A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations. To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

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Chapter 11, Problem 11.9Q

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Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

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Answer 2

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Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

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Answer 3

Question

Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

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Answer 4

Question

Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

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Answer 5

Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

Answer 6

Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

Answer 7

Chapter 11, Problem 11.9Q

To determine

Introduction: A countries’ currency is much like other commodities, and the exchange rate fluctuations occur because of a number of economic factors influencing the supply and demand for the nation’s currency. If a nation is facing a high level of inflation, the purchasing power of its currency decreases. This decrease in the value of a currency is reflected by a decrease in the positioning of the country’s currency comparative to the other nations’ currencies, other factors causing exchange rate fluctuations are the balance of payments of a country, changes in the exchange rate, and interest rate and investment levels of a country. The stability and process of governance will also contribute to the exchange rate fluctuations.

To explain: Some of the ways a U.S. company can manage the risk of changes in the exchange rates for foreign currencies.

Answer 8

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Answer 11

Ch. 11 - Prob. 11.1Q Ch. 11 - Prob. 11.2Q Ch. 11 - The U.S. dollar strengthened against the European...Ch. 11 - Prob. 11.4Q Ch. 11 - Prob. 11.5Q Ch. 11 - How are assets and liabilities denominated in a...Ch. 11 - Prob. 11.7Q Ch. 11 - Prob. 11.8Q Ch. 11 - Prob. 11.9Q Ch. 11 - Distinguish between an exposed net asset position...

Solution Summary: The author explains how U.S. companies can manage the exchange rate risk by using forward contracts, hedges, and speculative positions in the foreign currency markets.

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Chapter 11 Solutions