Foreign exchange constitutes
A) foreign stock market activity.
B) the balance of payments.
C) trade agreement(s) with foreign countries.
D) currency and bank deposits that are denominated in foreign money.
E) a trade commodity of foreign countries.

Question

Quizplus · Accepted Answer

Foreign exchange refers to currency and bank deposits that are denominated in foreign money. It involves the exchange and conversion of one currency into another for various purposes such as trade, investment, tourism, and speculation. Foreign exchange markets facilitate the trading of currencies among market participants, including banks, corporations, governments, and individuals. Other options such as A, B, C, and E are not accurate descriptions of foreign exchange.

Foreign Exchange Constitutes