The three economic benefits provided by the foreign exchange markets include:

Question

Quizplus · Accepted Answer

The three economic benefits provided by the foreign exchange markets are all listed in the options, hence the correct answer is D. The first benefit is the mechanism to transfer purchasing power from individuals who deal in one currency to people who deal in a different currency, which allows for efficient international trade. The second benefit is the opportunity for companies to pass the risk associated with foreign exchange price fluctuations to professional risk-takers, enabling them to focus on their core business operations. Finally, the foreign exchange markets provide a channel for importers and exporters to acquire credit for international business transactions, which lowers the cost of doing international business.

The Three Economic Benefits Provided by the Foreign Exchange Markets