Written assignment 5

Written assignment 5 - Running head: Foreign Exchange...

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Running head: Foreign Exchange Markets 1 Foreign Exchange Markets Dustin Taylor Thomas Edison State College MAN-372-OL
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Foreign Exchange Markets 2 Abstract The foreign exchange rate is a market for converting the currency of one country into the currency of another country. Exchange rate are the rate at which those same currencies are converted (Hill, 2010). This paper discusses the functions of the foreign exchange markets, spot change rates and their importance in the market, and what forward exchange rates are along with their importance in insuring against foreign risk. It also explains a number of theories about how exchange rates are figured, along with the merits of each. The differences between translation, transaction, and economic exposure are discussed from a managerial standpoint, along with what a manager can do to manage each type of exposure. Introduction
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Foreign Exchange Markets 3 How much do you know about foreign exchange markets? If you're anything like me (before this class), all of your foreign exchange market knowledge could probably fit on the end of a pin. But that's all about to change. Throughout the world, there are many different countries, using many different currencies. How does a country that uses the dollar trade with a country that uses the euro? They don't, at least not without foreign exchange markets. They allow us to trade with anyone else in the world without having to have the same currency. Functions of the Foreign Exchange Market The foreign exchange market serves two main function: converting the currency of one country into the currency of another country, along with providing some insurance against foreign exchange risk (Hill, 2010). Currency conversion
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This note was uploaded on 08/14/2011 for the course MAN 372 taught by Professor Toops during the Spring '11 term at Edison State College.

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Written assignment 5 - Running head: Foreign Exchange...

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