dollar value against six major currencies. Created in 1973 by US central bank after Bretton Woods collapse. Basket includes Euro, Yen, Pound, Canadian Dollar, Krona, and Franc