All trade-offs in the followings are true about exchange rate regime EXCEPT: a. China reminbi vs U.S. dollar. b. all answers available in the selection are true. c. discretionary arrangement vs rules. d. independence vs cooperation.

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: B  (ii) and (iii) only

A: Monetary items include all types of current assets is also not true because monetary items may also…

Q: In a money-market hedge you either borrow or invest in a foreign currency at foreign…

A: The question is related to Foregin Exchange. The Interest rate parity states that interest rate…

Q: How does the timing of hedges of (a) foreign currency denominated assets and liabilities, (b)…

A: The three terms are differentiated based on the time when the price or the foreign exchange rate is…

Q: What is the rationale for the remeasurement of foreign currency transactions?

A: Remeasurement: Remeasurement refers to re-evaluation of a physical asset or foreign currency in the…

Q: Which of the following 6 methods the best method for an multinational corperation to use in order to…

A: Forward rate is the rate of interest for a transaction that occur in the future period. It's value…

Q: Spot rate; forward exchange rate; discount on foreign currency forward rate; premium on foreign…

A: According to the rule, we will only answer the first three subparts, for the remaining subparts,…

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 foreign exchange intervention with an offsetting open market operation (e.g. a purchase of US…

A: Foreign Exchange intervention - It is a kind of monetary policy tool where the central bank actively…

Q: If the U.S.A. imports more than it exports, then: O a. The supply of dollars is likely to exceed the…

A: The exchange rate of a country's currency as compared to other currencies depends upon its supply…

Q: In the context of foreign exchange, how are non-deliverable currency situations typically handled?…

A: In the realm of foreign exchange trading, it's not uncommon for investors to encounter scenarios…

Q: Under a managed-float exchange rates regime, if the rate of inflation in Australia is less than the…

A: Higher rate of inflation in any country tends to have a negative impact on its currency. Since it…

Q: All of the following typically tend to be short-term determinants of exchange rates between currency…

A: Exchange Rate: The value of a nation's currency in relation to the currency of another country or…

Q: Based on IMF's "de facto classification" on exchange rate regime, a currency that is mainly…

A: The IMF's de facto classification includes - exchange arrangements with no separate legal tender,…

Q: Short-run exposure to exchange rate risk is best illustrated by which one of the following?…

A: Exchange rate risk is the risk related to the uncertainty regarding the change in the price of a…

Q: f the functional currency is determined to not be the foreign entity's local currency, translation…

A: Currency translation is needed when the business operated overseas. The functional currency of the…

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.