國際財(cái)務(wù)管理(第五版)習(xí)題解答-預(yù)覽頁
【正文】 als we have seen lately might not have happened. Since we cannot fully depend on the ethical behavior on the part of business leaders, the society should protect itself by adopting the rules/regulations and governance structure that would induce business leaders to behave in the interest of the society at large. 10. Suppose you are interested in investing in shares of Nokia Corporation of Finland, which is a world leader in wireless munication. But before you make investment decision, you would like to learn about the pany. Visit the website of CNN Financial work () and collect information about Nokia, including the recent stock price history and analysts? views of the pany. Discuss what you learn about the pany. Also discuss how the instantaneous access to information via inter would affect the nature and workings of financial markets. Answer: As students might have learned from visiting the website, information is readily available even for foreign panies like Nokia. Ready access to international information helps integrate financial markets, dismantling barriers to international investment and financing. Integration, however, may help a financial shock in one market to be transmitted to other markets. IM7 MINI CASE: NIKE?S DECISION Nike, a pany with a globally recognized brand name, manufactures athletic shoes in such Asian developing countries as China, Indonesia, and Vietnam using subcontractors, and sells the products in the . and foreign markets. The pany has no production facilities in the United States. In each of those Asian countries where Nike has production facilities, the rates of unemployment and underemployment are quite high. The wage rate is very low in those countries by the . standard。 (ii) the gold standard itself has no mechanism to enforce the rules of the game, and, as a result, countries may pursue economic policies (like demoization of gold) that are inpatible with the gold standard. 5. What were the main objectives of the Bretton Woods system? Answer: The main objectives of the Bretton Woods system are to achieve exchange rate stability and promote international trade and development. 6. One can say that the Bretton Woods system was programmed to an eventual demise. IM15 Comment on this proposition. Answer: The answer to this question is related to the Triffin paradox. Under the goldexchange system, the reservecurrency country should run BOP deficits to supply reserves to the world economy, but if the deficits are large and persistent, they can lead to a crisis of confidence in the reserve currency itself, eventually causing the downfall of the system. 7. Explain how the special drawing rights (SDR) is constructed. Also, discuss the circumstances under which the SDR was created. Answer: SDR was created by the IMF in 1970 as a new reserve asset, partially to alleviate the pressure on the . dollar as the key reserve currency. The SDR is a basket currency prised of five major currencies, ., . dollar, German mark, Japanese yen, French franc, and British pound. Currently, the dollar receives a 40% weight, mark 21%, yen 17%, franc 11%, and pound 11%. The weights for different currencies tend to change over time, reflecting the relative importance of each currency in international trade and finance. 8. Explain the arrangements and workings of the European Moary System (EMS). Answer: EMS was launched in 1979 in order to (I) establish a zone of moary stability in Europe, (ii) coordinate exchange rate policies against the nonEMS currencies, and (iii) pave the way for the eventual European moary union. The main instruments of EMS are the European Currency Unit (ECU) and the Exchange Rate Mechanism (ERM). Like SDR, the ECU is a basket currency constructed as a weighted average of currencies of EU member countries. The ECU works as the accounting unit of EMS and plays an important role in the workings of the ERM. The ERM is the procedure by which EMS member countries manage their exchange rates. The ERM is based on a parity grid system, with parity grids first pute
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