International Financial Market Parities: A Summary
Assume direct quotations: DC/FX
Formulae are for one time period
S0 = spot exchange rate at time 0
F0,n = n-period forward exchange rate quoted at time 0
i = domestic nominal interest rate (in the domesti
Fox School of Business
Fin (IBA) 3551: International Finance
Fall 2013, Tue 5:30-8pm, Alter 233
J. Jay Choi, Ph.D. (Webpage: http:/jchoi.me)
Alter Hall 417 (phone 215-204-5084/ fax 169
CHAPTER 1: GLOBAL FIRMS, GLOBAL MARKETS, AND GLOBAL GOVERNANCE
I. The Multinational Enterprise (MNE)
A. Globalization: producing where it is most cost-effective, selling where it is most
profitable, and sourcing capital where it is cheapest, without worry
1. Intro 2. Exchange Rates 3. Exercise 4. Equilibrium 5. Factors 6. Exercises 7. Expectations 8. Competitiveness 9. CBs
International Finance (Fin 3551)
The Determination of Exchange Rates
Fox School of Business
Keili Leahy FIN 3551 T 5:30-8
Problem Set I (* denotes optional items)
(global firms, market and governance; BOP, parities; forex markets; fx
Shapiro Fundamental 6th; Eun and Resnick 6th; Eiteman, Stonehill and
Global firms, marke
Balance of Payments
Is it bad if the country is running a BOP deficit?
l How do you measure the BOP?
l Does the current account deficit imply the government
budget deficit, and vice versa?
l How is the BOP related to exchange ra
Problems on Parities
US interest rate = 6% a year (1.5% for 3 months), UK interest rate = 4% a year (1% for 3
Lending/investing and borrowing interest rates are the same in both countries
US inflation = 2% a year, UK inflation = 1% a year
American Financial Crisis:
Causes and Implications
Jongmoo Jay Choi
Laura H. Carnell Professor of Finance and International
Fox School of Business, Temple University
Email: [email protected]
Introduction how bad?
Comparison with othe
Global firms, global
markets, and global
*Items identified with asterisks are optional or advanced
ones in the entire lecture note.
Whats special about Intern
System and Financial Crises
Tea Party, libertarians and other conservatives seem to
favor the adoption of the gold standard. Why?
European economic crisis seems to have been more intense
The Market for
is the largest financial market (in volume)
in the world?
l When the exchange rate changed from 100 yen
per $ to 80 yen per $, did yen increase or decrease
in value against $ (and by how mu