Exchange rates play a crucial role in international financial management from "summary" of International Financial Management, Abridged Edition by Jeff Madura
Exchange rates are a vital aspect of international financial management as they determine the value of one currency in terms of another. These rates are constantly changing due to various factors such as supply and demand, interest rates, inflation, and political stability. Understanding these fluctuations is crucial for companies engaged in international trade, as they can impact the cost of goods and services, revenue, and profitability. For multinational corporations, exchange rates play a significant role in determining the value of their foreign investments and subsidiaries. Fluctuations in exchange rates can affect the translation of foreign earnings into the parent company's home currency. This can have a direct impact on the financial performance of the company and its overal...
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