1. What are the benefits and the costs of being a member of a common-currency economic union? Give examples when possible. Do you think that we will see more common-currency unions in the future? Why or why not? Which regions are most likely to form such unions? Why or why not?
2. Describe the three best ways for a large multinational corporation to hedge its currency exposure. What are the advantages and disadvantages of these hedges? Do you think that “no hedging” is an acceptable strategy for MNC? Why or why not?
3. Compare the two major international parity relationships (IRP and PPP) in their ability to forecast the foreign exchange rates. What are the advantages and disadvantages of each one? Do you think the two are reliable in producing a forecast?
4.Discuss how the five major FX market participants interact among themselves? How are their roles affected by technological advances? What do you think will happen in the future to each one of the five groups in terms of their role for the FX market development?