Explore BrainMass

Forward Exchange Market Benefits

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Using an example, explain how traders benefit from the forward exchange market. Please ensure it's at least 210 words, APA format and provide references.

© BrainMass Inc. brainmass.com March 22, 2019, 2:57 am ad1c9bdddf

Solution Preview

Step 1
The forward exchange market buys and sells contracts for future delivery of foreign currency at a specified exchange rate. Traders benefit from these contracts because they can purchase and sell foreign exchange contracts easily. They can hedge against unfavorable rate fluctuations (a). Traders can benefit from these contracts because if they are either importing or exporting products, they can protect themselves from losses because of foreign exchange rate ...

Solution Summary

This solution explains the forward exchange market. The sources used are also included in the solution.