BUS201 Lecture Notes - Lecture 12: Foreign Exchange Risk, The Foreign Exchange, Foreign Exchange Spot
15 Mar 2020
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Document Summary
Week 12 international monetary system/foreign exchange market. This week"s lecture takes aspects from chapters 9 and 10 from the textbook i. e. look at the lecture material and follow both chapters of the textbook based on the material we cover here. Describe the functions of the foreign exchange market. Understand what is meant by spot rates. Recognise the role that forward exchange rates play in insuring against foreign exchange risk. Understand the different theories explaining how currency exchange rates are determined and their relative merits. Identify the merits of different approaches toward exchange rate forecasting. Compare and contrast the differences among transaction, translation and economic exposure and what managers can do to manage each type of exposure. The foreign exchange market: is used to convert the currency of one country into the currency of another, provides some insurance against foreign exchange risk the adverse consequences of unpredictable changes in exchange rates.
