A Criticism of the Floating Rate System Is That the Unpredictability

question 23

Multiple Choice

A criticism of the floating rate system is that the unpredictability of exchange rate movements has made business planning difficult.Advocates of a floating system reply that:

• A)the forward exchange market insures against the risks associated with exchange rate fluctuations.
• B)companies should invest more in efforts to forecast exchange rate movements.
• C)this difficulty is faced by every organization operating in a dynamic business environment.
• D)this uncertainty actually aids the growth of international trade and investment and provides new investment opportunities.

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