B. INTERNATIONAL FISHER EFFECT (PPP version for financial assets)
nominal interest rates reflect real return and inflation expectations;
over LR, real rate of return the same in most countries
Intl Fisher Effect:
-if nominal rates differ
If a country experiences high inflation relative to the U.S., its exports to the U.S.
should _, its imports should _, and there is
_ pressure on its currencys equilibrium value.
decrease; increase; upward
decrease; decrease; upward
1. The commonly accepted goal of the MNC is to:
A) maximize short-term earnings.
B) maximize shareholder wealth.
C) minimize risk.
D) A and C.
E) maximize international sales.
2. Which of the following is an example of direct foreign investment?
Questions on Forex Trading:
1. Utah Banks bid price for Canadian dollars is $.7938 and its ask price is $.81. What is the
bid/ask percentage spread?
2. Compute the bid/ask percentage spread for Mexican peso retail transactions in which the ask
rate is $.1
Should be able to:
1. Explain the transactions that takes place in 3 different markets (spot, forward, and
2. Use quote systems: show which currency is being priced (reference); distinguish
between European quote and its
A weak dollar can normally be expected to result in:
A) high unemployment and high inflation in the U.S.
B) high unemployment and low inflation in the U.S.
C) low unemployment and low inflation in the U.S.
D) low unemployment and high inflation in the
1. The primary component of the current account is:
a. unilateral transfers
c. the balance of trade
d. portfolio investment
2. If Goldman Sachs sells merger and acquisition advice to a German firm, it will show
up in the balance of payments account
TO: Prof. Cole
FROM: Group 4 (Connolly, Nolan, and Pav)
DATE: Jan. 20, 2016
SUBJECT: Grand Metropolitan Case
KEY ISSUES (WITH SOLUTIONS): There are eight key issues involved in our decision to recommend that
Grand Metropolitan use a WACC of 6.27% for USD
International Monetary Systems
1. Outline the role of the government in influencing currency value thru fiscal, monetary, and
2. Be able to explain in your own words the different currency arrangements and how they
CURRENCY VALUE: PARITY RELATIONS
Objectives: You should be able to:
explain four basic parity theories (PPP, IRP, IFE, and FP unbiased) in own words
outline the reasons that PPP may not hold (e.g., taxes, tariffs, etc.)
do the arbitrag
Questions on currency parity theories
2. If a country experiences an increase in interest rates relative to U.S. interest rates, the
inflow of U.S. funds to purchase its securities should _, the outflow of its
funds to purchase U.S. securities should _, a
Lecture 2: Balance of Payments
1. Be familiar with definitions in the international accounts
2. Be able to analyze international accts
-health of country /causes of trade imbalances/currency implications
3. Discuss solutions to trade imbalance
INTRODUCTION TO INTERNATIONAL FINANCE
Objectives: Should be able to:
1. Answer the basic 3 questions: what makes a successful multinational?; what country should a firm choose to
enter?; what entry strategy should the MNC choose (and why)?
2. Define the O
2a. Comparative advantage is a necessary aspect of international commerce, because
given certain labor and monetary differences, each country has certain advantages over
others; therefore, it is worth to specialize in certain things and trade in
Three common tactical mistakes in a sellers market:
1. After completing a capacity analysis, a company decides that industry demand exceeds supply
a. They price their product $4.99 above last rounds published price range
i. They forget that price ranges f
One thing that you find positively compelling and why regarding the truth claims of Perpetua, the
Didache Community and Benedict of Nursia.
In the Didache community I find this a very compelling way to live life. According to Didache you must love
The definition of justice is giving each person what they are due in accord with common good
and is realized in an external act. According to the reading on page 45 it states, That act, by
virtue of which something comes for the first time to be due to ma
One approach to doing Christian ethics is to identify a problem, put it into conversation with a moral
explanationpost, and then
Question 1 options:
engage in ethical reflection, with the goal of identifying what would be the right action to take
False: Daniel Trocme, who was featured in Weapons of the Spirit for his work in running a
children's home in Le Chambon, was a French Protestant.
Henry Heritier, when asked why they continued to shelter people in their home and risk their
Benedict of Nursia was a benefactor of the teachings of
Martin of Tours
The Desert Fathers and Mothers
According to Origen, there are three levels of interpreting scripture
The nature of Global Business Risk:
Transaction Risk: (current assets and current claims affected)
The risk of uncertainty that exists with accepting money in the future due to the volatility of
o Affects current assets and current claims
Financial Statement Analysis
Which is the better investment?
When choosing a company to invest in, it is best to avoid brand name bias and
choose the company that, according to its books, is the most effi