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International Financial Management
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Chapter 8 / Exercise 15
International Financial Management
Madura
Expert Verified
(Read: Class notes, and problem presented in class)4.Financial Institutions Muti-goal Optimization Strategy:a.Identify the major ‘objectives’ and ‘problems’ in the management of financial institutions globally. What strategies do institutions use to meet these challenges?b.How do regulators evaluate the financial institutions? Liquity, profitability, solvency ratios, there are 80 ratios in evaluation. Regulators use CAMELS approach. C=capital, A= asset quality, M=management, c.Why did ‘Virtual Banks’ fail? Discuss in depth. Based on this, What are the prospects for Mobile Banking worldwide in the forthcoming decade?(Read: Class Notes)
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International Financial Management
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Chapter 8 / Exercise 15
International Financial Management
Madura
Expert Verified
5. Theoretical Relationship 1: Relationship between Money Supply and Inflation; Monetary EquationaWhat Causes Inflation? Discuss. bWhat is the ‘Monetary Equation’. Why is it important to the financial manager? cWhat are the implications of this for the ‘foreign exchange market’?(Read: presentation in class and class notes)6Trade Policy and Offshoring Strategy:a.Why do nations trade with one another? Explain in your own words.(Ricardo’s Comparative advantage Chapter 1 Appendix: Economics and Efficiency)b. What is Dynamic Comparative Advantage? What are the implications of this for the current debate on “Outsourcing” and “Off-shoring?” [Vernon’s Theory]c. What strategies should corporations adopt to minimize the impact of off-shoring on its employees?(Read: Article and class hand outs)7Theoretical Relationship 2 : Relationship between Inflation and Interest Rates; Domestic Fisher EffectA.What is the ‘Domestic Fisher Effect’? B.What is the relationship between Inflation and interest rates ? C.Why is it important for the Global Financial manager?(Read: class notes and hand outs)8Theoretical Relationship # 3: Relationship between Inflation and Exchange Rates; Purchasing Power Parity A.Explain the concept of ‘purchasing power parity’ (PPP) in your own words. B.What are the requisite conditions for PPP to exist?
C.What is the relationship between PPP and exchange rates ?(Read: class notes and Instructor Notes on PPP)9Theoretical Relationship # 4: Relationship between Interest Rates and Exchange Rates; Interest Rate ParityA.Illustrate the concept of ‘Interst Rate Parity’ and ‘Covered Interest Arbitrage’ with a numerial example. B.What are the implications of this for Foreign Exchange Market.?(Read: class notes and Instructor Notes on IRP)10. Auctions Market StrategyA.Are auctions the optimal method to sell a security or service? B.Explain the advantages, and disadvantages of the Auction method of Selling for the buyer and seller, using a specific example..C.Explain why corporations do not sell “all” their products by auctions? D.What are the reasons for the success of Internet auction companies such as e-bay and Priceline?. (Read Presentations in class):

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