Here is the synopsis of our sample research paper on Currency Risks. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 4 page paper is written in 2 parts. The first part looks at the risks of speculating and considers what a bank is doing and the risk it faces if it has a long position in one currency and short position in another. The second part of the paper examines how a weak dollar could impact on inflation in the US. The bibliography cites 4 sources.
Page Count:
4 pages (~225 words per page)
File: TS14_TElongsh.rtf
Buy This Term Paper »
Unformatted sample text from the term paper:
If they believe the exchange rate is going to change then they may take a long or a short position depending on their forecast. Therefore if a bank is short
on Canadian dollars and long on Australian dollars they believe both will move in opposite directions. The short position on the Canadian dollars indicates that they believe that the
currency is going to weaken. The short position is adopted to try and profit from the expected fall in price and takes a bearish approach to the market. In this
position the bank will have borrowed Canadian dollars and will then sell them on, with the expectation that the price will drop and the bank will then be able to
buy the dollars back at a lower price (Howells and Bain, 2004). When the Canadian dollars are bought back at a lower
rate and the loan repaid the bank will make a profit from having repaid the loan with Canadian dollars bought at a cheaper rate. The difference between the prices at
the time the bank sold the Canadian dollars and the price that they bought them at. When the Canadian dollars are bought back this is known as covering the short
(Howells and Bain, 2004). If the currency does not fall then the bank may face high costs covering the loan repayments until the Canadian dollar does deprecate or having to
buy the Canadian dollars back at a higher rate and suffering a loss due to the higher price. The long position on
the Australian dollars may be seen as an opposite position. Here the bank will have the opinion that the Australian dollar is going to appreciate (rise) in value. Here there
...