Brooklyn College Bus 7240X- Fall, 2011 Prof. Charles H Columbus Midterm Exam- November, 7, 2011 1. What are the key considerations an MNE must address when entering a new geography and what are the new concerns for its Financial Management? Why go Global? The keys considerations are: first, an open marketplace which is the fundamental condition for value creation. Second, a strategic management which is the ability to see business opportunities and to design, develop, and execute a long term
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three years are $2B and $4B, $1B and $5B, and $2B and $6B, respectively. What is the country's net foreign wealth after three years? Should the country's government worry about this trend? What could it do about it? Does your answer depend on the exchange rate regime? Explain. - Net foreign wealth is defined as the difference between the foreign assets owned by home country (ex. U.S.) and home country assets (U.S. assets) owned by foreigners. The relationship of net foreign wealth and current account
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in the world, there would not have been any need for foreign exchange market, foreign exchange rates or foreign exchange. But in a world of many national currencies, the foreign exchange market plays the crucial role of providing the requisite machinery for making payments across borders, transferring funds and purchasing power from one currency to another, and determining the exchange rate. The fundamental changes in foreign exchange, or FX, market began to take form in 1970′s along with the increasing
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FIN340 304 Tutorial week 3 Questions 1. How can a central bank use direct intervention to change the value of a currency? Explain why a central bank may desire to smooth exchange rate movements of its currency.. 2. Should the governments of Asian countries allow their currencies to float freely? What would be the advantages of letting their currencies float freely? What would be the disadvantages? 3. What is the impact of a weak home currency on the home economy, other things
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Ime Ekwere Business Economic Business Economics GM545 Fall 2011 Ime_ekwere2004@yahoo.com 16-5 Why is frictional unemployment important to have in any economy? Frictional unemployment is considered as a sign of an economy well being for unemployment that exits in a fast-growing economy with an expanding mobile, flexible and adaptable labor force of having choices. This type of unemployment is beneficial to workers because it allows them to seek for jobs they want
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to illustrate your answer. Question 2 (a) (10 marks) Describe the demand and supply model of foreign exchange and use the model to explain how the exchange rate is determined under a fixed and under a floating exchange rates. Use appropriate diagram to illustrate you answer. (b) (5 marks) With the aid of diagrams explain what happens to the exchange rate under a flexible exchange rate regime when: (i) the Australian economy recovers from a recession (ii) prices in Australia rise relative
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Volatile Exchange In the Global Market Discuss and explain the functions of the foreign exchange market. The role of the foreign exchange market in international business and how it impacts a country's ability to do business is simple: It keeps the money flowing around the world. The foreign exchange (FOREX) market provides a place for nations to purchase, borrow, or sell their own currency to members of other nations. What the FOREX do in this regard is provide the resources for countries
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Determination of Exchange Rates 1) The primary objective of the International Monetary Fund is to ________. A) encourage euro adoption B) promote exchange rate stability C) establish a unilateral system of payments D) foster the power of the foreign exchange market Answer: B Diff: 2 Learning Outcome: Summarize the roles of the international monetary system and global capital market Skill: Concept Objective: 1 2) The Bretton Woods Agreement established a system of fixed exchange rates under
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last few years the Indian financial markets have witnessed wide ranging changes at fast pace. Intense competition for business involving both the assets and liabilities, together with increasing volatility in the domestic interest rates as well as foreign exchange rates, has brought pressure on the management of banks to maintain a good balance among spreads, profitability and long-term viability. These pressures call for structured and comprehensive measures and not just ad hoc action. The Management
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last few years the Indian financial markets have witnessed wide ranging changes at fast pace. Intense competition for business involving both the assets and liabilities, together with increasing volatility in the domestic interest rates as well as foreign exchange rates, has brought pressure on the management of banks to maintain a good balance among spreads, profitability and long-term viability. These pressures call for structured and comprehensive measures and not just ad hoc action. The Management
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