14-18 Most profits or losses on foreign trading come from taking an open position in currencies.

Question

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Most profits or losses on foreign trading come from taking an open position in currencies, as changes in exchange rates can have a significant impact on the value of investments denominated in different currencies. For example, if an investor buys a security denominated in a foreign currency, and that currency then appreciates in value relative to the investor's home currency, the investor will likely see a gain on that investment when it is converted back into their home currency. Conversely, if the foreign currency depreciates relative to the investor's home currency, the investor may experience a loss on the investment. Therefore, currency risk is a key consideration for investors involved in foreign trading.

14-18 Most Profits or Losses on Foreign Trading Come from Taking