 A company having its operations in other countries of the world is generally known as an international corporation or a multinational corporation. The foreign operations of such companies are affected by many factors such as foreign exchange rates, differing interest and tax rates of other countries, complicated and complex accounting systems for incorporating the financial aspects of foreign operations and interventions by governments in the other countries. Now the principles of corporate finance are equally applicable to the international finance. In international finance, foreign exchange occupies a substantial portion and that is the reason that the foreign exchange markets provide valuable information and opportunities to international corporations for creating value for their shareholders. There is a certain terminology that we need to understand before starting the concept of foreign exchange. The first term in this regard can be the cross-rate. This is the rate that is the implicit exchange rate between two non-US currencies when both are quoted in terms of some other third currency that may be the US currency, Euro Currency. This is the money deposited in financial center of another country, for example, Euro dollars. Now Euro dollars are the US currency denominated dollars that are deposited in banks outside the US banking system. Guilds, these are the debt securities having their guild edges and issued by British and Irish governments. London Interbank offered rate or LIBOR. LIBOR is the rate that most international banks charge one and other four overnight loans of Euro dollars in the London market. Foreign exchange and or forex market. This is the market where the currency of one country is traded with the currency of other countries of the world. If we talk about the list of or types of participants that play their financial role in the foreign exchange market at the global level, this list includes importers who need foreign currencies to settle their import bills, exporters who receive foreign currency and they want to convert this foreign currency into the currency of their home country, portfolio managers who buy or sell foreign stocks and debt instruments, forex brokers who participate to match their buy and sell orders. The list includes also traders who make a market in foreign currencies and finally the speculators who try to earn profit while with the help of changing changes in the foreign exchange rates of different currencies of different countries in the world. We can define foreign exchange rate as the price of currency of one country in expressed in terms of the currency of another country. There are two types of exchange rate quotes. One is called as direct or American quote and the other is called as indirect or European quote. In direct or American quote, it refers to the number of dollars to buy one unit of a foreign currency, whereas the indirect quote refers to the amount of foreign currency one needs to have in order to buy one US dollar. Let's take an example to understand this course. For example, we need to have Japanese yen to buy with available 1000 dollars and the exchange rate per dollar is equal to 118.62 yen. So we need to have one like 18,620 yen to purchase 1000 dollars at the exchange rate of 118.62 yen per US dollar. And what amount of dollars we need to buy a Porsche that cost 100,000 euros whereas the exchange rate of euro per dollar is equal to 1.2452. This means we need to have 124,520 dollars to purchase a Porsche that cost 100,000 US dollars.