I need a short answer for each subquestion. Short answer will be fine. 1 Foreign Exchange Market:...

I need a short answer for each subquestion. Short answer will be fine.

1 Foreign Exchange Market:

A. How is the Foreign Exchange Rate for a country Determined?

B. Is the Foreign Exchange Market Efficient? What are its implications for Finance manager?

C. What are Crypto-Currencies and what role do you think they will play in future? How will this impact the FX market and Gold market?

Expert Solution

The exchange rate is determined by forces of supply and demand for foriegn exchange. Demand arises due to demand for imports of goods and services, speculation etc. Supply arises due to exports of goods and services, speculation etc. Some countries also fix exchange rate artificially

B yes it is efficient. Even small variations are noted by traders and they soon engage in speculation with the result exchange rate is corrected. Implications for finance manager is to keep watch and invest whenever profitable opportunities exist in overseas or exchange market. He has also to save his investment from variations in exchange rate.

C crypto currency is digital means of exchange. It uses cryptography to secure transactions, control creation of digital currency and transfer of assets. From what is happening today it can be concluded that it will become mainly as store of value and as investment destination. It will not act too much as medium of exchange since many countries like South Korea, India are against its use. It will reduce demand for gold and FX as Investors are utilising it for speculation instead of FX and gold. However all will depend on how national govts regulate it

Rahul Sunny answered 2 years ago

Discuss the linkages between the money market and the foreign exchange market in both the short...

Discuss the linkages between the money market and the foreign exchange market in both the short and long-run? (You should use (lots of) graphs in this question)

1. For each of the following events draw a diagram of the foreign exchange market for...

1. For each of the following events draw a diagram of the foreign exchange market for dollars in equilibrium, and show the effect on the demand curve and/or the supply curve of dollars as a result of each of the events. Does the dollar rise or fall in value? i) Interest rates in the United States rise. ii) Speculators become convinced that the future value of the Japanese yen will be higher relative to the dollar than it is today....

Marketing department I need long answer /short answer is not working I need unique answer please...

Marketing department I need long answer /short answer is not working I need unique answer please don't copy I need references, use APA style If answer without references I will hit you dislike Question: Which strategies in Huawei company should make regarding its portfolio of current and future products. What are the dimensions upon which a company manages its product portfolio? Instructions: Good and clear explanation of the various dimensions upon which a company manages its product portfolio (product mix...

The foreign exchange market is a market in which foreign exchange transactions take place. The Primary...

The foreign exchange market is a market in which foreign exchange transactions take place. The Primary function of a foreign exchange market is the transfer of purchasing power from one country to another and from one currency to another. The international clearing function performed by foreign exchange markets plays a very important role in facilitating international trade and capital movement. Certain important types of transactions conducted in the foreign exchange market occurs via the Spot and Forward markets. Describe the...

Geography and the Foreign Exchange Market a. What is the geographical location of the foreign exchange...

Geography and the Foreign Exchange Market a. What is the geographical location of the foreign exchange market? b. What are the two main types of trading systems for foreign exchange? c. How are foreign exchange markets connected for trading activities?

Use the money market with the general monetary model and foreign exchange (FX) market to answer...

Use the money market with the general monetary model and foreign exchange (FX) market to answer the following questions. The questions consider the relationship between the U.K. pound (£) and the Australian dollar ($). Let the exchange rate be defined as Australian dollars per pound, E$/£. In the U.K., the real income (Y£) is 10.00 trill., the money supply (M£) is £50.00 trill., the price level (P£) is £10.00, and the nominal interest rate (i£) is 2.00% per annum. In...

Exercise 1 Use the money market and foreign exchange (FX) diagrams to answer the following questions....

Exercise 1 Use the money market and foreign exchange (FX) diagrams to answer the following questions. This question considers the relationship between the euro and the U.S. dollar ($). The exchange rate is in U.S. dollars per euro, E$/e. Suppose that with financial innovation in theUnited States, real money demand in the United States decreases. On all graphs, label the initial equilibrium point A. (a) Assume this change in U.S. real money demand is temporary. Using the FX and money...

Use the simple exchange-rate model (supply and demand model for foreign exchange market) to answer the...

Use the simple exchange-rate model (supply and demand model for foreign exchange market) to answer the following questions. 2.1. Assume an initial equilibrium level for price and quantity in the US versus China exchange rate market. Plot the exchange rate of US dollars per Chinese yuan versus the quantity of Chinese yuans traded. Then graphically simulate the impact of an increase in tariffs imposed by the US on Chinese goods and indicate your forecast for the potential changes in the...

For each of the following events draw a diagram of the foreign exchange market for dollars...

For each of the following events draw a diagram of the foreign exchange market for dollars in equilibrium, and show the effect on the demand curve and/or the supply curve of dollars as a result of each of the events. Does the dollar rise or fall in value? i) Interest rates in the United States rise. ii) Speculators become convinced that the future value of the Japanese yen will be higher relative to the dollar than it is today.

Use the money market equilibrium and Foreign Exchange (Forex) market equilibrium to answer the following questions....

Use the money market equilibrium and Foreign Exchange (Forex) market equilibrium to answer the following questions. In the FX market diagram, the exchange rate is in U.S. dollars per British pound, (E$/£ ) and it is on the X-axis. Rates of return are on the Y-Axis. US Federal Reserve lowers money supply temporarily. a. What happens to the price level in the short run? b. Show the short run change in the US money market equilibrium using a diagram. c....

Question