PSYC 100 Study Guide - Accounts Payable, Purchasing Power Parity, Fisher Hypothesis
Document Summary
Foreign exchange market: is a market for converting the currency of one country into that of another country. Exchange rate: the rate at which one currency is converted into another. i. e kia uses the foreign exchange market to convert the dollars it earns from selling cars in the. Foreign exchange risk: the risk that changes in exchange rates will hurt the profitability of a business deal. 4 main uses of foreign exchange markets: payments a company receives for its exports, the income it receives from foreign investments, the income it receives from licensing agreements with foreign firms maybe in foreign currencies. International businesses use foreign exchange markets when they must pay a foreign company for its products or services in its countrys currency. International business use foreign exchange markets when they have spare cash that they wish to invest for sot terms in money markets: currency speculation is another use of foreign exchange markets.
