5. The second currency named in an FX quote is called the: A. basis currency B. base currency C. unit currency D. quote or counter currency

Q: A. As an MNC, when would you use the spot rate? Explain your answer. B. If our MNC currency's is…

A: Survival is one of the main motives of business, and to survive it is necessary to grow. MNCs are…

Q: Please help with a discussion on question #2. The base country is Nevis and the countries trading to…

A: In the simulation of our MNC based in Nevis, which trades with Australia, Colombia, and Germany, it…

Q: _1). is a market for The foreign exchange market converting the currency of one country into that of…

A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…

Q: Question: 1 . Which of the following is not correct?   Choices: Premium arises when the spot…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: An exporter can share exchange rate risk with their customers by A invoicing in their customer's…

A: Exchange rate risk is caused due to fluctuations in the local currency of investors compared to…

Q: Let a flexible exchange rate system. Assume a current account deficit of $100 billion. Then the…

A: Under the flexible exchange rate, the deficit of one account is required to be balanced by the…

Q: amount to be received in terms of AED? O a. AED 12.675 million O b. AED 19,708.317 O C. AED 12.685…

A: Ans. In currency exchange the exchange rate for the required period shall be considered. In currency…

Q: 1. If the European Central Bank (ECB) wished to cause the EUR to _______, it would _______EUR and…

A: The question is based on the concept of influencers of foreign exchange rate of currency in market .…

Q: At any given time, the bank will purchase foreign exchange currency at what cost?  a. market price…

A: Standard Disclaimers“Since you have asked multiple question, we will solve the first question for…

Q: In a fixed-for-fixed currency swap where country A’s interest rate is higher than country B’s…

A: A fixed for fixed currency swap is one in which the counterparties enter in to agreement to pay…

Q: Pound 0.64/$ in London, 1.04/Euro in New York, and Pound 0.64/Euro in Frankfurt. Depending on this…

A: Given,   Pound / $ = 0.64 / $ $ / Euro = 1.04 / Euro Pound / Euro = 0.64 / Euro   Now, By dividing…

Q: Inflation rates and interest rates: O shift both demand and supply for a foreign currency at the…

A: Inflation rates and interest rates play a crucial role in shaping the dynamics of the foreign…

Q: the foreign exchange rate is the price in foreign currency for a dollar, then the exchange rate…

A: Exchange rate is the rate at which one currency can be converted to another currency at market…

Q: Give a detailed explanation of whether the following statement is true or false Call-put parity…

A: A portfolio consisting of a long put option and a short call option should be equivalent to a…

Q: [Checkbox: 1, 2, 3, or 4 options may be needed to form the correct answer]. You operate in multiple…

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A: Arbitrage is a situation where an investor takes advantage of differences in exchange rates in…

Q: An overvalued currency implies :

A: The overvalued exchange rate means the foreign currency is too high compared to domestic currency.…

Q: Ve observe Fo> Sera-), where Fo is the direct forward exchange rate, Ta is the domestic risk-free…

A: Concept. Theoretical forward rates are calculated to estimate forward rates and compare them with…

Q: Exchange rate fluctuations can be used as a tool of speculation by speculators. Make an example of…

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A: In the context of covered interest arbitrage, if the strategy is executed, it typically leads to…

Q: Purchasing Power Parity (PPP) theory states that Which of the answers is incorrect?   a . as the…

A: Purchasing power theory describe the relationship between inflation rate and exchange rate.

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Q: Which of the following factors influences the spread between forward and spot rates? a. which…

A: Spot rate is the current rate of the stock or bond or currency and forward rate is the price that is…

Q: a)  Why is financial leverage understood to be a fair-weather friend?

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

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Q: If a bank acts as a market maker between two counterparties in swaps transactions (earning a…

A: SWAP transaction means an agreement between two parties in which both the parties agree to exchange…

Q: 1.Treasury bills are money market instruments that can be bought or sold at a discount or premium…

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Q: The Hi-Stakes Company has a number of importing and exporting transactions. Importing activities…

A: In the context of the given question, we are required to compute the effect of direct exchange rates…

Q: Which of the following is correct when exports exceed imports in international trade? Multiple…

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Q: The is an over-the-counter market with participants (buyers and sellers) located in major commercial…

A: Over the counter market is also known as OTC market. An OTC market is decentralized and in an OTC…

Q: . Which of the following is NOT a main use of foreign exchange markets: (a). Currency Ledging…

A:

Q: exchange systems (2%) ii. Mention two advantages associated with each system of exchange rate…

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Q: How do I backdate settlement prices on the Chicago Mercantile Exchange? Or is there another exchange…

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Q: Suppose the Japanese yen exchange rate is ¥116/$ and the British pond exchange rate is $1.27/£. a)…

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A: A swap is a financial derivative arrangement in which two parties swap cash flows or liabilities…

Q: Which of the following statements is CORRECT? A. Foreign exchange dealers earn a profit by bringing…

A: Foreign exchange (forex) trading involves the buying and selling of currencies on the global market.…

Q: What is the relationship or link between the forward rate and the foreign currency option premium?

A: There exists a tangible and direct relationship between the forward rate and the foreign currency…

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Q: Choose the correct answer and give short explaination. 3. Advantages of a fixed exchange rates…

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Q: Denomination intermediation refers to: a. The efficiency with which depository institutions…

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.