With the information from the prior two questions, what is the implied Yen per dollar exchange rate?

Q: Discuss well about the exchange Rate Mechanisms of currencies; what does it mean  “Independent…

A: Answer:-  Currency meaning:- The public uses currency, an officially recognized type of money, for…

Q: importance of understanding the relationship between foreign exchange market and interest rate with…

A: Foreign exchange (forex) refers to the exchange of one currency for another currency in the global…

Q: Explain the followings:                          a.    Floating Exchange Rates  b.    Pegged or…

A: The price of a country's currency in reference to the currency of another country. When countries…

Q: Discuss how changes in the expected exchange rate affects current exchange rate

A: The rate at which one country currencies is exchanges with the currencies of another country, such…

Q: How can the Equivalence calculations be done at a varying interest rate?

A: Interest Rate - The amount of interest due each period expressed as a percentage of the amount lent,…

Q: Discuss the key differences between the operation of a currency forward market and a  futures…

A: Foreign exchange, also known as Forex or FX, is the process of converting one currency into another…

Q: What is the current market view on USD/JPY? (Will it appreciate and which depreciate? and why?)

A: USD/JPY will be reflecting the exchange rate of Japanese currency with respect to 1 American dollar.…

Q: What is the basic difference between floating and fixed exchange rates?

A: Answer: Fixed exchange rate is where, when revaluation or devaluation happens, the exchange rate…

Q: Exchange rates fluctuate under both the fixed exchange rate and floatingexchange rate systems. What,…

A: Fixed exchange rate: Fixed exchange rate is formally set by the administration or monetary authority…

Q: A foreign currency loan is a typical example for   O a. Currency Risk   O b. Interest rate risk…

A: A foreign currency loan is one in which you borrow money in a foreign currency, such as Swiss…

Q: 2. How fixed exchange rate system of UAE is managed? Show this for both surplus and deficit balance…

A: The exchange rate system explains how the exchange rate determines in respect of the other nation's…

Q: The nominal rate equals the real rate plus the inflation rate. True False

A: Nominal interest rate sometimes is also called as stated interest rate.

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: What are two benefits of a single currency like the Euro?

A: In finance, a currency is a medium through which goods and services are exchanged between the buyers…

Q: Who are the major actors in the exchange rate market and what are their roles?

A: The exchange rate market is also known as the Forex, it is a market for the changing home currency…

Q: Define foreign currency hedges.

A: Definition:   Hedge: The process through which the risk associated with a particular project, can be…

Q: How can we obtain a pay-domestic-floating, receive-foreign-fixed currency swap by using a…

A: A currency swap is the exchange of interest (and occasionally principal) in one currency for the…

Q: Will US$/C$ futures exchange rate go up or down? 2. Will US$/C$ spot exchange rate go up or down?

A: The value of one country's currency in presented terms of the value of another country's currency is…

Q: Describe about the foreign currency risk.

A: Foreign currency- As we know every country has its own currencies in which it operates. Hence,…

Q: differences between translation risk and transaction risk

A: Translation Risk  Translation risk is defined as the exchange rate risk associated with converting…

Q: Define spot, forward, and swap transactions in the foreign exchange market and give an example of…

A: The foreign exchange market (also known as the Forex or FX market) is a decentralized global market…

Q: Define each of the following terms: f. Spot rate; forward exchange rate; discount on forward rate;…

A: The spot rate shall be the value of a good, security, or monetary system for immediate payment.…

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…

Q: system, the three endogenous variables in the IS/LM/BP model are output, interest rates and money…

A: THE Mundell Fleming model is known as IS /LM/BOP MODEL. The equation more relevant for small open…

Q: An exchange rate is simply the rate at which one currency is converted into another True False

A: Currency is referred as the medium of exchange for which goods and services are exchanged. It is the…

Q: How can we establish economic equivalence by selecting the base period?

A: Answer: There is economic equivalence between cash flows which have the same economic influence and…

Q: Under a flexible exchange rate system, the three endogenous variables in the IS/LM/BP model are…

A: THE MUNDELL FLEMING MODEL , AS THE ECONOMY cannot maintain a fix exchange rate three capital women…

Q: Critically evaluate the argument that fixed exchange rate regime is better than flexible exchange…

A: Fixed exchange regime refers to that regime in which exchange rate in a country remains fixed…

Q: Compare and contrast a currency forward contract and a currency futures contract

A: Currency forward contracts and currency futures contracts are arrangements to purchase or sell a…

Q: explain what economists attribute so much attention to Real Exchange Rates? Provide an answer that…

A: Exchange rates are the rates in which one currency could be exchanged into the currency of another…

Q: Explore the concept of arbitrage on the currency exchange markets and critically evaluate with…

A: Arbitrage is the practice of purchasing and selling an item in numerous markets at the same time in…

Q: Which are two types of interest rates are used in equivalence calculations?

A: Equivalence calculation is used for analysis of an investment or a project based upon the the…

Q: Explain with examples how to measure exchange rate risk for long positions and short positions Notes…

A: Forex (Forex or FX) is the trading of one currency against another. For example, you can exchange US…

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.