abroad, or speculate on currency price changes. The FX market operates 24 hours a
day and represents the largest and most liquid marketplace in the global economy. On
average, the equivalent of about $1.5 trillion in different currencies is traded daily in the
FX market around the world. The liquidity of the market provides businesses with access
to international markets for goods and services by providing foreign currency necessary
for transactions worldwide (see:http://www.ny.frb. org/fxc).
The FX market operates in much the same way as a stock or commodity market; there
is a bid price and ask price for each commodity (or, in this case, currency). A bid price
is the price at which the market is willing to buy a particular currency and the ask price
is the price at which the market is willing to sell a currency. The ask prices are typically
slightly higher than the bid prices for the same currency representing the transaction cost
or the profit earned by the organizations that keep the market liquid.
The following table summarizes the current FX rates for the currencies Baldwin currently holds. The entries in this table represent the conversion rates from the row currencies to the column currencies.