The purpose of foreign exchange futures agreements under flexible exchange rates is to
A)make more profits for international bankers.
B)prevent shipping costs.
C)effectively reduce or eliminate exchange rate risk.
D)force economics students to really understand hedging.

Question

Quizplus · Accepted Answer

The purpose of foreign exchange futures agreements under flexible exchange rates is to effectively reduce or eliminate exchange rate risk for businesses engaged in international trade. These agreements allow businesses to lock in a specific exchange rate at a future date, reducing their exposure to potential fluctuations in currency exchange rates that could negatively impact their bottom line.

The Purpose of Foreign Exchange Futures Agreements Under Flexible Exchange