Exit Strategies It’s difficult to believe that after going through everything it takes to get a small business up and off the ground, often times the next steps are to….
write a 200 words response to the following post
Requesting 200 words response to the following post using at least three substantive peer-reviewed scholarly journal articles (different than in the below post) to provide those substantive replies. You may utilize only the main article as a reference.
Key Term and Why You Are Interested in It
I am interested in researching the key term Foreign Exchange Market (FX) for future professional plans to open an international franchise. I would need to understand the proper utilization of the daily conversion of currency and how it could affect my business (Satterlee, 2018).
Living in Europe offered my family the opportunity to learn about many cultures, including the Foreign Exchange Market (FX). We had limited information about the intricacies involving the exchange rate before relocating overseas. My children were taught precisely when the conversion would happen and when we needed to prepare for the change down to the exact dollar (Satterlee, 2018).
Explanation of the Key Term
Foreign Exchange Market (FX) is a standardized system set up to determine the trade of currency from one country to another (Satterlee, 2018). The FX can dictate what countries can buy and sell at any given time based on the supply and demand of the available currency (Satterlee, 2018).
Many countries are willing to accept the U.S. dollar because of its high percentage in the FX. The United States provides dollars, Japan carries Yen, Britain has Pounds, and most European countries carry the Euro (Satterlee, 2018). International banks track the frequency of the FX and the fluctuation in the exchange rate, keeping knowledgeable information of multiple country variations (Satterlee, 2018).
Major Article Summary
The article, Foreign exchange markets with Last Look, discusses how political power controls the currency trades. When there are no incentives or debt, the Foreign Market Exchange (FX) rate could be higher for one country than those who do not owe (Cartea et al., 2019). The coronavirus put a halt on many things to include job existence for many people. The decrease in monetary use worldwide provokes the economy to crash on a higher level than anticipated (Satterlee,2018). Creating the stimulus checks encouraged spending to increase the financial market in the United States and the Foreign Exchange Market (FX). Exchanges can happen at any time throughout multiple countries simultaneously at different rates.
The Foreign Exchange Market (FX) is a form of a world interest-bearing bank account (Satterlee,2018). The account holders have shares and are responsible for the transactions between countries (Cartea et al., 2019). There are times a country may want to postdate a check with minimal dollars in the bank, knowing it is not enough to clear the account. A government in debt will accept the advance payout hoping the exchange would be paid back over time (Cartea et al., 2019). If the stock market crashes, the exchange rate rises(Cartea et al., 2019).
The Paycheck Protection Program (PPP) loans were formulated to incentivize small businesses to stimulate the economy by staying open. The funding would assist with paying employees, rent for facilities and utilities. The true purpose of inviting customers into their establishments to spend their stimulus checks would boost the financial market for the United States, relieving the country of liquidations (Cartea et al., 2019). They are promoting the proper sizing of the Foreign Exchange Market (FX). The cost of the currency will dictate the trade or loss (Satterlee,2018). The country heavily funded on the Foreign Exchange Market (FX) side will have an advantage over opposing countries’ trade rates (Cartea et al., 2019).
a. The study of the Foreign Exchange Market (FX) would prove multinational corporations (MNC), Foreign subsidiaries, incentives and investments affect economic conditions in host countries (Song & Lee, 2017). My family traveled as often as feasibly possible while living overseas. We made it a point to visit McDonald’s in every country to compare their meals, cost, and customer service. It didn’t dawn on us that Mcdonald’s existed in those countries as an MNC (Song & Lee, 2017). The explanation of the dollar to euro versus the importance of the dollar to yuan. The differential rate between currencies and how they affect onshore and offshore markets (Wang, 2015). The deviation of the actual exchange rate and how the local interest rates differ from the world interest rates. True exchange rates are more costly for domestic countries(Catalán-Herrera, 2016). Export prices and volumes to changes in exchange rates. Higher-income countries request accurate exchange rates when receiving exported goods forcing countries to provide trade costs in their currency (Chen & Juvenal, 2016). This information is crucial for international entrepreneurs.
b. The Foreign Exchange Market (FX) allows multicultural governments to control international financial trading and export goods (Satterlee, 2018). All cited work provided a distinct correlation of the cost of currency between countries based on economic stability and governmental control (Song & Lee, 2017). Most countries preferred we would pay in dollars in all of our travels, making more on the exchange rate (Wang, 2015). It is exciting for tourists to flaunt the currency from the country they visited. It is sometimes tricky to exchange currency once the vacation is over. Jamaica and London were two of the most complicated places we toured, which caused an issue with returning exchange to U.S. dollars (Catalán-Herrera, 2016). It is profitable for the host country but a loss in the FX for the United States (Chen & Juvenal, 2016). I understand how the Foreign Exchange Market (FX) affects the currency exchange rate and international exporting.
Catalán-Herrera, J. (2016). Foreign exchange market interventions under inflation targeting: The case of guatemala. Journal of International Financial Markets, Institutions & Money, 42, 101-114. https://doi.org/10.1016/j.intfin.2016.02.003
Cartea, Á., Jaimungal, S., & Walton, J. (2019). Foreign exchange markets with last look. Mathematics and Financial Economics, 13(1), 1-30. https://doi.org/10.1007/s11579-018-0218-3
Chen, N., & Juvenal, L. (2016). Quality, trade, and exchange rate pass-through. Journal of International Economics, 100, 61-80. https://doi.org/10.1016/j.jinteco.2016.02.003
Wang, Y. D. (2015). Convertibility restriction in China’s foreign exchange market and its impact on forward pricing. Journal of Banking & Finance, 50, 616-631. https://doi.org/10.1016/j.jbankfin.2014.04.031
Satterlee, B. (2018). Cross Border Commerce (3rd ed.). Raleigh, NC: Synergistics International Inc.
Song, S., & Lee, J. Y. (2017). Relationship with headquarters and divestments of foreign subsidiaries: The hysteresis perspective. Management International Review, 57(4), 545-570. https://doi.org/10.1007/s11575-017-0317-z