Explain Why So Many Countries Have Moved to a Floating

question 7

Essay

Explain why so many countries have moved to a floating exchange rate system.What challenges does a floating exchange rate pose for businesses? How does the FX market help entities manage the risks posed by exchange rate volatility?

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Definitions:

Defined Contribution Plan

A retirement plan where the amount contributed is specified, but the future benefit is not, with final benefits depending on investment performance.

Risk-free Return

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government securities.

Standard Deviation

Represents how spread out the numbers in a data set are.

Variable Life Insurance

A type of life insurance where the policyholder can allocate a portion of premium dollars to a separate account comprised of various investment funds.