Mr. Swanson has expressed confusion about how foreign exchange rates will affect Content Cow Dairy if it expands to international markets. You tell Mr. Swanson that he has raised a good question and that you will draft and send him a report with information on this topic.
In your report, include the following:
Compare/contrast therisks and benefits of pricing goods in U.S. dollars or pricing goods in local currencywhen selling in a foreign market.
Explain rate parity theory and how it is used to predict future exchange rates.
Calculate the current Forward Exchange Rate for the United Statesand Egypt.
Explain the relationship between monetary policy, interest rates, and exchange rates.
Briefly introduce other factors that influence exchange rate fluctuations. Address whether any of these are a factor when looking at the future exchange rate between the United Statesand Egypt.