Definition Of Forward Market Efficiency - 3854 Words

Literature review Basic definitions Definition of forward market efficiency Fama (1970) defined that if a forward market allows positive profits by speculation on average without market agents’ control, it can be considered that the forward market is efficient. The forward market as an information receiver, can adjusted the fluctuation of prices. Hence, Fama (1970) also asserted that if prices in a market can fully reflect all available information, then this market can regard as â€Å"efficient†. Definition of NDF market NDF is the abbreviated name of non-delivered forward. NDF can be regarded as a periodical contract of forward foreign exchange without physical delivery at maturity date. Usually, NDF market is not settled in the domestic region whereas established in an international financial centre in U.S. dollar (Lipscomb, 2005). NDF market generally used to help foreign economic participants hedge the exchange rate risk from the domestic currency. There is not an obvious related to domestic economy in reality. At present, there are about 20 kinds of currencies with NDF market around the world, Renminbi (Chinese Yuan) is one of these currencies. Definition of cointegration The first condition of integration is that the two time series, xt and yt are I(1). And the second condition is that exists a linear combination of them (zt=ÃŽ ±xt+ÃŽ ²yt+et), which must be stationary. If xt and yt can sufficient the above two steps, then the two variables are cointegrated (Engle and Granger,Show MoreRelatedSupply Chain Management1177 Words   |  5 Pagescontrolling procedures for the efficient and effective transportation and storage of goods including services, and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. This definition includes inbound, outbound, internal, and external movements (Vitasek, 2013). 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