Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
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Chapter 17, Problem 2PS
Summary Introduction
To determine: The stance on investments in U.S auto producers is to be described.
Introduction:
The
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Chapter 17 Solutions
Investments
Ch. 17 - Prob. 1PSCh. 17 - Prob. 2PSCh. 17 - Prob. 3PSCh. 17 - Prob. 4PSCh. 17 - Prob. 5PSCh. 17 - Prob. 6PSCh. 17 - Prob. 7PSCh. 17 - Prob. 8PSCh. 17 - Prob. 9PSCh. 17 - Prob. 10PS
Ch. 17 - Prob. 11PSCh. 17 - Prob. 12PSCh. 17 - Prob. 13PSCh. 17 - Prob. 14PSCh. 17 - Prob. 15PSCh. 17 - Prob. 16PSCh. 17 - Prob. 17PSCh. 17 - Prob. 18PSCh. 17 - Prob. 19PSCh. 17 - Prob. 20PSCh. 17 - Prob. 21PSCh. 17 - Prob. 22PSCh. 17 - Prob. 23PSCh. 17 - Prob. 24PSCh. 17 - Prob. 25PSCh. 17 - Prob. 26PSCh. 17 - Prob. 27PSCh. 17 - Prob. 1CPCh. 17 - Prob. 2CPCh. 17 - Prob. 3CPCh. 17 - Prob. 4CPCh. 17 - Prob. 5CPCh. 17 - Prob. 6CPCh. 17 - Prob. 7CP
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- If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?arrow_forwardUnlike other investors, you believe the Fed is going to loosen monetary policy. What would be your recommendations about investments in the following industries?a. Gold miningb. Constructionarrow_forwardalthough it is important to consider the impact of inflation on investments made within one country, it is especially important to do so in multinational investment situations true or false?arrow_forward
- There is a situation where investors in the US are looking to Japan as a place where they should invest for a future high rate of return, while the Japanese investors are looking to lower their investments in the US. What is the combined effect on the US dollar value? Please explain.arrow_forwardIf the United States imports more goods from abroad than it exports, thenforeigners will tend to have a surplus of U.S. dollars. What will this do tothe value of the dollar with respect to foreign currencies? What is the corresponding effect on foreign investments in the United States?arrow_forwardFrom the U.S. standpoint, a capital outflow will occur when a Japanese investor buys a portion of the U.S. government debt. True Falsearrow_forward
- If a central bank decreases interest rates, then gradually: a. the country's gross domestic product is likely to decrease. b. foreign exchange rate is likely to appreciate. c. demand for exported goods and services is likely to increase. d. flows of investment funds into the country are likely to decrease.arrow_forward6) Suppose that the European central bank increased money supply right after you bought the European financial assets. How that change might aff ect the expected return you will get at the end of the period as an American investor? (Use graphs)arrow_forwardAssume U.S. interest rates are generally above foreign interest rates. What does this suggest about the future strength or weakness of the dollar based on the IFE? Should U.S. investors invest in foreign securities if they believe in the IFE? Should foreign investors invest in U.S. securities if they believe in the IFE?arrow_forward
- How may the domestic cost of capital for a foreign venture be adjusted to account for currency rate risk, political risk, and nation risk?arrow_forwardExplain the International Fisher effect and Interest Rate Parity theories. If these theories exist, explain MNCs' justification to invest excess cash in foreign country. Present a situation in which investment in the foreign money market would provide a higher rate of return than the one offered at the home market.arrow_forwardThose who say the growing current account deficit in the United States is not a significant problem make the argument that: 1.the current account deficit may hurt exporters, but American consumers gain as a result of lower relative prices. 2.the current account deficit is offset by an equally large capital account deficit, which ultimately leads to appreciation of the U.S. dollar. 3.the large current account deficit will ultimately lead to a current account surplus. 4.the increased investment in the United States as a result of the current account deficit will ultimately lead to increases in wealth and economic growth in the United States.arrow_forward
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