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Essay heading: Corporate Finance
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Music and Movies |
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December 9, 1999 |
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Nominal exchange rates are recognized on currency financial markets commonly known as "forex markets", which are like stock exchange markets. Rates are generally established in uninterrupted quotation, with newspaper reporting daily. Sometimes Central bank may also fix the nominal exchange rate.
Real exchange rates, on the other hand, are nominal rate corrected by inflation actions...
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Rates are generally established in uninterrupted quotation, with newspaper reporting daily. Sometimes Central bank may also fix the nominal exchange rate.
Real exchange rates, on the other hand, are nominal rate corrected by inflation actions. For example, if a country A has an inflation rate of 4%, and country B has an inflation of 2%, and no adjustments in the nominal exchange rate took place, then country A has now a currency whose real value is 4%-2%=2% higher than before...
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