GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Speculators in foreign exchange markets do all of the following except
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bear risk as they attempt to beat the market
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attempt to buy currency at a low price and later resell that currency at a higher price
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attempt to profit by trading on expectations about future currency prices
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simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit
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Explanation:
Detailed explanation-1: -Forward markets can be very profitable instruments of currency speculation. If a speculator expects a foreign currency, for example the Swiss Franc (SF), to appreciate over the next three months, she will contract to buy Swiss Francs in three months at a fixed exchange rate.
Detailed explanation-2: -Commercial banks do not participate in the foreign exchange market.
There is 1 question to complete.