b) Complete the following sentences based on your readings on International Financial Management. (One term may be used more than once) i. ii. iii. Suppose the spot exchange rate is 2 US dollars per British pound. The forward exchange rate is 0.5263 pound per dollar. The pound is selling at a forward Investing in a financial instrument other than one's home currency and locking in the proceeds through the forward rate is called states that difference between the forward and spot exchange rates is related to the interest rate differential between the currencies.

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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.