WriteTrueifthestatementiscorrectandwriteFalseifthestatement is incorrect.1). The foreign exchange marketis a market forconverting the currency ofone country into thatof another country.An exchange2).rateis simplythe rate at which onecurrency is converted intoanother.3).Therateatwhichonecurrency is converted intoanother can change over time.4).The foreign exchange marketserves to convert thecurrency of one country intothe currency ofanother.5).The foreign exchange marketserves to provide someinsurance against foreignexchange risk, by whichwemeantheadverseconsequences of unpredictablechanges in exchange rates.6).Whenatourist changesonecurrency into another,she is participating in theforeign exchangemarket.7). Tohome country, the companyusethosefundsin itsmust convert them to its homecountry's currency.8).Currencyspeculationisanother use of foreignexchange markets.9). International businessesuseforeign exchangemarkets when they have sparecash that they wishto invest for short terms inmoney markets.D in10). The foreign exchange marketis the lubricant thatenables companies based incountries that usedifferent currencies to tradewith each other.

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_1). is a market for The foreign exchange market converting the currency of one country into that of another country. _2). An exchange rate is simply the rate at which one currency is converted into another. 3). The rate at which one currency is converted into another can change over time.

_1). is a market for The foreign exchange market converting the currency of one country into that of another country. _2). An exchange rate is simply the rate at which one currency is converted into another. 3). The rate at which one currency is converted into another can change over time.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter13: Emerging Topics In Managerial Accounting

Section: Chapter Questions

Problem 47E: Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot...

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Question

Write
True
if
the
statement
is
correct
and
write
False
if
the
statement is incorrect.
1). The foreign exchange market
is a market for
converting the currency of
one country into that
of another country.
An exchange
2).
rate
is simply
the rate at which one
currency is converted into
another.
3).
The
rate
at
which
one
currency is converted into
another can change over time.
4).
The foreign exchange market
serves to convert the
currency of one country into
the currency of
another.
5).
The foreign exchange market
serves to provide some
insurance against foreign
exchange risk, by which
we
mean
the
adverse
consequences of unpredictable
changes in exchange rates.
6).
When
a
tourist changes
one
currency into another,
she is participating in the
foreign exchange
market.
7). To
home country, the company
use
those
funds
in its
must convert them to its home
country's currency.
8).
Currency
speculation
is
another use of foreign
exchange markets.
9). International businesses
use
foreign exchange
markets when they have spare
cash that they wish
to invest for short terms in
money markets.
D in
10). The foreign exchange market
is the lubricant that
enables companies based in
countries that use
different currencies to trade
with each other.

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Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).
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