In a short essay, discuss how companies use foreign exchange. ...

[rosent76]

In a short essay, discuss how companies use foreign exchange.
 
  What will be an ideal response?

Question 2

Which of the following is a reason why we don't drop our tools?
 
  a. We don't trust the person who tells us to change.
  b. We see everyone else dropping their tools.
  c. We are given clear reasons to change.
  d. We believe that dropping our tools will make a big difference.

[sailorcrescent]

Answer to Question 1

There are a number of reasons why companies use the foreign-exchange market. The most obvious is for import and export transactions. Companies also use the foreign-exchange market for financial transactions, such as those in FDI. Sometimes companies, but mostly traders and investors, deal in foreign exchange solely for profit. One type of profit-seeking activity is arbitrage, which is the purchase of foreign currency on one market for immediate resale on another market (in a different country) to profit from a price discrepancy.

Answer to Question 2

a