...1. The benefits to using a digital currency like Bitcoin for transactions are based on it being independent from the government and central banks. Being in control of your own currency, its accessibility, security, and remaining virtually anonymous while using it are what give it value. For both parties, the information for transactions using Bitcoin is transparent. This transparency protects merchants from losses incurred via fraud, robbery, or NSF since the transaction cannot be reversed. Since it is a digital currency, which is community regulated, it inherently carries less fees in use and conversion. The costs for using Bitcoin for transactions are ones which can be seen as opportunity costs. The volatility of its price and demand tend to stem from the current events that affect digital currencies. These events can reflect positively or negatively for its value in such instances as the Silk Road or foreign bank crisis & capital restrictions increasing demand for secure anonymous currency. The increased exposure over its volatility acts to stabilize it; as it becomes more well-known it is accepted in more places. The most significant issue Bitcoin faces is the uncertainty of its future. With improvements and innovations being made daily in the fields which control digital currency it reduces the likelihood that BTC will keep up, rather than be replaced with a newer iteration of itself. Digital currencies are not going to leave us, but in fact they will inevitably become...
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...Currency Conversion Test Procedure Display Menu Declare as Boolean Set = true While = true Display = International Currency Conversion Program Display = Make a Selection Display = International Currency Types Display = Canadian Dollars Display = Mexican Pesos Display = English Pounds Display = Japanese Yen Display = French Francs Display = Quit Display = Enter a Selection Input Currency Type If Currency Type >= 5 and Currency Type <=25 then Set = false Else if currency Type = 26 Display = Quitting Currency Conversion Display = Error 4 Invalid Menu Selection End Display Menu Display Menu Test Produce As the user is deciding which they would like to select an international currency type. When the user enters a number between 5 and 26 corresponding with a currency type, then the program is set to false. If 26 is selected the program displays “Quitting Currency Conversion.” But if the user does not enter a number between 5 and 26 the program displays “Error 4: Invalid Menu Selection” and the set it true. Test Case 1 Input: user enters 5 for Canadian Dollars Set = false Test Case 2 Input: user enters 6 for Mexican Pesos Set = false Test Case 3 Input: user enters 7 for English Pounds Set = false Test Case 4 Input: use enters 8 for Japanese Yen Set = false Test Case 5 Input: user enters 9 for French Francs Set = false Test Case 6 Input: user enter 10 for Quit Set = false Test Case 7 Input: user enters 11 Output: display “Error 4:...
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...selection as integer Declare currency type as integer Declare international value as real Declare US value as real Do while user wants to continue Call display Menu Call get international value Call convert currency Call display results End while Print exit message End main module Display Menu Declare continue as Boolean Set continue = true While continue = true Display "Welcome to the international currency conversion program" Display "Please make a selection" Display "International Currency Types:" Display "1: Canadian Dollars" Display "2: Mexican Pesos" Display "3: English Pounds" Display "4: Japanese Yen" Display "5: French Francs" Display "6: Quit" Display "Enter a selection: "; Input currency type If currency type >= 1 and currency type <= 5 then Set continue = false else if currency type = 6 Display “Quitting Currency Conversion” continue = false else Display "Error 4: Invalid menu selection." continue = true end if end While End Display Menu Get International Value Declare value as integer Declare continue as Boolean Set continue = true While continue = true Display "Enter a currency value (positive number):" Input international value if international value > 0 and international value <=(NNN) NNN-NNNNthen continue = false else Display "Error 1: Invalid input--Negative Number" continue = true end if end while End Get International Value Convert Currency Declare rate as real ...
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...Hard and Soft Currencies Renita McBath MGT/448 University of Phoenix December 1, 2011 Professor David Grier Global Financing and Exchange Rate Mechanisms of Hard and Soft Currencies Trading, bartering, buying, and selling are known as the act doing business. The action of doing business has been a way of life for human beings for Centuries. At some point in our history the difficulty of doing business equally became a challenge. For instance, one person would like to trade a jar of jelly to another person that owns cows. The trade is off balance because of the value of each item. The difficulty arose when trying to access a credit. At this point, currency was born. In the beginning, currency was established by villagers in the form of stones, paper, linen, and other countable items. Nowadays humans have evolved currency into unique metal and paper items that have unique values. Currently these uniquely valuable currencies are referred to as hard and soft. Further research will reveal an analysis of the use of the currencies in global financing operations as well as describing the importance of managing risks that may arise. Hard Currency Hard currency is a status associated with the material, paper, and coins that are circulated within a country and globally in an effort to buy and sell goods. Currently, hard currency is the most traded currency. Countries that acquire this currency status attain...
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...accounting: foreign currency transactions and financial instruments L.O.11-1: Understand how to make calculations using foreign currency exchange rates The accounting issues * Foreign currency transactions of a U.S. company include sales, purchases, and other transactions giving rise to a transfer of foreign currency or the recording of receivables or payables that are denominated in a foreign currency. * Translation is the process of restating foreign currency transactions to their U.S. dollar equivalent values. * Many U.S. corporations have multinational operations. * The foreign subsidiaries prepare their financial statements in their home currencies * The foreign currency amounts in these financial statements have to be translated into their U.S. dollar equivalents before they can be consolidated with the U.S. parent’s financial statements that uses U.S. dollar as its reporting currency unit Foreign currency exchange rates * Foreign currency exchange rates between currencies are established daily by foreign exchange brokers who serve as agents for individuals or countries wishing to deal in foreign currencies * Some countries maintain an official fixed rate of currency exchange and have established fixed exchange rates for dividends remitted outside the country. * The determination of exchange rates * Exchange rates change because of a number of economic factors affecting the supply of and demand for a nation’s currency. * Factors causing...
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...user screen shall have a short description telling the user how to use the program. 4. The calculation of the currency shall be executed only after all the valid input values are provided. 5. The program shall allow the user to clear all input fields and recomplete the calculation 6. Display the MENU for currency conversion 7. Allow user to select from MENU containing list of foreign currencies to be converted into US dollars. 8. Convert the currency amount entered into an equivalent amount of US dollars. 9. Calculate currency conversion using user supplied input values. 10. Display the currency amount entered by the user along with its US dollars equivalent. Input | Process | Output | Menu optionsName:Type:Range: | Display Menu | Menu OptionsName: Currency TypeType: IntegerRange: 1-6 | Menu choice currencyName: International ValueType: RealRange: 0-1,000,000 | Get Foreign Value | Menu choice currencyName: International ValueType: RealRange: 0-1,000,000 | Currency conversion Name: International ValueType: RealRange: 0-1,000,000Name: Currency TypeType: IntegerRange-1-6 | Convert currency | Equivalent US dollarName: Us ValueType: RealRange: > 0 | Name: Currency TypeType: IntegerRange: 1-6Name: International ValueType: RealRange: 0-1,000,000Name: US ValueType: RealRange: >0 | Display Results | Name: Currency TypeType: IntegerRange: 1-6Name: International ValueType: RealRange: 0-1,000,000Name: US ValueType: RealRange: >0...
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...exchange of currencies. Therefore any movements in the exchange rate affect international competitiveness, trade flows, investment decisions, inflation and may other factors. Exchange rates are the price of one currency in terms of another economy’s currency, which facilitate economic transactions between individuals firms and governments in different countries. The FOREX market refers to the market in which currencies are traded, where the forces of supply and demand determine the price of one country’s currency in terms of another. In December 1983, Australia switched from a managed flexible peg to a floating exchange rate system. This is regarded as one of the most significant structural changes that Australia has implemented, because it opened up the Australian economy to global financial flows. Under a floating exchange rate system the exchange rate is determined by the free play of market forces and not by government intervention, unlike the previous system of flexible peg where the RBA would ‘peg’ the value of the $A at 9am each day and that price would operate throughout the day. One way to measure the movements in the exchange rates is the Trade weighted Index (TWI) which measures the value of the $A against a basket of foreign currencies of major trading partners. These currencies are weighted according to their significance to Australian trade flows. Fluctuations in the exchange rates can bring about changes in the BOP which in turn influences the value of Australia’s...
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...Assignment Currency Devaluation Introduction Devaluation refers to a decrease in a currency's value. A currency devalues when its value declines in relation to one or more other currencies. It affects the demand for exports and imports. Currency devaluation is evaluated in terms of the foreign exchange rate. Exchange rate is the value between two currencies shows how much one currency is worth in terms of other currency. The depth and intensity of exchange rate volatility and its impact on the volume of international trade was recognized during 1970s when the world economy shifted from fixed exchange rate to free floating exchange rate. If the exchange rate volatility is higher, then it will generate uncertainty of the future profit from export trade. In this assignment we will discuss on such issues like exchange rate volatility I addition to currency devaluation and its impact on the volume of international trade of developing country focusing Bangladesh. This assignment is based on the exchange rate and its volatility in addition to devaluation that affect on the on international trade of Bangladesh. The concept of the study is taken from the academic activity of ECN-201 course instructed by Mrs. Nahid ferdousi, lecturer of Department of Business Administration of University of Asia Pacific. This paper consists of three parts. In first part we will give a short description of currency valuation and factors that affects the currency valuation, and then we animated...
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...1. Explain why another country would abandon its own currency and use the U.S. dollar as its official currency instead. Explain why such a policy will not work in the long run. 5 points Other countries abandon their own currencies in order to protect themselves from possible devaluation and inflation as well as reduce a number of risks they might have when it comes to foreign investments. Thus, by abandoning their own currency and using the U.S. dollar they are able to provide a more stable and secure economic and investment climate for their country. Also, by doing this, it helps that country's economic climate become more credible and it helps to encourage both local and foreign investors to invest money into that country and their capital market again 2. According to the text, freely floating exchange rate policy means that a country allows market forces to determine the value of its currency. I believe that this policy exist only on paper. Why do you think this is the case? 5 points. I think this is the case too because in some instances, if a currency value moves in any one direction at a rapid and continuous rate, governments who are represented by their central banks are able to and will intervene by buying and selling its own currency reserves in the foreign-exchange market in order to stabilize the local currency. Thus, in reality this policy really only exists on paper because central banks slightly still have the ability to intervene in the foreign exchange...
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...J. of Multi. Fin. Manag. 13 (2003) 123 Á/139 www.elsevier.com/locate/econbase Foreign-denominated debt and foreign currency derivatives: complements or substitutes in hedging foreign currency risk? William B. Elliott a,*, Stephen P. Huffman b, Stephen D. Makar b a Department of Finance, Oklahoma State University, 224 Business, Stillwater, OK 74078, USA b University of Wisconsin Oshkosh, Oshkosh, WI, USA Received 30 June 2001; accepted 20 April 2002 Abstract Using a unique dataset, this study examines the relationship between foreign-denominated debt (FDD), foreign currency exposure and foreign currency derivative (FCD) use, for a sample of US multinational corporations. We find a positive relationship between the exposure to foreign currency risk and the level of FDD, indicating that this debt may be used as a hedge. Moreover, FDD is negatively related to the use of FCD. We interpret this as further evidence that FDD is used as a hedge, and substitutes for the use of FCD in reducing currency risk. # 2002 Elsevier Science B.V. All rights reserved. Keywords: F23 Keywords: Hedging; Foreign debt; Currency derivatives 1. Introduction US multinational corporations (MNCs) employ a variety of financial and nonfinancial techniques to reduce or hedge their exposure to changing exchange rates (e.g. Bodnar et al., 1998; Marshall, 2000). Financial techniques include foreign- * Corresponding author. Tel.: '/1-405-744-8639; fax: '/1-405-744-5180 E-mail address: elliowb@okstate...
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... traders have two sets of currencies that come in a pair. The fluctuations in the exchange rate between these two currencies are where a trader looks to make profit on the Exchange Market. If trader believes that the foreign currency will appreciate against the USD, the trader’s profits will rise with every increase in the exchange price. However if the foreign currency were to fall against the dollar, than the trader would take a loss. Seems simple enough, however traders have option to buy or sell that foreign currency at any time and can go both ways of the currency. So even if the foreign currency were to depreciate against the USD, the trader can still make a profit if they were to sell the dollar on the exchange market. To bring some clarity lets take a look at the Yen. If the Yen were appreciate (rises) against the dollar. A trader would than buy the Yen. By buying the Yen the buyer is also selling the dollar on expectation that the exchange price of the Yen will rise in value. The trader will than decide to close the position, selling the Yen with the exchange price higher than when they first bought it leaving them an increase in value or profit. Now if the Yen were to depreciate against the dollar, the YEN/USD exchange price will fall. That would than leave the trader with a loss as the exchange price falls below their purchase level and leave them a loss. In any trading market, the traders have the option of buying or selling currency pairs ultimately so they can...
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...questions which must be considered. What factors affect the demand and supply of Australian dollars in the foreign exchange markets? Distinguish between the possible causes and effects of currency depreciation and a currency appreciation on the Australian economy. What forces have come into play, if any, in the past few years that have affected the value of the Australian dollar? In addition to looking further into those questions, it is helpful to know what the word Exchange Rate means; it is defined as, “The rate at which one unit of domestic currency is exchanged for a given amount of foreign currency.” A BRIEF HISTORY OF THE AUSTRALIAN DOLLAR Until 1971, the Australian dollar (AUD) was “pegged” to the British pound. This meant that the AUD rose or fell in line with the pound. In 1971, the AUD became pegged to the US dollar instead. These currencies were fixed currencies, which meant that the Australian currency would only change value when a major world currency also changed. This system lasted only until 1974 when the AUD became pegged to a trade-weighted selection of other currencies. This was still a fixed currency. In 1976 this selection of currencies became moveable. Small shifts were able to take place when needed. In 1983 the AUD became a floating currency. This means that the value of the dollar is determined by supply and demand. Initially, the Reserve Bank of Australia was not intended to intervene in the market however since then it has been deemed necessary for...
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...conducting business in another country. Country risks refer to the political and financial risks of conducting business in a particular foreign country. Country risks include foreign exchange risk, political risk, and cultural risk. 1.3 What is foreign exchange risk? Foreign exchange (or currency) risk is the risk of unexpected changes in foreign currency exchange rates. 1.4 What is political risk? Political risk is the risk that a sovereign host government will unexpectedly change the rules of the game under which businesses operate. 1.5 In what ways do cultural differences impact the conduct of international business? Because they define the rules of the game, national business and popular cultures impact each of the functional disciplines of business from research and development right through to marketing, production, and distribution. 1.6 What is the goal of financial management? How might this goal be different in different countries? How might the goal of financial management be different for the multinational corporation than for the domestic corporation? The goal of financial management is to make decisions that maximize the value of the enterprise to some group of stakeholders. The...
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...BOFIT Discussion Papers 19 • 2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang China’s new exchange rate regime, optimal basket currency and currency diversification Bank of Finland, BOFIT Institute for Economies in Transition BOFIT Discussion Papers Editor-in-Chief Laura Solanko BOFIT Discussion Papers 19/2011 23.7.2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang: China’s new exchange rate regime, optimal basket currency and currency diversification ISBN 978-952- 462-714-6 ISSN 1456-5889 (online) This paper can be downloaded without charge from http://www.bof.fi/bofit Suomen Pankki Helsinki 2011 BOFIT- Institute for Economies in Transition Bank of Finland BOFIT Discussion Papers 19/2011 Contents Abstract ................................................................................................................................................ 3 Tiivistelmä ........................................................................................................................................... 4 1 2 Introduction ................................................................................................................................ 5 Theoretical model ..................................................................................................................... 11 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3 Policy goal .................................................................................................................... 12 Trade...
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...IT/210 Final Project Currency Consolidation Requirements. Problem: Converting Currency A currency conversion application in a menu based system allowing users to select one of five set currencies to convert to and from the US dollar. The program will display the amount and will loop back to the beginning to allow another conversion or termination of the program. Currency Selections Canadian dollars (1US = 1.468 Canadian) Mexican pesos (1US = 9.5085 Pesos) English Pounds (1US = .66 Pounds) Japanese yen (1US = 104.92 yen) French francs (1US = 6.2561 Francs) Application-Level Requirements List 1. There should be a series of screens, in the application, that will help the user to input specified information. 2. Include general information and the title on the first screen 3. There should be explanatory material or external documentation. 4. Comments should be included in the program because this will allow other programmers to follow and track what has been done. 5. Should include the ability to clear the inputs and start the calculations over (just in case there are errors) Input process and output chart. INPUT | PROCESS | OUTPUT | Menu Options | Display Menu | Menu Options | Menu ChoiceCurrency | Get User Input | Menu choiceCurrency | CurrencyConversion formula | Convert Currency | Equivalent US dollar | Hierarchy Chart Main Module Main Module Display_Resluts Display_Resluts Get_Int_Value Get_Int_Value Display_Menu...
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