Changes in exchange rates

Question

Quizplus · Accepted Answer

All of the above options are correct. 
A) Exchange rates have a greater impact on foreign bond indexes because bonds typically have fixed interest payments that are denominated in a foreign currency. Therefore, changes in exchange rates directly affect the value of these payments and ultimately the bond prices. 
B) Exchange rate changes can affect different equity markets in different ways depending on various factors like sector of the industry, trade relations, etc. 
C) Exchange rate changes can impact dollar-denominated foreign equity returns, but this risk can be hedged to minimize the impact. Thus, the investor can protect themselves from the loss.

Changes in Exchange Rates