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When We No Longer Assume That the Exchange Rate Expected

question 6

Essay

When we no longer assume that the exchange rate expected to occur in one year is constant,explain what variables affect the current exchange rate in a flexible exchange rate regime.Include in your answer an explanation of how changes in these variables affect the current exchange rate.

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Definitions:

Annual Dividend

represents the total dividend payment a company distributes to its shareholders within a given fiscal year.

Market Value

The cost for buying or selling assets or services in the marketplace at this time.

Constant Rate

A fixed percentage rate applied over a certain period which does not change.

Dividend Per Share

The amount of dividends paid to shareholders per share, indicating the distribution of company profits to shareholders.

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