• 1. What are the five major factors that influence foreign exchange rates?

• 2. What are the differences between a floating exchange rate policy and a fixed exchange rate policy?

• 3. Describe the IMFs roles, responsibilities, and challenges.

• 4. Describe the three primary types of foreign exchange transactions made by financial companies.

• 5. Why is the strength of the U.S. dollar important to the rest of the world?

• 6. How would you describe the theory of purchasing power parity (PPP)?

• 7. What is the relationship between a countrys current account balance and its currency?

• 8. How is the phenomenon of capital flight an example of the bandwagon effect or herd mentality?

• 9. What concepts must a savvy manager understand about currencies to do international business successfully?