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Unformatted text preview: International Corporate Financial Management Ned Hill BM 432 Final Exam Review Balance of Payments Definitions—be clear about what the major accounts are measuring What happens when FX rates change? 1. What impact do FX rates have on prices? 2. What is impact on imports and exports? 3. What do we mean when a currency “strengthens” or “weakens” against another currency? 4. What is the relationship between recent Fed actions and exchange rates? Exchange Rate Forecasting 1. Using forward rate (interest rate parity) 2. Using price indices (purchasing power parity) 3. Impact of other factors a. Economic growth b. Balance of payment data c. Safety and security d. Intervention (buying, selling currency) 4. Covered and uncovered interest arbitrage Derivatives 1. Know in general what a derivative is 2. How does an option differ from a futures and a forward contract? 3. What is an interest rate futures contract work and how would it protect you?...
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