and __________ allow a financial intermediary to offer safe, liquid liabilities such as deposits while investing the depositors’ money in riskier, illiquid assets. a. Diversification; high equity returns. b. Price risk; collateral. c. Primary markets; foreign exchange markets. d. Monitoring; diversification

and __________ allow a financial intermediary to offer safe, liquid liabilities such as deposits while investing the depositors’ money in riskier, illiquid assets. a. Diversification; high equity returns. b. Price risk; collateral. c. Primary markets; foreign exchange markets. d. Monitoring; diversification

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter29: Exchange Rates And International Capital Flows

Section: Chapter Questions

Problem 6SCQ: A booming economy can attract financial capital inflows, which promote further growth. However,...

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1. Explain the concept of the international financial environment and how this relates to companies operating in the Caribbean context. 2. Compare the models that may explain the emergence of the multinational corporation (MNC). 3. Justify the role of MNCs in contributing to national economies, recognizing the composition of a country’s balance of trade. 4. Compare the ways in which companies engage in international business. 5. Determine how the agencies facilitating the international flow of funds can support Caribbean industries in developing their international trade.
1. Summer1 Digital (Summer1) is a multinational corporation that produces and distributes telecommunications technology. Although its corporate headquarters are located in Kuala Lumpur, Malaysia, Summer1 usually buys its materials in several different countries using several different foreign currencies. The matter is further complicated because Summer1 often sells its products in other foreign countries. Summer1 is concerned with economic conditions that could adversely affect ringgit exchange rates. Explain Malaysias economic conditions in 2021. Evaluate the risks that need to be considered by Summer1 if it decides to continue buying materials from other countries including China and Indonesia as well as selling its products in countries such as Hong Kong and Japan. Discuss ways to manage and minimise the impacts of the risks associated with Techno1’s materials purchase and products sales in the foreign countries.
A. An exporter in the U.S is planning to ship $10,000,000 worth of automobiles to Germany in 6 months. What kind of foreign currency event should the exporter hedge against? What could happen if the exporter did not hedge? B. The selling price of 3-month forward U.K. pound sterling is $1.7107 and, the spot rate for pounds the selling price is $1.8953. Calculate the per annum percentage premium or discount in the forward rate.
Compared to past results, the latest BIS Markets survey shows which of the following characteristics in the foreign exchange market in 2022? (Select all that apply.) A. low volume B. low volatility C. high volatility D. high volume
8. International money and capital markets Aa Aa Globalization has led to the progressive integration of capital markets around the world, allowing worldwide investors and corporations to trade with or in other countries. The following table provides descriptions of certain transactions or situations. Based on your understanding of international capital markets and international money, choose the best term to match each description. Description Term Indian rupees are deposited in a bank in Kenya. A U.S. corporation starts a greenfield project in Mexico. This type of bond is issued by a European company in U.S. dollars and sold to American investors in the U.S. stock market under the SEC regulations. Eurocurrency deposits made in the U.S. are often tied to this rate.
Just TRUE & FALSE
10. Which of the following would cause a financial account (FA) surplus?a. the sale of heavy trucks used in construction by a domestic seller to a foreign buyer b. the purchase of stock in a U.S. corporation by a U.S. buyer c. the purchase of stock in a U.S. corporation by a foreign buyer d. the sale of stock in a U.S. corporation held by a foreign owner to a domestic buyer
Answer the given question... Assume Country X is a lower risk safe haven country while Country Y is higher risk emerging market country. If global financial conditions suddenly tighten, in which direction if any would you expect global capital to normally flow due to this tightening? A.) From Country X to Country Y B.) From Country Y to Country X C.) No change would be expected
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Exercise 1.7 Indicate whether the statement is true, false, or uncertain and explain why. 1. The net foreign asset position of South Africa in 2010 and 2011, respectively, was -70.5 billion USD and -19.7 billion USD. The current account in 2011 was -10.1 billion USD. There must be an error in the official numbers. The correct figure should be a net international investment position of -80.6 billion USD in 2011. 2. The fact that the United States made large valuation gains on average over the past 40 years means that the rest of the world as a whole made equally large valuation losses. After all, this is a zero sum game. 3. The United States has large unrecorded foreign asset holdings. 4. Saving is a stock variable.
Exercise 1.7 Indicate whether the statement is true, false, or uncertain and explain why. 1. The net foreign asset position of South Africa in 2010 and 2011, respectively, was -70.5 billion USD and -19.7 billion USD. The current account in 2011 was -10.1 billion USD. There must be an error in the official numbers. The correct figure should be a net international investment position of -80.6 billion USD in 2011. 2. The fact that the United States made large valuation gains on average over the past 40 years means that the rest of the world as a whole made equally large valuation losses. After all, this is a zero sum game.
8. Countries are moving towards convertible currencies. 9. When you have a future receivable in a currency that is expected to (DEPRECIATE/APPRECIATE), you should lag. 10. To reduce economic exposure, you should (REDUCE/INCREASE) the amount of production in a location where the currency is appreciating.