Question: questions on exchange rate a) Define forward contracts and list two problems with forward contracts. b) Discuss two factors that affects current account balance and

questions on exchange rate

a) Define forward contracts and list two problems with forward contracts. b) Discuss two factors that affects current account balance and two factors that affects capital (financial) account balance, clearly indicating the direction (positive or negative) of the impact c) Explain the monetary model of exchange rate, with reference to PPP and the quantity theory of money. d) Define currency and interest swap and provide an example of a 3-period currency and interest swap between two parties

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