Question : The interest parity condition: Student Answer: can be used to explain how the exchange rate is determined. simply means that the expected returns on both dollar assets and foreign assets. both of the above. none of the above. Points Received: 2 of 2 Comments: Question 5. Question : The starting point for understanding how exchange rates are determined is a simple idea called _______‚ which states that if two countries produce an
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characterised by great changes in the international financial system‚ beginning with the use for gold and silver in the bimetallism era‚ through the gold standard the gold exchange standard ‚ the Bretton Woods system and the current floating exchange rates. Arguably gold id the oldest metal used both as store of value and as a medium of exchange as realised in the early Egyptian Pharaohs’’ (3000 B.C)‚ who stored wealth in gold and traded with other likewise‚ according to Prayer (1982). Definitions
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license for foreign currency exchange services. Central Bank is the sole bank who can control the foreign currency exchange‚ and foreign exchange rate against US dollar was traditionally designated as around 6 Kyats per dollar since 1975 while the market exchange rate fluctuated between 780 and 1‚000 per dollar for the past several years. However‚ since the government transform into Democracy System‚ the banking policy is also became to start change for the stability of financial and exchange rate with
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Central bank buy securities in open market operations and increases money supply | | Central bank sell securities in open market operations and increases money supply | | | | | | Short term interest rate and exchange rate falls | | Short term interest rate and exchange rate rises | | | | | | Qty of money and supply of loanable funds increase | | Qty of money and supply of loanable funds decrease | | | | | | Long term interest rate fall | | Long term interest rate
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Chapter 6 International trade and Investment Trade: the voluntary exchange of goods‚ services‚ assets‚ or money between one person or organization and another. International Trade: Trade between residents of two countries. (believe they can benefit from voluntary exchange) Classical Country-Based Theories: commodities Mercantilism: 16th century economic philosophy - a country’s wealth is measured by its holding of gold and silver - promoting exports and discouraging imports. * Supporters:
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away from the Gold Standard and began looking for a way that they could have monetary policy autonomy‚ the Bretton Woods system came into play. This system looked to have foreign currencies tied to the US dollar and “if a country’s currency was too high relative to the dollar‚ its central bank would sell its currency in exchange for dollars‚ driving down the value of its currency. Conversely‚ if the value of a country’s money was too low‚ the country would buy its own currency‚ thereby driving up
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Financial Markets and Institutions SEVENTH EDITION The Prentice Hall Series in Finance Alexander/Sharpe/Bailey Geisst Fundamentals of Investments Megginson Investment Banking in the Financial System Andersen Corporate Finance Theory Melvin Global Derivatives: A Strategic Risk Management Perspective Bear/Moldonado-Bear Gitman International Money and Finance Principles of Managerial Finance* Principles of Managerial Finance–– Brief Edition* Mishkin/Eakins
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FEMA & consumer Protection Act When a business enterprise imports goods from other countries‚ exports its products to them or makes investments abroad‚ it deals in foreign exchange. In the light of economic reforms and the liberalized scenario‚ FERA was replaced by a new Act called the Foreign Exchange Management Act (FEMA)‚ 1999.The Act applies to all branches‚ offices and agencies outside India‚ owned or controlled by a person resident in India. FEMA emerged as an investor friendly legislation
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unemployment‚ riots‚ the fall of the government‚ a default on the country’s foreign debt‚ the rise of alternative currencies and the end of the peso’s fixed exchange rate to the US dollar. The economy shrank by 28 percent and poverty was rife. In a 2001 interview‚ journalist Peter Katel identified three factors‚ converging at "the worst possible time"‚ to explain why the Argentine economy unraveled. Firstly the fixed exchange rate between Argentine peso and the US dollar (created at the start of the
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2. Indirect Intervention The central banks can affect the exchange rate indirectly by influencing the factors that determine the exchange rate. Variables that affects the exchange rates are interest rates‚ inflation‚ income level‚ governments control and expectations of future exchange rates. When using indirect intervention‚ commonly central bank focus on government controls or interest rates. The interest rate is the cost paid for borrowing funds. The central bank has an authority to set interest
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