Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To stabilize currency values
B
To profit from fluctuations in currency values
C
To reduce exchange rate risks
D
To predict government economic policies
Understanding the Answer
Let's break down why this is correct
Answer
The primary goal of currency speculation in the foreign exchange market is to make a profit by predicting changes in currency values. Traders buy a currency when they believe its value will increase and sell it when they think it will decrease. For example, if a trader thinks the Euro will strengthen against the Dollar, they might buy Euros and wait for the value to rise before selling them for a profit. This process involves analyzing economic data, political events, and market trends to make informed decisions. Ultimately, successful speculation can lead to significant financial gains, but it also carries risks due to the unpredictable nature of currency movements.
Detailed Explanation
The main aim of currency speculation is to make money by betting on changes in currency values. Other options are incorrect because Some might think the goal is to make currency values stable; People may believe that speculation helps reduce risks.
Key Concepts
currency speculation
Topic
Foreign Exchange Market Dynamics
Difficulty
easy level question
Cognitive Level
understand
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