Week 1 Discussion - International Economic Theory
Please review the Lecture Note and the Web link on Comparative Advantage on this week's
1. Explain how the theory of comparative advantage relates to the need for international
1. Compare and contrast forward and futures contracts.
2. How can currency futures be used by corporations?
3. How can currency futures be used by speculators?
1. The biggest differentiating item between forward contracts and futures
Compare and contrast interest rate parity (IRP), purchasing power parity (PPP), and the
international Fisher effect (IFE).
1. Based on PPP theory, what is a general forecast of the values of currencies in countries
with high inflation?
2. How is it possib
Hedging Foreign Currency Risk
1. Why should an MNC identify net exposure before hedging?
2. Explain how a U. S. corporation could hedge net receivables in Euros with futures
contracts. Explain how a U. S. corporation could hedge net payables in Japanese y
Food Miles and Sustainability
A recent trend has been to minimize our food miles. This involves buying locally grown, in
season food products. The goal is to minimize the carbon footprint of our food. We also see a
push to improve sustainability of our fo
Direct Foreign Investment
1. Describe some potential benefits to an MNC because of direct foreign investment (DFI).
Elaborate on each type of benefit. Which motives for DFI do you think encouraged Nike
to expand its footwear production in Latin America?
Micro Assessment of Country Risk
1. Describe the steps involved in assessing country risk once all relevant in-formation has
2. Statement: "Once a project is accepted, country risk analysis for the foreign country
involved is no longer nece
Assessment of International Trade Financing in Thailand
Chapter 19 - Blades, Inc Case Page 575 and 576
Discuss answers to Questions 1 through 6 on Page 576
1. No, Blades would not receive payment prior to delivery with a bank issued time draft.