Explain the difference between indirect and direct exchange rates.
Answer to relevant QuestionsWhat is the direct exchange rate if a U.S. company receives $1.3623 in Canadian currency in exchange for $1.00 in U.S. currency?Explain why a difference usually exists between a currency's spot rate and forward rate. Give two reasons this difference is usually positive when a company enters into a contract to receive foreign currency at a future date.Suppose the direct foreign exchange rates in U.S. dollars are 1 British pound = $1.60 1 Canadian dollar = $0.74Requireda. What are the indirect exchange rates for the British pound and the Canadian dollar?b. How many pounds ...Merit & Family purchased engines from Canada for 30,000 Canadian dollars on March 10 with payment due on June 8. Also, on March 10, Merit acquired a 90-day forward contract to purchase 30,000 Canadian dollars at C$1 = $0.58. ...Nick Andros of Streamline Company suggested that the company speculate in foreign currency as a partial hedge against its operations in the cattle market, which fluctuates like a commodity market. On October 1, 20X1, ...
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