Read the entire chapter to learn about currencies, foreign exchange rates and global capital markets. The “Opening Case: Why a Main Street Firm, Walmart, Is Impacted by Foreign Exchange Fluctuations” gives us a real-world example of a company that “has to deal extensively in different currencies.” Further, “small changes in the daily foreign currency market can significantly impact the costs for Walmart and in turn both its profitability and that of its global suppliers.”
As in subunit 6.4.1, you will learn new terms associated with the foreign exchange market, such as currency hedging, currency arbitrage, foreign exchange rate, spot rates, cross rates, venture capitalists, etc.
Food for thought: at the end of the chapter, read the questions under, “Ethical Dilemmas.” What would be your response to question two? Would you recommend Walmart set up an offshore company? Why or why not?