ECONOMICS
FINANCIAL MARKETS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Exchange rate movements affect an MNC’s value because they can affect the amount of cash inflows received from exporting products or services or from a subsidiary
|
|
|
Exchange rate movements can affect the amount of cash outflows needed to pay for imports of products or services.
|
|
|
An exchange rate measures the value of one currency in units of another currency
|
|
|
As economic conditions change, exchange rates can change not significantly.
|
Detailed explanation-1: -Answer: Concept: Equilibrium rate of exchange is determined where demand for foreign exchange is equal to supply of foreign exchange.
Detailed explanation-2: -There are many ways to measure an exchange rate. The most common way is to measure a bilateral exchange rate. A bilateral exchange rate refers to the value of one currency relative to another. Bilateral exchange rates are typically quoted against the US dollar (USD), as it is the most traded currency globally.
Detailed explanation-3: -Detailed Solution. The correct answer is Flexible exchange rate. Flexible exchange rate system is a method of regulating exchange rates based on the market mechanism that is demand and supply.
Detailed explanation-4: -Inflation rates. Low inflation rates translate to a rise in the currency value hence low-interest rates. Interest rates. Interest rate changes affect currency exchange rates and their respective values. Government debt.