Define Historical exchange rates

Q: What is the purchasing power exchange rate?

A: Purchasing power exchange rate is the rate at which one currency is converted into another currency…

Q: What is managed floating rate?

A: Managed floating rate: It may be a framework that requires an issuing central bank to mediate…

Q: What is foreign exchange FX risk?

A: Foreign exchange risk: It alludes to the misfortunes, due to currency or money changes, that a…

Q: The two major translation methods currently used are:      a. Historical exchange rate and…

A: correct option is D i.e. current rate and temporal

Q: rence rat

A: Introduction :  In simple words, Reference rate can be understood as the rate that is utilized to…

Q: How to trade in forex

A: Foreign exchange market is defined as the global decentralized or OTC market regarding the currency…

Q: What is exchange traded fund

A: Introduction: Exchange traded funds are an investing instrument that includes trading in stock…

Q: Describe the method used to establish the Economic equivalence at period 0?

A: Economic Equivalence sets the cash flows in such a way that its value is adjusted for the time…

Q: state the importance of Balance of International Payment

A: The Balance of International Payment (or simply the Balance of Payment or BoP) is that statement…

Q: What is the important differences that exist between U.S. GAAP and IFRS?

A: U.S. GAAP is the accounting standards laid forth by the Financial Accounting Standards Board (FASB).…

Q: Define trade balance (deficit or surplus)

A: Trade balance commonly known as international trade balance, balance of trade The difference between…

Q: What is a floating rate system?

A: We know that there are two types of rate Fixed Rate System Floating rate system   Fixed Rate…

Q: What is an alternative trading system (ATS)?

A: Alternative trading systems are generally helpful for people like investors & professional…

Q: What is forward exchange rate?

A: A rate through which individuals or companies convert their domestic currency with the other…

Q: Define “partially convertible currency.”

A: The legal tender of a nation exchanged in small amounts in the international exchange market is a…

Q: The advantages and disadvantages of a dual currency bond.

A: Dual Currency Bond - It is a 2-way concept bond in which coupon or interest is denominated in one…

Q: How can economic equivalence at the period o be established?

A: The question is based on the concept of economic equivalence.

Q: How is the Equivalence Calculations made with Effective Interest Rates?

A: The formula for Effective annual rate is  Where, r - rate of return n - number of compounding.…

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: Differentiate between spot and forward exchange rates

A: Introduction: The spot rate is the rate at which the actual deal or sale is to take place…

Q: Define each of the following terms: b. Exchange rate; fixed exchange rate system; floating exchange…

A: Introduction: The terms exchange rate, fixed exchange rate system, floating exchange rate are…

Q: What is an exchange rate?

A: Exchange is the price of one currency derived in another form of currency.

Q: What is exchange risk, as distinct from exposure?

A: Foreign exchange risk or foreign exchange exposure refers to the financial risk associated with a…

Q: Which of the following would be considered a Eurodollar deposit?

A: Eurodollars refer to dollars denominated at overseas banks or overseas branches of America. The…

Q: What are the similarities of money and currency?

A: Money refers to the medium of economic exchange between individuals for their financial and economic…

Q: What is exchange rate risk?

A: Exchange rate risk It is a chance of occurrence of loss in the investment value because of uncertain…

Q: Differentiate between foreign bonds and Eurobonds.

A: Foreign bonds are generally considered to be unstable as their value is always influenced by various…

Q: What is a convertible currency?

A: Introduction: A convertible currency that might be swapped for a foreign currency. Currency…

Q: What is cross-exchange rate? Give an example.

A: The exchange rate expresses the value of a currency in terms of another currency. It determines the…

Q: What is the difference between the time periods being measured with real income and exchange rates?

A: When referring to an individual's income, real income is the amount of money earned after inflation…

Q: What is an exchange rate? What is the differencebetween direct and indirect quotations? Whatis a…

A: Introduction: An exchange rate is the value of one currency stated in terms of another currency, or…

Q: Define currency swap

A: Introduction: This question is related to the concept of financial derivatives. Derivative…

Q: exchange gain or loss

A: As per IAS 21 ( The effect of changes in foreign exchange rates), a foreign currency monetary item…

Q: Describe the widely used currency derivatives.

A: Currency Derivatives: These are the contracts that generate their value from their underlying…

Q: illustrate the different exchange rates regimes.

A:

Q: Define a floating exchange rate system.

A: A floating exchange rate is a system in which a country's exchange price is set mostly on basis of…

Q: Define convertible currency

A: A convertible currency is the one that is readily available to purchase other currencies and is not…

Q: What is a Eurodollar?

A: Currency refers to the medium through which goods and services are exchanged. Basically, it's the…

Q: Define Eurobond.

A: Eurobonds allows corporations to raise funds by issuing bonds in a foreign currency. The bonds are…

Q: Explain the meaning of a "trade balance"

A: Answer: Trade Balance is basically the difference between the country's imports and exports. It is…

Q: Define Functional currency

A: currency : Currency is the medium of exchange of goods and services.

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.