Scenario: Trader's Paradise
Trader's Paradise is a global merchant that sells a variety of products. The company operates in forty-eight different countries (some developed, some developing) and some former communist countries. The company faces substantial risks given the differing conditions in foreign exchange markets.
-If Trader's Paradise purchases euros expecting the value to rise and generate a profit for the company,it is engaging in currency ________.

Question

Quizplus · Accepted Answer

Trader's Paradise is engaging in currency speculation as they are purchasing euros with the expectation that its value will rise, in order to generate profit. Currency hedging involves taking measures to protect against potential losses from currency fluctuations, while currency swaps and arbitrage involve exchanging one currency for another at a pre-determined rate and taking advantage of price differences between markets, respectively.

Scenario: Trader's Paradise Trader's Paradise Is a Global Merchant That Sells a Variety