Indirect Intervention How can a central bank use indirect intervention to change the value of a currency?

Q. If barriers to international securities markets are reduced, will a country’s interest rate be more or less susceptible to foreign lending and borrowing activities? Explain.

why is commercial paper considered as cash equivalent?

How do you determine and calculate return and risk on foreign exchange transactions?

The questions about Risks when investing in another country

Which of the following is not an example of sovereign risk? a. Changes in tax rates b. Changes in currency denominations c. Changes in exchange rates d. Changes in regulations

Why the single currency eliminates exchange rate fluctuation and why is better for the countries to use the a common currency?

The company DstriBut.inc decides to take a technological shift by replacing its old distribution center with a new one that is more oriented towards technology and less dependent on manpower. The entire installation is estimated at $6,000,000 amortized at the rate of 30% decreasing. An immediate expense of $30,000 (taxable and non-depreciable) is planned to ensure the training of the personnel who will operate on the new installations. This investment creates a working capital requirement of $400,000, fully recoverable. The company estimates to increase its operating cash flow by $1,500,000 before tax. On the other hand, the company must assume an expense for the maintenance and replacement of consumable components of new installations in the amount of $50,000 every 2 years. This investment will have a residual value of $2,500,000 at the end of the investment horizon, which is set at 5 years by senior management. The tax rate is 40% and the rate of return required by senior management…

Why do governments intervene in the foreign exchange market?   Check all that apply:   To maintain exchange rate boundaries   To reduce fear in financial markets To smooth out the business cycle To smooth out exchange rate movements To earn a profit for the government

D3) Finance Use covered interest rate parity (CIP) to show that a fixed exchange rate and free capital flows imply that a central bank cannot set the interest rate independently from the interest rate set by the reference currency's central bank.