Scenario: Trader's Paradise
Trader's Paradise is a global merchant that sells a variety of products.The company operates in 48 different countries (some developed,some developing)and some former communist countries.The company faces substantial risks given differing conditions in foreign exchange markets.
-If Trader's Paradise instead purchases euros expecting the value to rise and generate a profit for the company,it is engaging in currency ________.

Question

Quizplus · Accepted Answer

Engaging in purchasing euros with the expectation of raising their value and generating a profit is an example of currency speculation as the company is taking risks in the foreign exchange market to make a profit. Hedging involves taking measures to reduce potential losses from fluctuating exchange rates, while arbitrage involves taking advantage of price differences between markets. Currency conversion simply refers to exchanging one currency for another.

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