Quoted Prices, Difference in

Quoted Prices, Difference in

 

the difference in market prices in foreign currency and securities that occur in connection with changes in their rates at stock and currency exchanges. Rate increases yield a rate-of-exchange profit to monopolies and individuals who purchase securities in advance for cash. Decreases in rates yield a rate-of-exchange loss.

Rate-of-exchange profits from trading of shares and other securities are usually made by monopolists who own or control large-scale enterprises and the information media and who play a decision-making role on the exchange. The profit received as a result of differences in quoted prices is one of the varieties of monopolistic profit.

Because of the risk of loss connected with differences in quoted prices, sellers and buyers of securities and currency insure themselves by concluding futures transactions or by including a foreign-exchange stipulation in their contracts. A difference in quoted prices regarding currency does not usually imply equivalent real losses on the part of its holders, since the purchasing power of currency does not change in the same proportion as its rate.