Discuss one tool that has been developed to mitigate foreign exchange rate fluctuation and instability.
Discuss one tool that has been developed to mitigate foreign exchange rate fluctuation and instability.
Managing Foreign Exchange Risks The working of the foreign exchange market has clear implications for business. It is critical that international businesses understand the influence of exchange rates on the profitability of trade and investment deals. Internatonal business managers must understand the different kinds of risk, or exposure, and ways to mitigate that risk. The risk introduced into international business transactions by changes in exchange rates is referred to as foreign exchange risk. Foreign exchange risk is usually divided into three categories:...
QUESTION 15 It has been argued that the exchange rate can be used as a policy tool. Assume that the U.S. government would like to reduce inflation. Which of the following is an appropriate action given this scenario? O a Sell dollars for Foreign Currency O b raise interest rates 。c. Lower interest rates od. Buy Dollans with Foreign Currency
2. Foreign exchange rate quotations An exchange rate is the price of one country’s currency expressed in another country’s currency. The exchange rates of the euro (€ ) and the Japanese yen (¥) relative to the U.S. dollar ($) are listed as follows: Spot Rate Euro € 0.6589 / $1 Yen ¥ 105.7800 / $1 When exchange rates are stated in 1.(European/American) terms, the foreign exchange rate represents the number of American dollars that can be purchased with one...
The rate at which a foreign exchange dealer converts one currency into another currency on a particular day is the Multiple Choice o forward exchange rate. O fixed exchange rate. O future exchange rate. o spot exchange rate. O floating exchange rate.
An ___ reflects the amount of one currency required to purchase one unit of another currency. To put it simply, it is the ___ of foreign currency. This rate is set by ___ in foreign exchange markets. When a currency becomes more valuable in the market, this is called ___; when a currency becomes less valuable, this is called ___. possible answers: interest rate supply and demand exchange rate inflation rate price depreciation appreciation monetary policy
Explain how exchange rate fluctuations affect the return from a foreign market measured in dollar terms. Discuss the empirical evidence on the effect of exchange rate uncertainty on the risk of foreign investment
2. Foreign exchange rate quotations Aa Aa An exchange rate is the price of one country's currency expressed in another country's currency Suppose an American investor is given the current exchange rates in the following table. The listed quotations are direct quotations stated in American terms British pound (E) Euro () Australian dollar (AUS) $0.8970 Australian dollar Exchange Rate $1.9760 / pound 1.3210 euro Given these rates, an Australian dollar can purchase British pounds Purple Whale Foodstuffs Inc. is a...
2. Foreign exchange rate quotations An exchange rate is the price of one country’s currency expressed in another country’s currency. 1. Suppose an American investor is given the current exchange rates in the following table. The listed quotations are _1.__(direct/ Indirect)___ quotations stated in American terms. Exchange Rate British pound (£) $1.8790 / pound Euro (€ ) $1.3210 / euro Australian dollar (AU$) $0.8970 / Australian dollar 2.Given these rates, an Australian dollar can purchase__2.(__)___ British pounds. 3. Green...
North Bank has been borrowing in the US markets and lending abroad, thereby incurring foreign exchange risk. In a recent transaction, it issued a one year $2 million CD at 6 percent and is planning to fund a loan in British pounds at 8 percent for a 2 percent expected spread. The spot rate of U.S. dollars for British pounds is $132/41 a. However, new information now indicates that the British pound will appreciate such that the spot rate of...
One source of the supply of dollars in the foreign exchange rate market is Group of answer choices the sale of U.S. domestic financial assets to foreigners. imports of merchandise into the United States. gold sold to foreigners. the purchase of U.S. exports.