Describe how stock prices are determined in stock markets and how derivatives can be used to hedge or speculate on stock prices. Examples should include put and call options and stock index futures. Foreign Exchange Rates Use an example of a foreign currency and discuss how it has changed in price relative to the U.S. dollar over the last year. Discuss how exchange rates affect domestic economic activity. Include the supply and demand factors that moved the relative prices.

Describe how stock prices are determined in stock markets and how derivatives can be used to hedge or speculate on stock prices. Examples should include put and call options and stock index futures.

Stock prices are determined in the say way the bond prices are determined, i.e. stock price is the present...