Question 5

Mutual funds are involved in foreign exchange markets because:

a.they need to convert funds into other currencies so that they can buy investments denominated in those other currencies.

b. foreign currencies are used by mutual funds to hedge or protect their other investments against losses.

c. mutual fund regulations require that mutual funds diversify their investments by owning a variety of currencies.

d. they are the largest interbanks and seek to speculate in buying and selling foreign currencies..