4 International Finance I

4 International Finance I - WHY DEMAND FOREIGN EXCHANGE?...

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WHY DEMAND FOREIGN EXCHANGE? -TO BUY FOREIGN GOODS AND SERVICES We don’t really know why exchange rates rise and fall– however the variables are important– investments, interest rates, wealth, when us is doing well we buy foreign goods, - TO BUY FOREIGN ASSETS - TO HOLD THE CURRENCY ITSELF
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FOREIGN EXCHANGE: JUST ANOTHER PRICE “HOW MUCH DO I HAVE TO GIVE UP TO GET ONE MORE UNIT OF WHAT I WANT? Price D Q
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HOW TO READ FOREIGN EXCHANGE VALUES WALL STREET JOURNAL U.S. DOLLAR EQUIVALENT CURRENCY PER U.S. DOLLAR ECONOMICS ‘HOW MUCH DO I HAVE TO GIVE UP IN $ TO GET ONE MORE UNIT OF THE FOREIGN CURRENCY?’ ‘HOW MUCH DOES A FOREIGNER HAVE TO GIVE UP TO GET ONE MORE U.S. DOLLAR?’ PRACTICAL ‘HOW MUCH IS A YEN?’ ‘HOW MUCH WILL MY DOLLAR THEORY PAPERS x 1/X
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TYPE ONE: DOLLAR TO FOREIGN “HOW MUCH WILL MY DOLLAR BUY?” $ x yen / $ = SUPPOSE I HAVE $100.00 AND I WANT YEN US $ x Yen / $ = Yen Check to make sure you did the units right!! $ x
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4 International Finance I - WHY DEMAND FOREIGN EXCHANGE?...

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