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: How does an investor earn in the foreign exchange market?

A: The foreign exchange market comes into exitance where currencies of different countries can be…

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: What happens over time to the currencies of countries with higherinflation rates than that of the…

A: Currency exchange rate is the rate at which the currency of one country is traded for another…

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: Why does a money has an intristic value and a currency doesn't have an intristic value?

A: The estimate of an asset's worth based on a financial model is known as the intrinsic value in…

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: Under a flexible exchange rate system, a decrease in the value of a domestic currency in terms of…

A: Option 2. Depreciation   Explanation Decrease in value of domestic currency in terms of foreign…

Q: What three real-world complications keep purchasing power parity from being a complete explanation…

A: Purchasing power parity-It states that exchange rates between two currencies are in…

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: exchange rates

A: Mundell Fleming Model is actually the standard open economy model. It explains how key macroeconomic…

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: Who are the players in the foreign exchange market?

A: The currency market, often known as the foreign exchange market, is a global decentralized or…

Q: Assume that interest rate parity holds. When a currency trades at a forward premium,what does that…

A: When trading of currency is at forward premium, A situation where the currency’s forward price is…

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: Which currency regime plays role of counter inflation anchor: Select one alternative: Free…

A: Solution Step (1) Inflation Anchor Conventional wisdom is that a financial organization can anchor…

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: According to the interest-parity relation ... 1. a higher domestic interest rate leads to a…

A: According to interest parity concepts difference in interest rates are reflected by difference in…

Q: i) Under a fixed exchange rate, a continuous increase in domestic credit will finally cause... i.…

A: Under a fixed exchange, when supply of money increases, the interest rates become lower. The…

Q: What factors create a foreign exchange gain on a foreign currency transaction? What factors create a…

A: Factors creating foreign exchange Gains or losses: 1) Having an exposure of receivables and payable.…

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…

Q: e the real exchange rate is constant – say, at the level required for net exports (or the current…

A: Nominal exchange rate includes the exchange rate after consideration of inflation and real exchange…

Q: how interest rate impact the foreign exchange market? how foreign exchange market impacts interest…

A: Interest rates and the foreign exchange market are closely related, and changes in one can have a…

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.