This is the first 1,000 characters of 1662 words (6.65 pages) in the essay titled Free Trade
Introduction The foreign exchange market is one of the most important financial markets. It affects the relative price of goods between countries and so can affect trade. It means that it affects the price of imports and so affects a country’s price level (inflation rate). It also affects the international investment and financing decision. In this project, we will try to find why exchange rate would give many risks to a company and how a company can hedge itself. Definition of Exchange Rate The price of one currency expressed in terms of another currency is called an exchange rate. With the price it is normal to quote them as the price for one unit of the good. The price of a jacket is how much you have to pay to get 1 jacket. The price of a car is how much you pay to get 1 car. The exchange rate between AUS and US from AUS’s point of view is how many AUS dollars you have to pay to get 1 US dollar. Since you have to pay about AUS$1.55 to get 1 US dollar the exchange...
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