What Are the Two Main Functions of the Foreign Exchange

question 5

Multiple Choice

What are the two main functions of the foreign exchange market?

• A) Trading of equities of foreign companies and currency conversion
• B) Reducing currency volatility and setting interest rates
• C) Insuring companies against interest rate risk and enabling imports and exports
• D) Currency conversion and providing some insurance against foreign exchange risk

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Definitions:

End-User

The ultimate consumer of a product or service, who uses it for its intended purpose.

Forecasted Profit

An estimate or prediction of the financial gain or profit that a business expects to make in a future period.

Buying Decision

The process of making a choice among available alternatives that culminates in the purchase of a product or service.

Mental Step

A stage in cognitive processing or decision-making, often used to describe phases in the buying process of consumers.