The Foreign Exchange Market

The foreign exchange market will exists wherever one currency is traded for another currency in the particular country. It is by far the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Retail traders are a small part of this market. They may only participate indirectly through brokers or banks and may be targets of forex scams.

There is no single unified foreign exchange market. Due to the over-the-counter (OTC) nature of currency markets, there are rather a number of interconnected marketplaces, where different currency instruments are traded. This implies that there is no such thing as a single dollar rate rather than a number of different rates , depending upon what bank or market maker is trading. In practice the rates are often very close, otherwise they could be exploited by arbitrageurs.The interbank market for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.

Bond

In finance, a bond is a debt security, in which the issuer owes the holders a debt and is gratified to repay the principal and interest at a later date, termed maturity. Other provisions may also be attached to the bond issue, such as the obligation for the issuer to offer certain information to the bond holder, or limitations on the behavior of the issuer. Bonds are generally issued for a fixed term longer than ten years. U.S Treasury securities issued debt with life of ten years or more is a bond. New debt between one year and ten years is a note, and new debt less than a year is a bill.

A bond is simply a loan, but in the form of a security, although terminology used is rather different. The issuer is equivalent to the borrower, the bond holder to the lender, and the coupon to the interest. Bonds enable the issuer to finance long-term investments with external funds. Debt securities with a maturity shorter than one year are typically bills. Certificates of deposit or commercial paper are measured money market instruments.