IF A2 1. Discuss the pros and cons of fixed exchange rate systems and flexible exchange rate systems.

Q: Suppose that you observe the following exchange rates: $1.75/£; $.0075/¥; and £.005/¥. Is there…

A: Exchange rates: $1.75/Pound  $0.0075/ Yen Pound 0.005 / Yen

Q: Explain pegged exchange rates

A: Exchange rate is the value of one country’s currency in exchange of other country’s currency.

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: PQ 22a What is a situation the real exchange rate would be used?

A: The weighted average of a nation's currency in respect to an index or basket of other major…

Q: Define the term exchange rate?

A: There are two types of exchange rates: floating and fixed. The floating exchange rate is determined…

Q: What is fixed exchange rate system?

A: Fixed exchange rate system It is a standard forced by an administration or national bank that…

Q: What are the different types of money market instruments available?

A: Introduction: Money market: Money market is a short term liquid instruments are traded.

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: 1. What is the optimum currency area? 2. What is the specie-flow mechanism?

A: Standard disclaimer-Hi there, Thanks for posting the questions. As per our Q&A guidelines, must…

Q: country with fixed exchange rate rep plidation on Y, exchange rate E, i, C,

A: The figure is shown as,

Q: What three real-world complications keep purchasing power parity from being a complete explanation…

A: Purchasing power parity-It states that exchange rates between two currencies are in…

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: What are pegged exchange rates?

A: Pegged exchange rate: It is otherwise called a fixed exchange rate, which is a kind of conversion…

Q: 20. Which of the following is nota benefit of a single currency? Select one: O a. increased price…

A: SINGLE CURRENCY : INCREASES TRANSPRANCY DECREASE TRANSCTION COST REDUCES EXCHANGE RATE UNCERTAINITY

Q: What are the differences between an exchange and an over-the counter market?

A: Over the counter market is customized market. Exchange is standardized.

Q: Required: a. What are the indirect exchange rates for the places.)

A: 1 British Pound = $1.60 So 1 Dollar = 0.625 British Pounds ( 1*1/1.60)   1 Canadian Dollar = $ 0.74…

Q: Explain the random walk model for exchange rate forecasting. Can it be consistent with technical…

A: The Random Walk Model suggests that the movement in the prices of the stocks is unpredictable and if…

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: 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: What is a convertible currency?

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

Q: What are the advantages of a flexable exchange rate systems?

A: As the name suggests a flexible exchange rate system is one in which the exchange rates are not…

Q: What is the difference between a spot rate anda forward exchange rate?

A: There are two types of currency exchange rates available namely forward exchange rate & spot…

Q: Critically evaluate the role of exchange rate systems in influencing FDI and trade levels.

A: Foreign direct investment:  One of the primary methods of contemporary capital internationalization,…

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: 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: The gold standard is a type of floating exchange rate system. a type of managed flexible exchange…

A: Exchange rate: It is the rate at which the value of one currency is exchanged for another currency.

Q: list 7 benefits of a flexible exchange rate system then defend claims that returning to the gold…

A: Flexible exchange rate-A flexible exchange-rate system is a type of monetary system in which the…

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: What are three main stages at which could be considered the effect of exchange rates? Discuss them…

A: There are three main stages in the life of a transaction exposure that could be considered the…

Q: easons in favour of forecasting exchange rate

A: Exchange rates refer to the currency of a country for the objective of conversion in the currency…

Q: Discuss the following types of currency risks giving suitable examples: i. Economic risk ii.…

A: EXPLANATION:- Currency Risk Currency ratio is a measurement of loosing money as a result of…

Q: What is the difference between spot and forward exchange rates?

A: Commodity market involves different rates for products depending on the trading transactions. The…

Q: what is the difference between the e

A: The exchange rate is rate at which one currency is exchanged with currency of other country and some…

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.