Synthetic: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Administrator (CSV import) |
imported>Doug Williamson m (Spacing and wiki listing 15/8/13) |
||
| Line 2: | Line 2: | ||
For example, a synthetic forward foreign exchange contract can be built from a simultaneous combination of: | For example, a synthetic forward foreign exchange contract can be built from a simultaneous combination of: | ||
# A spot foreign exchange contract. | |||
# A borrowing in one of the currencies; and | |||
# A deposit of equal maturity in the other currency. | |||
== See also == | == See also == | ||
* [[Arbitrage]] | * [[Arbitrage]] | ||
* [[Foreign exchange forward contract]] | * [[Foreign exchange forward contract]] | ||
Revision as of 13:05, 15 August 2013
A synthetic financial instrument is a combination of two or more instruments, designed to replicate the cashflows from another instrument.
For example, a synthetic forward foreign exchange contract can be built from a simultaneous combination of:
- A spot foreign exchange contract.
- A borrowing in one of the currencies; and
- A deposit of equal maturity in the other currency.
