Exchange Rate

How does the International Monetary Fund (IMF) classify exchange rates?

• As the price of goods and services between countries

• As the price of one country's currency in relation to another

• As the average cost of imports

• As the market value of national debt

What is the purpose of combining fundamental analysis and technical analysis in Mixed Approaches?

• To make more accurate predictions about exchange rates

• To predict stock market trends

•  To analyze company financial statements

• To assess government economic policies

 In a fixed exchange rate system, how is a country's currency value determined?

•  It fluctuates freely based on market demand and supply.

• It is determined by the country's GDP and inflation rate.

• It is set by private financial institutions without government intervention.

• It is tied to another major currency, a basket of currencies, or a commodity like gold.

How is the value of a currency determined in a floating exchange rate system?

• By the government setting a fixed rate

• Through supply and demand in the foreign exchange market

• By international organizations

• Based on the country’s gold reserves

What is a managed float system?

• A system where currency value is determined solely by market forces without any central bank intervention.

• A system where the currency’s value is entirely fixed by the government.

• A system that combines elements of both fixed and floating systems, where the value is mostly determined by market forces, but central banks may intervene occasionally.

• A system where central banks control the currency’s value at all times.

In Floating Exchange Rate, central bank actively maintains the exchange rate by buying/selling reserves.

• True

• False

What are the factors affecting Exchange Rates?

• Economic Factors

• Market Sentiment

• Commodity Prices

• All correct

The Importance of Exchange Rates are

1. 1. Impact on International Trade

2. 2. Effect on Inflation

3. 3. Influence on Investment Decisions

4. 4. Corporate Profits & Financial Performance

• True

• False