Assessing and Understanding the Foreign Exchange
Important Note: You can use your written assignments for each module in your comprehensive Final Paper, which is described in detail in the Final Paper section of the course Web site. Please review the requirements of the Final Paper early and plan your written assignments appropriately based on your Final Paper topic.
Please the paper is 4-5 pages, each paragraph should be 6 sentences, and at least 3 paragraphs for each essay REQUIRED from the prof. respond to the following questions:
● Module objectives addressed: MO 5.1, 5.2, 5.3, 5.4, 5.5, 5.6
In this paper, provide a descriptive title or heading for your paper by focusing on topics or countries that interest you (such as “The Volatile Exchange Market in Country X”), and then discuss/explain the following concepts:
1. Discuss and explain the functions of the foreign exchange market.
2. Discuss spot exchange rates and its overall importance in the market.
3. What is forward exchange rate and what role do they play in insuring against foreign exchange risk?
4. Discuss at least one theory explaining how currency exchange rates are determined and their relative merits.
5. Discuss and evaluate the merits of different approaches toward exchange rate forecasting.
6. Discuss the differences between translation, transaction and economic exposure and what managers can do to manage each type of exposure.