Assessing and Understanding the Foreign Exchange Market Paper
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.