Foreign exchange forward contract and Investment trust: Difference between pages

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A transaction which solely involves the exchange of two different currencies:
An investment trust is a limited liability company whose sole aim is to invest in securities issued by other entities. 


<p>(i) on a specific future date


(ii) at a fixed foreign exchange rate which is pre-agreed at the outset of the contract.</p>
Investment trusts are similar to unit trusts.


Foreign exchange forward contracts are used - among other purposes - for hedging forward foreign exchange exposures.
However, unlike a unit trust, the number of shares that can be issued is limited (it is a closed-ended structure).
For example known or likely future currency receivables and payables.


They are priced by adjusting the spot foreign exchange rate to reflect the interest rate differential between the two currencies involved for the forward period.


== See also ==
* [[Bid-offer spread]]
* [[Company]]
* [[Investment]]
* [[Investment company]]
* [[Limited liability]]
* [[Net asset value]]
* [[Open-ended investment company]]
* [[Real estate investment trust]]  (REIT)
* [[Security]]
* [[Undertaking for collective investments in transferable securities]]
* [[Unit trust]]


Also known as a Forward foreign exchange contract, or a Foreign exchange forward.
[[Category:Accounting,_tax_and_regulation]]
 
[[Category:The_business_context]]
== See also ==
[[Category:Corporate_finance]]
* [[Hedging]]
[[Category:Investment]]
* [[Non-deliverable forward]]
[[Category:Long_term_funding]]
* [[Synthetic]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Revision as of 15:15, 9 July 2022

An investment trust is a limited liability company whose sole aim is to invest in securities issued by other entities.


Investment trusts are similar to unit trusts.

However, unlike a unit trust, the number of shares that can be issued is limited (it is a closed-ended structure).


See also