The mobility of international capital flows is causing emerging market nations to choose between a free-floating currency exchange regime and a currency board (or taken to the limit, dollarization). Describe how each of the regimes would work and identify at least two likely economic results for each regime.

Q: Explain the International Fisher effect and Interest Rate Parity. If these parity exists, explain…

A: Interest parity rate shows the balance and comparison of difference of interest rates between two…

Q: discuss any four factors that foreign direct investment (FDI) consider when evaluating the political…

A: Foreign direct investment (FDI) : A foreign direct investment (FDI) can be described as  a financial…

Q: why is political stability is one of the factor of foreign exchange market

A: The foreign exchange market, also known as the forex market or FX market, is a decentralized market…

Q: The international trade activities of MNCs have grown in importance over time. This trend is…

A: Various trade finance methods of financing international trade are as follows: Accounts receivable…

Q: Explain the differences and similarities between Forward, Futures, and Options. Then why can there…

A: The key differences between forwards, futures, and options are as follows: 1. Forward contracts…

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: Do you agree with the following claim? “U.S. companies with global operations can give you…

A: The question is based on the concept of globalization and its impact on risk  by way of…

Q: why should investors consider constructing global portfolios? As part of your response, be sure to…

A: Global portfolios are all such portfolios which will be providing investors with an opportunity to…

Q: You expect the Central bank to conduct expansionary monetary policy. What will be the impact on the…

A: The question is based on the concept of monetary policy and its impact on the financial market

Q: In international finance, can you explain the risk involve for both importer and exporter and…

A: International finance is referred as the study of the monetary interactions, which used to transpire…

Q: By referring to three theories learnt from Multinational Finance and Investment, critically discuss…

A: Exchange rates between two currencies refer to the value of one currency expressed in terms of…

Q: What are the impacts of Financial globalization?

A: Financial globalization - It is the integration of the financial markets through cross border…

Q: Describe the market for foreign investment.

A: Foreign investment is when a domestic investor decides to purchase ownership of an asset in a…

Q: Internationalization theory suggests that Select one: a. FDI is more likely to take place when the…

A: F.D.I ( Foreign Direct Investment ) occurs in developing countries only in order to boost their…

Q: Explain the role of private multinational corporations (MNCs) in foreign direct investment in…

A: Private multinational corporations MNC always wanted to grow internationally and grow business…

Q: Explain why nations trade, using the Heckscher-Ohlin model. Further, explain the pattern of trade…

A: Trade is the voluntary exchange of goods and services between various economic agents. Both parties…

Q: The money market has a vital role in developing the different economies. Analyze the extent to which…

A: The money market is a sector of the financial market in which financial instruments with high…

Q: Discuss following two international capital markets relationships   a) PPP b) International Fisher…

A: Capital market is a place where financial instruments and securities are traded. International…

Q: If the United States and Mexico engage in substantial trade and capital flows, which factors are…

A: Exchange rate fluctuations are driven by many factors including demand and supply. Exchange rates…

Q: There are three main types of methods to forecast exchange rates: technical forecasting fundamental…

A: Forecasting refers to a technique that is useful for analyzing the historical data for taking the…

Q: How can we measure whether short-term international capital markets are fully integrated or not?…

A: Measuring the integration of short-term international capital markets is a complex task that…

Q: Compare the strategies of pooling risk and diversification as methods of reducing the risks of…

A: Lending has a lot of risks. Aside from risks associated with the borrower's creditworthiness, there…

Q: Explain how political risk and exchange rate risk increase the uncertainty of international projects…

A: Capital budgeting is the process of evaluating and selecting long-term investments that will benefit…

Q: Which hedging strategy uses an exchange rate agreed to today for future delivery of currency to…

A: Hedging is a financial management strategy help to setoff the risk of making an investment in…

Q: what factors affecting foreign exchange market? explain each factor

A: When the goods are bought or imports from other country are done then these goods or bought in our…

Q: Sometimes it is claimed that the international equality of real interest rates is the most accura…

A: Real interest rate equaliizatiion is that the most theoretiically appealiing of the varied measures…

Q: how would market forces be affected? Does arbitrage opportunity destabilize foreign exchange…

A: Arbitrage is nothing but buying in one market with some price and selling the same with other market…

Q: st and explain the seven functions performed by the money and capital market in the global economy.…

A: Money and capital markets are two important components of the global economy. The money market…

Q: As international monetary system is looking into moving forward towards digital transformation, What…

A: In general term, digital transformation is the process of converting manual  processes into…

Q: Distinguish between the spot market and forward market for foreign exchange.

A: The objective of this question is to differentiate between the spot market and the forward market in…

Q: =) FALSE?

A: The exchange rate refers to the value of the one currency converted into the other currency. The…

Q: What are your views on dedollarization?

A: Dedollarisation is the process of substituting the US dollar currency which is used in trading oil…

Q: How can fluctuations in exchange rates impact Zara especially in dealing with international…

A: Answer:-  Exchange rate definition:- Exchange rate is that rate at which one country's currency can…

Q: Why do we need a foreign exchange ma

A: Foreign exchange market is where one can buy and sell currencies of other countries and convert…

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: Which of the following statements about globalization best describes the increasing complexity in…

A: Globalization is the process of increasing interconnectedness and interdependence among individuals,…

Q: Explain how political risk and exchange rate risk increase the uncertainty of international projects…

A: Political risk and exchange rate risk are two important sources of uncertainty that can increase the…

Q: Compare and contrast the Hecksher-Ohlin theory and the increasing returns to scale theory? Clearly,…

A: there are different theory given in the economics related to the international trade according to…

Q: international

A: Benefits of international portfolio diversification : . Risk Can Be Reduced: Having an international…

Q: what are the advantages and drawbacks for digital Technology: How It Could Transform the…

A: Digital technology is referred as an usage of an advanced communication as well as information…

Q: How does the interest rate parity condition Maintain equilibrium in the foreign exchange Market?

A: The question asks how the interest rate parity (IRP) condition helps keep the foreign exchange…

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.