Disclaimer: I CFD sono strumenti complessi e comportano un alto rischio di perdere denaro rapidamente a causa della leva finanziaria.
Dovresti considerare se comprendi come funzionano i CFD e se puoi permetterti di correre l’alto rischio di perdere il tuo denaro.
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Tutto
Exchange rate
The ratio at which one currency is exchanged for another, used mainly in the foreign exchange market. For instance, USD 1 is equivalent to or is able to purchase GBP 0.85.
Exchange Rate Risk
The risk of a foreign exchange rate adjustment having a negative impact on the value of an investment, cash flow, asset or liability in a foreign currency. Also known as forex risk, currency risk or FX risk. Exchange-rate risk exists for all cross-border financial transactions in foreign currencies (with the exception of hedging).
There are a number of types of exchange-rate risk. Translation risk is a risk that an investor who owns foreign stocks encounters, even if the stock does well in the country where it is held, as a drop in the foreign currency will decrease the returns on the stocks when they are converted back to the home country’s currency. Transaction risk is the risk that a corporate with foreign revenues will see cash flows affected by future transactions. Multinational companies that are consolidating foreign subsidiaries are subject to accounting translation risk on the results of those subsidiaries.
It is a symmetrical risk, meaning that favourable actions increase the return, while unfavorable ones decrease the return, making this risk a separate risk to manage in some cases, alongside the overall asset allocation risk.
Example: Over a year, a UK investor has bought US equities, which have increased by 10% in dollars. However, the dollar loses 8% on sterling during the same time. The net sterling return is around 2%, the bulk of the investment gain is offset by the negative currency change. The investor faced exchange rate risk, which impacted them as a loss of returns, even if they had made the right underlying asset selection.
Exchange Traded Fund (ETF)
An investment pool of securities, such as stocks, bonds, commodities or currencies, that is bought and sold on an exchange for an established price at any point of the day, similar to that of an individual stock. The majority of ETFs passively track an index, sector, commodity, or benchmark.
The key structural innovation that enables ETFs to remain efficient is the creation/redemption process. Authorised participants are able to sell new shares in an ETF by submitting the underlying basket or redeem shares in the underlying assets. This arbitrage process helps to maintain the ETF’s price in close proximity to the NAV of the securities in the underlying basket during the trading day.
Over the last 20 years, ETFs have won over most asset classes with their diversification features in one trade, low management fees, intraday liquidity and tax efficiency over mutual funds.
Example: A retail investor who wants exposure to Indian equities invests in a Nifty 50 ETF at the NSE. Instead of diversifying across the 50 stocks in the index, gaining an equal market session trading experience and paying just a fraction of the higher management fee that an active fund would charge, a single transaction provides proportional ownership.
Exchange-traded fund (ETF)
A type of investment fund that trades like a stock on a stock exchange.
Execution
The process of completing a trade or order in the market.
Execution only
A type of brokerage service that only executes trades on behalf of clients, without providing investment advice.
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