long position in foreign exchange? Does a successful Long position mean the currency price becomes lower than what you bought it?

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: _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: A country with a fixed exchange rate experiences downward pressure on the exchange rate value of its…

A: The exchange rates in financial markets are rates at which the currencies of different countries are…

Q: What is meant by Foreign Exchange Markets?

A:

Q: Relative inflation rates affect interest rates, exchange rates, the overall economic health of a…

A: Answer 1:The statement is a “valid” statement.Justification: The interest rate may comprise two…

Q: Firms typically hedge their foreign exchange exposure to: A. Speculate on currency movements. B.…

A: C. Reduce the uncertainty of future cash flows. Firms frequently do business with other countries,…

Q: If US dollars gets lower interest rates in the United States. How would this affect a fundamental…

A: There are two methods to calculate the future or forward currency exchange rates - Interest rate…

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: 3. Consider the monetary neutrality. Suppose that the central bank changed the money supply.…

A: Money Neutrality is an economic theory which states that the change in the supply of money or stock…

Q: Due to ____, market forces should realign the relationship between the interest rate differential of…

A: Arbitrage means buying and selling the asset in order to profit from its price between markets.

Q: Explain how exchange rate fluctuations affect the return from a foreign market measured in dollar…

A: When doing business outside country of home currency dollars there is risk of change in exchange…

Q: Choose a,b,c,d,e for the following: Question 10 - Which of the following is true? a. An indirect…

A: Answer- Option (e)

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

A: Speculators who anticipate rising prices want to make a profit by buying futures contracts.…

Q: Does Arbitrage destabilize foreign exchange markets? Support your logic about that statement

A: Solution- F = S*1+if/1+id  F= Forward Exchange Rate  S= Current Spot Exchange Rate  Id= Interest…

Q: A decrease in the expected future domestic exchange rate causes the demand for domestic assets to…

A: A decrease in the expected future domestic exchange rate causes the demand for domestic assets to…

Q: Define short exposure and explain the relationship between the variability of the domestic currency…

A: Domestic currency is referred to as the legal tender in an economy as well as issuance through the…

Q: A rise in the foreign interest rate will a.raise the value of both foreign-currency put and call…

A: Options are derivative contracts the value of which depends on the underlying asses. Options are of…

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: If the downward pressure on the currency persists for a long period, even after successive…

A: Downward pressure: It is the devaluation in the value of the currency. It mainly happens when the…

Q: once the capital markets are integrated it is difficult for a country to maintain a fixed exchange…

A: Market is a place to exchange the products, in the financial market (FM), financial securities are…

Currency Market

The currency market, also known as the foreign exchange market, consists of currencies worldwide. This market determines the rate of all currencies based on the buying and selling of forex. It is an over-the-counter market. It is the largest and most liquid market based on trade volume.