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:

Advantages

The positive aspects or benefits associated with a decision, strategy, or action.

Franchise

A business model where a franchisee obtains the rights to operate a business under the franchisor's brand and system in exchange for a fee.

Foreign Firm

A company that is based in one country but operates or has offices in other countries.

Local Firm

A business establishment that operates in a specific geographical area, typically offering products or services to a local market or community.