chapter 9 The financial system%2Cmoney and prices

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国际金融英文版课后答案

International Finance 国际金融Notes to the ans wers:1、All the terms can be found in the text.2、The discussions can be attained by reading the original text.Chapter 1Answers:II. T T F F F T TIII. 1. reserve currency 2. appreciate 3. was pegged to 4. deficit 5. fixed exchange rates 6. floating exchange rates 7. depreciate 8. market forcesIV. 1. Confidence in the ability of the U.S. to redeem dollars for gold began to fall as potential claims against the dollar increased and U.S. gold reserves fell.2.Under the fixed exchange rate system, the value of the dollar was tied to gold through itsconvertibility in to gold at the U.S. Treasury, and other nations’ currencies were tied to the dollar by the maintenance of a fixed rate of exchange.3.IMF has adjusted its role in the exchange rate system in view of the development of thesituation.4.After the collapse of the Bretton Woods System, the task of ―rigorous monitoring‖theexchange rate policy of member countries fell on the shoulder of IMF.5.Under normal conditions the stabilizing operations were sufficient to contain short-runfluctuations in a currency’s price within the required bounds of 1% of par value and thereby maintain a system of fixed exchange rates.Chapter 2Answers:I. liquid, turnover, due to, hedge, cross trading, electronic broking, outright forwards,Over-the-counter, futures and options, derivatives, remainder.II.. 1. The fundamental changes occurred in post-war world economy. The international flow of commodities, capital and labor is intensifying, thus leading to integration of international markets.1.Often referred to as ―financial institutions with a soul‖, credit unions are member-ownedcooperatives that offer checking accounts, savings accounts, credit cards, and consumer loans.2.If you think the price of gold will rise, you can buy a most simple kind of financial derivativewhich is called ―futures‖. If by that time the price really goes up, then you make a gain. But if you make a wrong guess and the price declines, then you suffer a loss.3.Financial derivatives are financial commodities deriving from such spot market products asinterest rate or bond, foreign exchange or foreign exchange rate and sto ck or stock indexes.There are mainly three types of derivatives: futures, options and swaps, each of which involves a mix of financial contracts.panies and investment funds are using basic currency futures and currency options, onesthat are regarded as traditional hedging products for investors who want to protect their international assets from sharp gains and declines in currency prices.Chapter 3Answers：II. 1. deposit accounts 2. securitization 3. Deregulation 4. consolidation 5. portfolio 6. thrift institutions 7. listing 8. liquidity 9. banking supervision 10. Credit riskIII. 1. Depository institutions 2. commercial banks 3. credit analysis 4. working capital 5. consolidation 6. financing 7. moral hazard 8. Bank supervision and regulation 9. Credit risk 10. Liquidity riskIV. 1. If a bank’s base rate was below money market rates, a customer could borrow from a bank and lend these funds to the money market, thus making a profit on the deal.2.Financing of international trade is one of the basic functions of a commercial bank. Not onlydoes it father deposits (demand, time and savings accounts), but it also grants loans.3.If you have a credit card, you buy a car, eat a dinner, take a trip,a nd even get a haircut bycharging the cost to your account.4.As the central bank and under the leadership of the State Council, the People’s Bank ofChina will formulate and implement monetary policies, execute supervision and control power over the banking industry.5.One of major function of the central bank is the supervision of the clearing mechanis m. Areliable clearing mechanis m which can settle inter-bank transaction with high efficiency is crucial to a well-operated financial system.Chapter 4 Ans wers:II. 1．integrity 2. pretext 3. released 4. produce 5. facilities 6. obliged 7. alleging 8. Claims 9. cleared 10. deliveryIII. 1. in favor of 2. consignment 3. undertaking, terms and conditions 4. cleared 5. regardless of 6. obliged to 7. undervalue arrangement 8. on the pretext of 9. refrain from 10. hinges onIV. 1. The objective of documentary credits is to facilitate international payment by making use of the financial expertise and credit worthiness of one or more banks.2.In compliance with your request, we have effected insurance on your behalf and debited youraccount with the premium in the amount of $1000.3.When an exporter is trading regularly with an importer, he will offer open account terms.4.Exporters usually insist on payment by cash in advance when they are trading with oldcustomers.5.Cash in advance means that the exporter is paid either when the importer places his order orwhen the goods are ready for shipment.Chapter 5.II．1. b 2. c 3. c 4. a 5. b 6. b 7. a 8. cIII. 1. guaranteed 2. without recourse 3. defaults 4. on the buyer’s account 5. is equivalent to 6. in question 7. devaluation 8. validity 9. discrepancy 10. inconsistent withChapter 6Answers:II. 1. open account, creditworthiness 2. demand 3. draw on, creditor 4. protest 5. schedule, discrepancies 6. acceptance 7. drawee 8. guranteedIII. 1. collecting bank 2. tenor 3. the proceeds 4. protest 5. deferred payment 6. presentation 7. the maturity date 8. a document of title 9. the shipping documents 10. transshipmentIV. 1. Documentary collection is a method by which the exporter authorizes the bank to collect money from the importer.2.When a draft is duly presented for acceptance or payment but the acceptance or paymentis refused, the draft is said to be dishonored.3.In the international money market, draft is a circulative and transferable instrument.Endorsement serves to transfer the title of a draft to the transferee.4.A clean bill of lading is favored by the buyer and the banks for financial settlementpurposes.5.Parcel post receipt is issued by the post office for goods sent by parcel post. It is both areceipt and evidence of dispatch and also the basis for claim and adjustment if there is any damage to or loss of parcels.Chapter 7II. financing, discounting, factoring, forfaiting, without recourse, accounts receivable, factor, trade obligations, promissory notes, trade receivables, specialized.III. 1. a cash flow disadvantage 2. without recourse 3. negotiable instruments 4. promissory notes 5. profit margin 6. at a discount, maturity, credit risk 7. A bill of exchange, A promissory noteIV. 1. When a bill is dishonored by non-acceptance or by non-payment, the holder then has an immediate right of recourse against the drawer and the endorsers.2.If a bill of lading is made out to bearer, it can be legally transferred without endorsement.3.The presenting bank should endeavor to ascertain the reasons non-payment ornon-acceptance and advise accordingly to the collecting bank.4.Any charges and expenses incurred by banks in connection with any action for protection o fthe goods will be for the account of the principal.5.Anyone who has a current account at a bank can use a cheque.Chapter EightStructure of the Foreign Exchange Market外汇市场的构成1. Key Terms1）foreign exchange：―Foreign exchange‖ refers t o money denominated in the currency of another nation or group of nations.2）payment“payment”is the transmission of an instruction to transfer value that results from a transaction in the economy.3）settlement―settlement‖ is the final and uncondit ional transfer of the value specified in a payment instruction.2. True or False1) true 2) true 3) true 4) true1)Tell the reasons why the dollar is the market's most widely tradedcurrency?key points: U.S.A economic background; the leadership of USD in the world economy ; the role it plays in investment , trade, etc.2)What kind of market is the foreign exchange market?Make reference to the following parts:（8.7 The Market Is Made Up of An International Network of Dealers）Chapter 9Instruments交易工具1. Key Terms1) spot transactionA spot transaction is a straightforward (or ―outright‖) exchange of one currency for another. The spot rate is the current market price, the benchmark price.Spot transactions do not require immediate settlement, or payment ―on the spot.‖ By convention, the settlement date, or ―value date,‖is the second business day after the ―deal date‖ (or ―trade date‖) on which the transaction is agreed to by the two traders. The two-day period provides ample time for the two parties to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.2) American termsThe phrase ―American terms‖means a direct quote from the point of view of someone located in the United States. For the dollar, that means that the rate is quoted in variable amounts of U.S. dollars and cents per one unit of foreign currency (e.g., $1.2270 per Euro).3) outright forward transactionAn outright forward transaction, like a spot transaction, is a straightforward single purchase/ sale of one currency for another. The only difference is that spot is settled, or delivered, on a value date no later than two business days after the deal date, while outright forward is settled on any pre-agreed date three or more business days after the deal date. Dealers use the term ―outright forward‖ to make clear that it is a single purchase or sale on a future date, and not part of an ―FX swap‖.4) FX swapAn FX swap has two separate legs settling on two different value dates, even though it is arranged as a single transaction and is recorded in the turnover statistics as a single transaction. The two counterparties agree to exchange two currencies at a particular rate on one date (the ―near date‖) and to reverse payments, almost always at a different rate, on a specified sub sequent date (the ―far date‖). Effectively, it is a spot transaction and an outright forward transaction going in opposite directions, or else two outright forwards with different settlement dates, and going in opposite directions. If both dates are less than one month from the deal date, it is a ―short-dated swap‖; if one or both dates are one month or more from the deal date, it is a ―forward swap.‖5) put-call parity―Put-call parity‖says that the price of a European put (or call) option can be deduced from the price of a European call (or put) option on the same currency, with the same strike price and expiration. When the strike price is the same as the forward rate (an ―at-the-money‖forward), the put and the call will be equal in value. When the strike price is not the same as the forward price, the difference between the value of the put and the value of the call will equal the difference in the present values of the two currencies.2. True or False1) true 2) true 3) true3. Cloze1) Traders in the market thus know that for any currency pair, if the basecurrency earns a higher interest rate than the terms currency, the currency will trade at a forward discount, or below the spot rate; and if the base currency earns a lower interest rate than the terms currency, the base currency will trade at a forward premium, or above the spot rate. Whichever side of the transaction the trader is on, the trader won't gain (or lose) from both the interest rate differential and the forward premium/discount. A trader who loses on the interest rate will earn the forward premium, and vice versa.2) A call option is the right, but not the obligation, to buy the underlyingcurrency, and a put option is the right, but not the obligation, to sellthe underlying currency. All currency option trades involve two sides—the purchase of one currency and the sale of another—so that a put to sell pounds sterling for dollars at a certain price is also a call to buy dollars for pounds sterling at that price. The purchased currency is the call side of the trade, and the sold currency is the put side of the trade. The party who purchases the option is the holder or buyer, and the party who creates the option is the seller or writer. The price at which the underlying currency may be bought or sold is the exercise , or strike, price. The option premium is the price of the option that the buyer pays to the writer. In exchange for paying the option premium up front, the buyer gains insurance against adverse movements in the underlying spot exchange rate while retaining the opportunity to benefit from favorable movements. The option writer, on the other hand, is exposed to unbounded risk—although the writer can (and typically does) seek to protect himself through hedging or offsetting transactions.4. Discussions1)What is a derivate financial instrument? Why is traded?2)Discuss the differences between forward and futures markets in foreigncurrency.3)What advantages do foreign currency futures have over foreigncurrency options?4)What is meant if an option is ―in the money‖, ―out of the money‖,or ―atthe money‖?5)What major international contracts are traded on the ChicagoMercantile Exchange ? Philadelphia Stock Exchange?Chapter 10Managing Risk in Foreign Exchange Trading外汇市场交易的风险管理1. Key Terms1) Market riskMarket risk, in simplest terms, is price risk, or ―exposure to (adverse)price change.‖ For a dealer in foreign exchange, two major elements of market risk are exchange rate risk and interest rate risk—that is, risks of adverse change in a currency rate or in an interest rate.2) VARVAR estimates the potential loss from market risk across an entire portfolio, using probability concepts. It seeks to identify the fundamental risks that the portfolio contains, so that the portfolio can be decomposed into underlying risk factors that can be quantified and managed. Employing standard statistical techniques widely used in other fields, and based in part on past experience, VAR can be used to estimate the daily statistical variance, or standard deviation, or volatility, of the entire portfolio. On the basis of that estimate of variance, it is possible to estimate the expected loss from adverse price movements with a specified probability over a particular period of time (usually a day).3) credit riskCredit risk, inherent in all banking activities, arises from the possibility that the counterparty to a contract cannot or will not make the agreed payment at maturity. When an institution provides credit, whatever the form, it expects to be repaid. When a bank or other dealing institution enters a foreign exchange contract, it faces a risk that the counterparty will not perform according to the provisions of the contract. Between the time of the deal and the time of thesettlement, be it a matter of hours, days, or months, there is an extension of credit by both parties and an acceptance of credit risk by the banks or other financial institutions involved. As in the case of market risk, credit risk is one of the fundamental risks to be monitored and controlled in foreign exchange trading.4) legal risksThere are legal risks, or the risk of loss that a contract cannot be enforced, which may occur, for example, because the counterparty is not legally capable of making the binding agreement, or because of insufficient documentation or a contract in conflict with statutes or regulatory policy.2. True or False1)True 2) true3. Translation1) Broadly speaking, the risks in trading foreign exchange are the same asthose in marketing other financial products. These risks can be categorized and subdivided in any number of ways, depending on the particular focus desired and the degree of detail sought. Here, the focus is on two of the basic categories of risk—market risk and credit risk (including settlement risk and sovereign risk)—as they apply to foreign exchange trading. Note is also taken of some other important risks in foreign exchange trading—liquidity risk, legal risk, and operational risk2) It was noted that foreign exchange trading is subject to a particular form ofcredit risk known as settlement risk or Herstatt risk, which stems in part from the fact that the two legs of a foreign exchange transaction are often settled in two different time zones, with different business hours. Also noted was the fact that market participants and central banks have undertaken considerable initiatives in recent years to reduce Herstatt risk.4. Discussions2)Discuss the way how V AR works in measuring and managing marketrisk?3)Why are banks so interested in political or country risk?4)Discuss other forms of risks which you know in foreign exchange. Chapter 11The Determination of Exchange Rates汇率的决定1. Key Terms1) PPPPurchasing Power Parity (PPP) theory holds that in the long run, exchange rates will adjust to equalize the relative purchasing power of currencies. This concept follows from the law of one price, which holds that in competitive markets, identical goods will sell for identical prices when valued in the same currency.2) the law of one priceThe law of one price relates to an individual product. A generalization of that law is the absolute version of PPP, the proposition that exchange rates will equate nations' overall price levels.3) FEER―fundamental equilibrium exchange rate,‖ or FEER,envisaged as the equilibrium exchange rate that would reconcile a nation's internal and external balance. In that system, each country would commit itself to a macroeconomicstrategy designed to lead, in the medium term, to ―internal balance‖—defined as unemployment at the natural rate and minimal inflation—and to ―external balance‖—defined as achieving the targeted current account balance. Each country would be committed to holding its exchange rate within a band or target zone around the FEER, or the level needed to reconcile internal and external balance during the intervening adjustment period.4) monetary approachThe monetary approach to exchange rate determination is based on the proposition that exchange rates are established through the process of balancing the total supply of, and the total demand for, the national money in each nation. The premise is that the supply of money can be controlled by the nation's monetary authorities, and that the demand for money has a stable and predictable linkage to a few key variables, including an inverse relationship to the interest rate—that is, the higher the interest rate, the smaller the demand for money.5) portfolio balance approachThe portfolio balance approach takes a shorter-term view of exchange rates and broadens the focus from the demand and supply conditions for money to take account of the demand and supply conditions for other financial assets as well. Unlike the monetary approach, the portfolio balance approach assumes that domestic and foreign bonds are not perfect substitutes. According to the portfolio balance theory in its simplest form, firms and individuals balance their portfolios among domestic money, domestic bonds, and foreign currency bonds, and they modify their portfolios as conditions change. It is the process of equilibrating the total demand for, and supply of, financial assets in each country that determines the exchange rate.2. True or False1) true 2) true3. Cloze1）PPP is based in part on some unrealistic assumptions: that goods are identical; that all goods are tradable; that there are no transportationcosts, information gaps, taxes, tariffs, or restrictions of trade; and—implicitly and importantly—that exchange rates are influenced only byrelative inflation rates. But contrary to the implicit PPP assumption,exchange rates also can change for reasons other than differences ininflation rates. Real exchange rates can and do change significantly overtime, because of such things as major shifts in productivitygrowth, advances in technology, shifts in factor supplies, changes inmarket structure, commodity shocks, shortage, and booms.2）Each individual and firm chooses a portfolio to suit its needs, based on a variety of considerations—the holder's wealth and tastes, the level ofdomestic and foreign interest rates, expectations of future inflation,interest rates, and so on. Any significant change in the underlying factorswill cause the holder to adjust his portfolio and seek a new equilibrium.These actions to balance portfolios will influence exchange rates.4. Discussions1）How does the purchasing power parity work?2）Describe and discuss one model for forecasting foreign exchange rates.3）Make commends on how good are the various approaches mentioned in the chapter.4）Central banks occasionally intervene in foreign exchange markets. Discuss the purpose of such intervention. How effective is intervention?Chapter 12The Financial Markets金融市场1. Key Terms1）money marketThe money market is really a market for short-term credit, or the option to use someone else's money for a period of time in return for the payment of interest. The money market helps the participants in the economic process cope with routine financial uncertainties. It assists in bridging the differences in the timing of payments and receipts that arise in a market economy.2）capital marketMarkets dealing in instruments with maturities that exceed one year are often referred to as capital markets.3）primary marketThe term ―primary market‖ applies to the original issuance of a credit market instrument. There are a variety of techniques for such sales, including auctions, posting of rates, direct placement, and active customer contacts by a salesperson specializing in the instrument4） secondary marketOnce a debt instrument has been issued, the purchaser may be able to resell it before maturity in a ―secondary market.‖ Again, a number of techniques are available for bringing together potential buyers and sellers of existing debt instruments. They include various types of formal exchanges, informal telephone dealer markets, and electronic trading through bids and offers on computer screens. Often, the same firms that provide primary marketing services help to create or ―make‖ secondary markets.5）RPsIn addition to making outright purchases and sales in the secondary market, entities with money to invest for a brief period can acquire a security temporarily, and holders of debt instruments can borrow short term by selling securities temporarily. These two types of transactions are repurchase agree-ments (RPs) and reverse RPs,respectively. In the wholesale market, banks and government securities dealers offer RPs at competitive rates of return by selling securities under contracts providing for their repurchase from one day to several months later6）BAs 7）CDs (reference to 13.1)8） EurodollarEurodollars are U.S. dollar deposits at banking offices in a country other than the United States.9） EurobankEurobanks—banks dealing in Eurodollar or some other nonlocal currency deposits, including foreign branches of U.S. banks— originally held deposits almost exclusively in Europe, primarily London. While most such deposits are still held in Europe, they are also held in such places as the Bahamas, Bahrain, Canada, the Cayman Islands, Hong Kong, Singapore, and Tokyo, as well as other parts of the world.10）LIBOR (reference to 13.2.2 Certificates of Deposit)London inter-bank offer rate11）mortgage-backed securities12）Eurobond market (details make reference to13.3.3 )The Eurobond market, centered in London, is an offshore market in intermediate- and long-term debt issues. It serves as a source of capital for multinational corporations and for foreign governments. It developed after the United States instituted the interest equalization tax in 1963 to stem capital outflows inspired by relatively low U.S. interest rates.2. True or False1) true 2) true 3) true3. Discussions1) Describe the characteristics of Interest Rate Swap and the role of it in thebank-related financial market.2) What risks are encountered in the swaps markets?3) Discuss one or two specific examples of derivative products and their use.4. Translations1) Markets dealing in instruments with maturities that exceed one year are often referred to as capital markets, since credit to finance investments in new capital would generally be needed for more than one year. The time division is arbitrary. A long-term project can be started with short-term credit, with additional instruments may need to be renewed before a project is completed. Debt instruments that differ in maturity share other characteristics. Hence, the term ―capital market‖ could be –and occasionally is applied to some shorter maturity transactions.2) The secondary market for Treasure securities consists of a network of dealers, brokers, and investors who effect transactions either by telephone or electronically. Telephone trades are generally between dealers and their customers. Electronics trading is arranged through screen-based systems provided by some of the dealers to their customers. It allows selected trades to take place without a conversation. When dealers trade with each other, they generally use brokers. Brokers provide information on screen, but the final trades are made bytelephone.Chapter 13Concepts of Financial Assets Value金融资产价值的概念1. Key Terms1) absolute measure of valueAn absolute measure of value is used when one must compare it to a nominal amount: purchase price, amount to invest, target sum of money to raise2) relative measure of valueA relative measure of rate of return is more convenient to use when one wishes to compare one financial asset to a set of numerous alternative assets. A rate of return is the most commonly used relative measure of value.3) discountingFuture benefits must be discounted (or converted) to their present (or today's) value, before they are summed. Discounting is part of the study of time value of money, or actuarial mathematics, and a complete treatment of it can be found in specialized textbook.4) time value of moneyTime value of money studies how amounts of money are made equivalent over time. Converting amounts today into their future equivalent consists in adding interest to principal, i.e. compounding. Converting amounts in the future into today's equivalent consists of charging an interest, i.e. discounting. Thus, discounting is the exact inverse of compounding.5) FV 6) PV 7) annuity8) short term securitiesShort term securities (i.e. securities with maturity less than one year) are sold at a discount (i.e. nominal value less the interest to be earned over the remaining number of days to maturity). There is no coupon, and no additional benefits such as conversion right, but there may be a penalty for early redemption in the case of some bank certificates of deposit.9) P/E ratio (make reference to 15.5.3 --Earnings Multiple or P/E Ratio)Another approach which is used as a short-cut by a large number of investors, is the earnings multiple. It is sometimes referred to as earningsmultiplier, and it is most commonly known as price-to-earnings or P/E ratio. In many instances, the approach, rather than being an oversimplification, can be an improvement over the previous format. In its most common presentation, the idea is that the price P of a share should be a multiple m of its earnings per share E. The multiple m is an industry average because it is assumed that all companies in an industry face similar marketing, technological and resource challenges, and thus, should have similar organizational and production patterns.10) intrinsic valueintrinsic value, or difference between market price of the underlying stock and strike price (which is also known as exercise price because it is the price at which an option holder can buy from or sell to the option writer the underlying stock through the options exchange)。

[美]R·格伦·哈伯德《宏观经济学》R.GlennHubbard,AnthonyP

Macroeconomics R. GLENN HUBBARD COLUMBIA UNIVERSITY ANTHONY PATRICK O’BRIEN LEHIGH UNIVERSITY MATTHEW RAFFERTY QUINNIPIAC UNIVERSITY Boston Columbus Indianapolis New York San Francisco Upper Saddle RiverAmsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City So Paulo Sydney Hong Kong Seoul Singapore Taipei TokyoAbout the AuthorsGlenn Hubbard Professor Researcher and Policymaker R. Glenn Hubbard is the dean and Russell L. Carson Professor of Finance and Economics in the Graduate School of Business at Columbia University and professor of economics in Columbia’s Faculty of Arts and Sciences. He is also a research associate of the National Bureau of Economic Research and a director of Automatic Data Processing Black Rock Closed- End Funds KKR Financial Corporation and MetLife. Professor Hubbard received his Ph.D. in economics from Harvard University in 1983. From 2001 to 2003 he served as chairman of the White House Council of Economic Advisers and chairman of the OECD Economy Policy Commit- tee and from 1991 to 1993 he was deputy assistant secretary of the U.S. Treasury Department. He currently serves as co-chair of the nonpar-tisan Committee on Capital Markets Regulation and the Corporate Boards Study Group. ProfessorHubbard is the author of more than 100 articles in leading journals including American EconomicReview Brookings Papers on Economic Activity Journal of Finance Journal of Financial EconomicsJournal of Money Credit and Banking Journal of Political Economy Journal of Public EconomicsQuarterly Journal of Economics RAND Journal of Economics and Review of Economics and Statistics.Tony O’Brien Award-Winning Professor and Researcher Anthony Patrick O’Brien is a professor of economics at Lehigh University. He received a Ph.D. from the University of California Berkeley in 1987. He has taught principles of economics money and banking and interme- diate macroeconomics for more than 20 years in both large sections and small honors classes. He received the Lehigh University Award for Distin- guished Teaching. He was formerly the director of the Diamond Center for Economic Education and was named a Dana Foundation Faculty Fel- low and Lehigh Class of 1961 Professor of Economics. He has been a visit- ing professor at the University of California Santa Barbara and Carnegie Mellon University. Professor O’Brien’s research has dealt with such issues as the evolution of the U.S. automobile industry sources of U.S. economiccompetitiveness the development of U.S. trade policy the causes of the Great Depression and thecauses of black–white income differences. His research has been published in leading journals in-cluding American Economic Review Quarterly Journal of Economics Journal of Money Credit andBanking Industrial Relations Journal of Economic History Explorations in Economic History andJournal of PolicyHistory.Matthew Rafferty Professor and Researcher Matthew Christopher Rafferty is a professor of economics and department chairperson at Quinnipiac University. He has also been a visiting professor at Union College. He received a Ph.D. from the University of California Davis in 1997 and has taught intermediate macroeconomics for 15 years in both large and small sections. Professor Rafferty’s research has f ocused on university and firm-financed research and development activities. In particular he is interested in understanding how corporate governance and equity compensation influence firm research and development. His research has been published in leading journals including the Journal of Financial and Quantitative Analysis Journal of Corporate Finance Research Policy and the Southern Economic Journal. He has worked as a consultantfor theConnecticut Petroleum Council on issues before the Connecticut state legislature. He has alsowritten op-ed pieces that have appeared in several newspapers including the New York Times. iii Brief Contents Part 1: Introduction Chapter 1 The Long and Short of Macroeconomics 1 Chapter 2 Measuring the Macroeconomy 23 Chapter 3 The Financial System 59 Part 2: Macroeconomics in the Long Run: Economic Growth Chapter 4 Determining Aggregate Production 105 Chapter 5 Long-Run Economic Growth 143 Chapter 6 Money and Inflation 188 Chapter 7 The Labor Market 231 Part 3: Macroeconomics in the Short Run: Theory and Policy Chapter 8 Business Cycles 271 Chapter 9 IS–MP: A Short-Run Macroeconomic Model 302 Chapter 10 Monetary Policy in the Short Run 363 Chapter 11 Fiscal Policy in the Short Run 407 Chapter 12 Aggregate Demand Aggregate Supply and Monetary Policy 448 Part 4: Extensions Chapter 13 Fiscal Policy and the Government Budget in the Long Run 486 Chapter 14 Consumption and Investment 521 Chapter 15 The Balance of Payments Exchange Rates and Macroeconomic Policy 559 Glossary G-1 Index I-1ivContentsChapter 1 The Long and Short of Macroeconomics 1WHEN YOU ENTER THE JOB MARKET CAN MATTER A LOT ........................................................ 11.1 What Macroeconomics Is About........................................................................... 2 Macroeconomics in the Short Run and in the Long Run .................................................... 2 Long-Run Growth in the United States ............................................................................. 3 Some Countries Have Not Experienced Significant Long-Run Growth ............................... 4 Aging Populations Pose a Challenge to Governments Around the World .......................... 5 Unemployment in the United States ................................................................................. 6 How Unemployment Rates Differ Across Developed Countries ......................................... 7 Inflation Rates Fluctuate Over Time and Across Countries................................................. 7 Econo mic Policy Can Help Stabilize the Economy .. (8)International Factors Have Become Increasingly Important in Explaining Macroeconomic Events................................................................................. 91.2 How Economists Think About Macroeconomics ............................................. 11 What Is the Best Way to Analyze Macroeconomic Issues .............................................. 11 Macroeconomic Models.................................................................................................. 12Solved Problem 1.2: Do Rising Imports Lead to a Permanent Reductionin U.S. Employment. (12)Assumptions Endogenous Variables and Exogenous Variables in EconomicModels ........................................................................................................ 13 Forming and Testing Hypotheses in Economic Models .................................................... 14Making the Connection: What Do People Know About Macroeconomicsand How Do They KnowIt .............................................................................................. 151.3 Key Issues and Questions of Macroeconomics ............................................... 16An Inside Look: Will Consumer Spending Nudge Employers to Hire................................ 18Chapter Summary and Problems ............................................................................. 20 Key Terms and Concepts Review Questions Problems and Applications Data Exercise Theseend-of-chapter resource materials repeat in all chapters.Chapter 2 Measuring the Macroeconomy 23HOW DO WE KNOW WHEN WE ARE IN ARECESSION ........................................................... 23Key Issue andQuestion .................................................................................................... 232.1 GDP: Measuring Total Production and Total Income ..................................... 25 How theGovernment Calculates GDP (25)Production and Income (26)The Circular Flow of Income (27)An Example of Measuring GDP (29)National Income Identities and the Components of GDP (29)vvi CONTENTS Making the Connection: Will Public Employee Pensions Wreck State and Local Government Budgets.................................................................... 31 The Relationship Between GDP and GNP........................................................................ 33 2.2 Real GDP Nominal GDP and the GDP Deflator.............................................. 33 Solved Problem 2.2a: Calculating Real GDP . (34)Price Indexes and the GDP Deflator (35)Solved Problem 2.2b: Calculating the Inflation Rate ..........................................................36 The Chain-Weighted Measure of Real GDP ....................................................................37 Making the Connection: Trying to Hit a Moving Target: Forecasting with “Real-Time Data” .................................................................................. 37 Comparing GDP Across Countries................................................................................... 38 Making the Connection: The Incredible Shrinking Chinese Economy ................................ 39 GDP and National Income .............................................................................................. 40 2.3 Inflation Rates and Interest Rates ....................................................................... 41 The Consumer Price Index .............................................................................................. 42 Making the Connection: Does Indexing Preserve the Purchasing Power of Social Security Payments ................................................................ 43 How Accurate Is theCPI ............................................................................................... 44 The Way the Federal Reserve Measures Inflation ............................................................ 44 InterestRates .................................................................................................................. 45 2.4 Measuring Employment and Unemployment .. (47)Answering the Key Question ............................................................................................ 49 An Inside Look: Weak Construction Market Persists.......................................................... 50 Chapter 3 The Financial System 59 THE WONDERFUL WORLD OFCREDIT ................................................................................... 59 Key Issue and Question .................................................................................................... 59 3.1 Overview of the Financial System ...................................................................... 60 Financial Markets and Financial Intermediaries ................................................................ 61 Making the Connection: Is General Motors Making Cars or Making Loans .................... 62 Making the Connection: Investing in the Worldwide Stock Market . (64)Banking and Securitization (67)The Mortgage Market and the Subprime Lending Disaster (67)Asymmetric Information and Principal–Agent Problems in Financial Markets...................68 3.2 The Role of the Central Bank in the Financial System (69)Central Banks as Lenders of Last Resort ..........................................................................69 Bank Runs Contagion and Asset Deflation ....................................................................70 Making the Connection: Panics Then and Now: The Collapse of the Bank of United States in 1930 and the Collapse of Lehman Brothers in2008 (71)3.3 Determining Interest Rates: The Market for Loanable Funds and the Market forMoney .......................................................................................... 76 Saving and Supply in the Loanable Funds Market ........................................................... 76 Investment and the Demand for Loanable Funds ............................................................ 77 Explaining Movements in Saving Investment and the Real Interest Rate (78)CONTENTS .。

金融规章制度中英文对照

金融规章制度中英文对照金融行业是一个国家经济系统中至关重要的组成部分，它对国家经济的稳定性和发展起着至关重要的作用。

金融规章制度是为了规范金融行业的运作，保护投资者权益，预防金融风险而建立起来的一套制度体系。

本文将介绍一些常见的金融规章制度，并对其进行中英对照。

The financial industry is a crucial component of a country's economic system, playing a vital role in the stability and development of the national economy. Financial regulations are established to regulate the operation of the financial industry, protect the rights and interests of investors, and prevent financial risks. This article will introduce some common financial regulations and provide a comparison between the Chinese and English versions. 1. 证券法 Securities Law《证券法》是中国国家对证券市场的管理和监督所制定的法律文件。

该法律主要包括证券的发行、上市、交易、中介服务等方面的规定，确保证券市场的稳定和秩序。

下面是《证券法》的中英对照：Chinese Version:第一章总则第一条为了规范证券市场行为，保护投资者合法权益，促进证券市场健康发展，制定本法。

第二条本法所称证券是指国家法定的股票、债券等有价证券，以及法定的其他证券。

English Version:Chapter I General ProvisionsArticle 1 In order to regulate the behaviors in the securities market, protect the legitimate rights and interests of investors, and promote the healthy development of the securities market, this Law is formulated.Article 2 The term "securities" as mentioned in this Law refers to the legally recognized stocks, bonds, and other securities, as well as other securities specified by law.2. 银行法 Banking Law《银行法》是对金融机构进行管理和监管的法律基础，其主要目的是确保金融机构稳健经营，维护金融体系的稳定性。

财金英语教程参考答案

财金英语教程参考答案Chapter 1: Introduction to Finance1. What is finance?- Finance is the management of money and includesactivities such as investing, borrowing, lending, budgeting, saving, and forecasting.2. What are the three main functions of finance?- The three main functions of finance are planning, acquiring, and managing financial resources.3. What is the time value of money?- The time value of money is the concept that a sum of money is worth more now than the same sum in the future dueto its potential earning capacity.4. How does inflation affect the value of money?- Inflation erodes the purchasing power of money over time, meaning that the same amount of money will buy fewer goodsand services in the future.5. What is the difference between a bond and a stock?- A bond is a debt instrument where an investor lends money to an entity in exchange for interest payments, while a stock represents ownership in a company and offers thepotential for capital gains and dividends.Chapter 2: Financial Statements1. What are the four main financial statements?- The four main financial statements are the balance sheet, income statement, cash flow statement, and statement of changes in equity.2. What is the purpose of a balance sheet?- The balance sheet provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and equity.3. How is net income calculated?- Net income is calculated by subtracting all expensesfrom the total revenue of a company during a specific period.4. What does the cash flow statement show?- The cash flow statement shows the inflow and outflow of cash within a business over a period of time, categorizedinto operating, investing, and financing activities.5. What is the statement of changes in equity?- The statement of changes in equity shows the changes in the equity accounts of a company over a period of time, including retained earnings, capital contributions, and other comprehensive income.Chapter 3: Financial Analysis1. What are the main types of financial analysis?- The main types of financial analysis are ratio analysis,horizontal analysis, vertical analysis, and trend analysis.2. What is the purpose of ratio analysis?- Ratio analysis is used to evaluate a company's financial health by comparing various financial ratios such asliquidity, profitability, and leverage ratios.3. What is horizontal analysis?- Horizontal analysis involves comparing financial statement items over multiple periods to identify trends and changes in performance.4. What is vertical analysis?- Vertical analysis, also known as common-size analysis,is a method of financial statement analysis where each itemis expressed as a percentage of a base figure, typicallytotal assets or total revenue.5. What is trend analysis?- Trend analysis involves examining the historical data of financial metrics over time to predict future trends and performance.Chapter 4: Risk Management1. What is risk management?- Risk management is the process of identifying, assessing, and prioritizing potential risks to an investment or project, and taking steps to mitigate or avoid these risks.2. What are the types of risks in finance?- The types of risks in finance include market risk,credit risk, liquidity risk, operational risk, and legal risk.3. What is diversification?- Diversification is a risk management strategy that involves spreading investments across various financial instruments, industries, or geographic regions to reduce overall risk.4. What is hedging?- Hedging is a risk management technique used to reducethe risk of price fluctuations in an asset by taking an offsetting position in a related security.5. What is the role of insurance in risk management?- Insurance is a risk management tool that providesfinancial protection against potential losses or damages by transferring the risk to an insurance company in exchange for a premium.Chapter 5: Investment Strategies1. What are the different types of investment strategies?- Types of investment strategies include passive investing, active investing, value investing, growth investing, and income investing.2. What is the difference between passive and active investing?- Passive investing involves a "set it and forget it" approach, typically using index funds, while active investingrequires regular buying and selling of individual securities based on market research and analysis.3. What is value investing?- Value investing is an investment strategy that involves buying stocks that are considered undervalued by the market, with the expectation that their true value will eventually be recognized.4. What is growth investing?- Growth investing focuses on companies that are expected to grow at an above-average rate compared to the market, often investing in companies with strong competitive advantages and high growth potential.5. What is income investing?- Income investing is an investment strategy aimed at generating a steady stream of income from investments, typically through dividends or interest payments.Chapter 6: International Finance1. What is international。

金融市场学双语题库及答案(第九章)米什金《金融市场与机构》

A) Americans' fear of centralized power.
B) the traditional American distrust of moneyed interests.
C) Americans' desire to remove control of the money supply from the U.S. Treasury.
B) the Second Bank of the United States not been abolished in 1836 by President Andrew Jackson.
Answer: Cຫໍສະໝຸດ Topic: Chapter 9.1 Origins of the Federal Reserve System
Question Status: Previous Edition
3) The unusual structure of the Federal Reserve System is perhaps best explained by
A) 17th century.
B) 18th century.
C) 19th century.
D) 20th century.
Answer: D
Topic: Chapter 9.1 Origins of the Federal Reserve System
Question Status: Previous Edition
B) the Federal Reserve needed greater authority to deal with problem banks.
C) a central bank was needed to prevent future financial panics.

曼昆经济学原理英文书

曼昆经济学原理英文书The Economics Principles by MankiwChapter 1: Ten Principles of EconomicsChapter 2: Thinking Like an EconomistChapter 3: Interdependence and the Gains from Trade Chapter 4: The Market Forces of Supply and Demand Chapter 5: Elasticity and Its ApplicationChapter 6: Supply, Demand, and Government Policies Chapter 7: Consumers, Producers, and Efficiency of Markets Chapter 8: Application: The Costs of TaxationChapter 9: Application: International TradeChapter 10: ExternalitiesChapter 11: Public Goods and Common Resources Chapter 12: The Design of the Tax SystemChapter 13: The Costs of ProductionChapter 14: Firms in Competitive MarketsChapter 15: MonopolyChapter 16: Monopolistic CompetitionChapter 17: OligopolyChapter 18: The Markets for Factors of Production Chapter 19: Earnings and DiscriminationChapter 20: Income Inequality and PovertyChapter 21: Introduction to MacroeconomicsChapter 22: Measuring a Nation's IncomeChapter 23: Measuring the Cost of LivingChapter 24: Production and GrowthChapter 25: Saving, Investment, and the Financial System Chapter 26: The Basic Tools of FinanceChapter 27: UnemploymentChapter 28: The Monetary SystemChapter 29: Money Growth and InflationChapter 30: Open-Economy Macroeconomics: Basic Concepts Chapter 31: A Macroeconomic Theory of the Open Economy Chapter 32: Aggregate Demand and Aggregate SupplyChapter 33: The Influence of Monetary and Fiscal Policy on Aggregate DemandChapter 34: The Short-Run Trade-Off between Inflation and UnemploymentChapter 35: The Theory of Consumer ChoiceChapter 36: Frontiers of MicroeconomicsChapter 37: Monopoly and Antitrust PolicyChapter 38: Oligopoly and Game TheoryChapter 39: Externalities, Public Goods, and Environmental Policy Chapter 40: Uncertainty and InformationChapter 41: Aggregate Demand and Aggregate Supply Analysis Chapter 42: Understanding Business CyclesChapter 43: Fiscal PolicyChapter 44: Money, Banking, and Central BankingChapter 45: Monetary PolicyChapter 46: Inflation, Disinflation, and DeflationChapter 47: Exchange Rates and the International Financial SystemChapter 48: The Short - Run Trade - Off between Inflation and Unemployment RevisitedChapter 49: Macroeconomic Policy: Challenges in the Twenty - First CenturyEpilogue: 14 Big IdeasNote: The chapter titles have been abbreviated for simplicity and brevity purposes.。

(完整word版)国际财务管理课后习题答案chapter9

CHAPTER 9 MANAGEMENT OF ECONOMIC EXPOSURESUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTERQUESTIONS AND PROBLEMSQUESTIONS1. How would you define economic exposure to exchange risk?Answer: Economic exposure can be defined as the possibility that the firm’s cash flows and thus its market value may be affected by the unexpected exchange rate changes.2. Explain the following statement: “Exposure is the regression coefficient.”Answer: Exposure to currency risk can be appropriately measured by th e sensitivity of the firm’s future cash flows and the market value to random changes in exchange rates. Statistically, this sensitivity can be estimated by the regression coefficient. Thus, exposure can be said to be the regression coefficient.3. Suppose that your company has an equity position in a French firm. Discuss the condition under which the dollar/franc exchange rate uncertainty does not constitute exchange exposure for your company.Answer: Mere changes in exchange rates do not necessarily constitute currency exposure. If the French franc value of the equity moves in the opposite direction as much as the dollar value of the franc changes, then the dollar value of the equity position will be insensitive to exchange rate movements. As a result, your company will not be exposed to currency risk.4. Explain the competitive and conversion effects of exchange rate changes on the firm’s operating cash flow.Answer: The competitive effect: exchange rate changes may affect operating cash flows by altering the firm’s competitive position.The conversion effect: A given operating cash flows in terms of a foreign currency will be converted into higher or lower dollar (home currency)amounts as the exchange rate changes.5. Discuss the determinants of operating exposure.Answer: The main determinants of a firm’s operating exposure are (1) the structure of the markets in which the firm sources its inputs, such as labor and materials, and sells its products, and (2) the firm’s ability to mitigate the effect of exchange rate changes by adjusting its markets, product mix, and sourcing.6. Discuss the implications of purchasing power parity for operating exposure.Answer: If the exchange rate changes are matched by the inflation rate differential between countries, firms’ competitive positions will not be altered by exchange rate changes. Firms are not subject to operating exposure.7. General Motors exports cars to Spain but the strong dollar against the peseta hurts sales of GM cars in Spain. In the Spanish market, GM faces competition from the Italian and French car makers, such as Fiat and Renault, whose currencies remain stable relative to the peseta. What kind of measures would you recommend so that GM can maintain its market share in Spain.Answer: Possible measures that GM can take include: (1) diversify the market; try to market the cars not just in Spain and other European countries but also in, say, Asia; (2) locate production facilities in Spain and source inputs locally; (3) locate production facilities, say, in Mexico where production costs are low and export to Spain from Mexico.8. What are the advantages and disadvantages of financial hedging of the firm’s operating exposure vis-à-vis operational hedges (such as relocating manufacturing site)?Answer: Financial hedging can be implemented quickly with relatively low costs, but it is difficult to hedge against long-term, real exposure with financial contracts. On the other hand, operational hedges are costly, time-consuming, and not easily reversible.9. Discuss the advantages and disadvantages of maintaining multiple manufacturing sites as a hedge against exchange rate exposure.Answer: To establish multiple manufacturing sites can be effective in managing exchange risk exposure, but it can be costly because the firm may not be able to take advantage of the economy of scale.10. Evaluate the following statement: “A firm can reduce its currency exposure by diversifying across different business lines.”Answer: Conglomerate expansion may be too costly as a means of hedging exchange risk exposure. Investment in a different line of business must be made based on its own merit.11. The exchange rate uncertainty may not necessarily mean that firms face exchange risk exposure. Explain why this may be the case.Answer: A firm can have a natural hedging position due to, for example, diversified markets, flexible sourcing capabilities, etc. In addition, to the extent that the PPP holds, nominal exchange rate changes do not influenc e firms’ competitive positions. Under these circumstances, firms do not need to worry about exchange risk exposure.PROBLEMS1. Suppose that you hold a piece of land in the City of London that you may want to sell in one year. As a U.S. resident, you are concerned with the dollar value of the land. Assume that, if the British economy booms in the future, the land will be worth £2,000 and one British pound will be worth $1.40. If the British economy slows down, on the other hand, the land will be worth less, i.e., £1,500, but the pound will be stronger, i.e., $1.50/£. You feel that the British economy will experience a boom with a 60% probability and a slow-down with a 40% probability.(a) Estimate your exposure b to the exchange risk.(b) Compute the variance of the dollar value of your property that is attributable to the exchange rate uncertainty.(c) Discuss how you can hedge your exchange risk exposure and also examine the consequences of hedging.Solution: (a) Let us compute the necessary parameter values:E(P) = (.6)($2800)+(.4)($2250) = $1680+$900 = $2,580E(S) = (.6)(1.40)+(.4)(1.5) = 0.84+0.60 = $1.44Var(S) = (.6)(1.40-1.44)2 + (.4)(1.50-1.44)2= .00096+.00144 = .0024.Cov(P,S) = (.6)(2800-2580)(1.4-1.44)+(.4)(2250-2580)(1.5-1.44)= -5.28-7.92 = -13.20b = Cov(P,S)/Var(S) = -13.20/.0024 = -£5,500.You have a negative exposure! As the pound gets stronger (weaker) against the dollar, the dollar value of your British holding goes down (up).(b) b2Var(S) = (-5500)2(.0024) =72,600($)2(c) Buy £5,500 forward. By doing so, you can eliminate the volatility of the dollar value of your British asset that is due to the exchange rate volatility.2. A U.S. firm holds an asset in France and faces the following scenario:In the above table, P* is the euro price of the asset held by the U.S. firm and P is the dollar price of the asset.(a) Compute the exchange exposure faced by the U.S. firm.(b) What is the variance of the dollar price of this asset if the U.S. firm remains unhedged against thisexposure?(c) If the U.S. firm hedges against this exposure using the forward contract, what is the variance of thedollar value of the hedged position?Solution: (a)E(S) = .25(1.20 +1.10+1.00+0.90) = $1.05/€E(P) = .25(1,800+1,540+1,300 +1,080) = $1,430Var(S) = .25[(1.20-1.05)2 +(1.10-1.05)2+(1.00-1.05)2+(0.90-1.05)2]= .0125Cov(P,S) = .25[(1,800-1,430)(1.20-1.05) + (1,540-1,430)(1.10-1.05)(1,300-1,430)(1.00-1.05) + (1,080-1,430)(0.90-1.05)]= 30b = Cov(P,S)/Var(S) = 30/0.0125 = €2,400.(b) Var(P) = .25[(1,800-1,430)2+(1,540-1,430)2+(1,300-1,430)2+(1,080-1,430)2]= 72,100($)2.(c) Var(P) - b2Var(S) = 72,100 - (2,400)2(0.0125) = 100($)2.This means that most of the volatility of the dollar value of the French asset can be removed by hedging exchange risk. The hedging can be achieved by selling €2,400 forward.MINI CASE: ECONOMIC EXPOSURE OF ALBION COMPUTERS PLCConsider Case 3 of Albion Computers PLC discussed in the chapter. Now, assume that the pound is expected to depreciate to $1.50 from the current level of $1.60 per pound. This implies that the pound cost of the imported part, i.e., Intel’s microprocessors, is £341 (=$512/$1.50). Other variables, such as the unit sales volume and the U.K. inflation rate, remain the same as in Case 3.(a) Compute the projected annual cash flow in dollars.(b) Compute the projected operating gains/losses over the four-year horizon as the discounted present value of change in cash flows, which is due to the pound depreciation, from the benchmark case presented in Exhibit 12.4.(c) What actions, if any, can Albion take to mitigate the projected operating losses due to the pound depreciation?Suggested Solution to Economic Exposure of Albion Computers PLCa) The projected annual cash flow can be computed as follows:______________________________________________________Sales (40,000 units at £1,080/unit) £43,200,000Variable costs (40,000 units at £697/unit) £27,880,000Fixed overhead costs 4,000,000Depreciation allowances 1,000,000Net profit before tax £15,315,000Income tax (50%) 7,657,500Profit after tax 7,657,500Add back depreciation 1,000,000Operating cash flow in pounds £8,657,500Operating cash flow in dollars $12,986,250______________________________________________________b) ______________________________________________________Benchmark CurrentVariables Case Case______________________________________________________Exchange rate ($/£) 1.60 1.50Unit variable cost (£) 650 697Unit sales price (£) 1,000 1,080Sales volume (units) 50,000 40,000Annual cash flow (£) 7,250,000 8,657,500Annual cash flow ($) 11,600,000 12,986,250Four-year present value ($) 33,118,000 37,076,946Operating gains/losses ($) 3,958,946______________________________________________________c) In this case, Albion actually can expect to realize exchange gains, rather than losses. This is mainly due to the fact that while the selling price appreciates by 8% in the U.K. market, the variable cost of imported input increased by about 6.25%. Albion may choose not to do anything.。

商业银行管理彼得S.罗斯第八版课后答案chapter_01

商业银行管理彼得S.罗斯第八版课后答案chapter_01CHAPTER 1AN OVERVIEW OF BANKS AND THE FINANCIAL-SERVICES SECTORGoal of This Chapter: In this chapter you will learn about the many roles financial service providers play in the economy today. You will examine how and why the banking industry and the financial services marketplace as a whole is rapidly changing, becoming new and different as we move forward into the future. You will also learn about new and old services offered to the public.Key Topics in This ChapterPowerful Forces Reshaping the IndustryWhat is a Bank?The Financial System and Competing Financial-Service InstitutionsOld and New Services Offered to the PublicKey Trends Affecting All Financial-Service FirmsAppendix: Career Opportunities in Financial ServicesChapter OutlineI. I ntroduction: P owerful Forces Reshaping the IndustryII. W hat Is a Bank?A. D efined by the Functions It Serves and the Roles It Play:B. B anks and their Principal CompetitorsC. Legal Basis of a BankD. D efined by the Government Agency That Insures Its DepositsIII.The Financial System and Competing Financial-Service InstitutionsA.Savings AssociationsB.Credit UnionsC.Money Market FundsD.Mutual FundsE.Hedge FundsF.Security Brokers and DealersG.Investment BankersH.Finance CompaniesI.Financial Holding CompaniesJ.Life and Property/Casualty Insurance CompaniesIV. T he Services Banks and Many of Their Closest Competitors Offer the PublicA. S ervices Banks Have Offered Throughout History1.Carrying Out Currency Exchanges2.Discounting Commercial Notes and Making Business Loans3.Offering Savings Deposits4.Safekeeping of Valuables and Certification of Value5.Supporting Government Activities with Credit6.Offering Checking Accounts (Demand Deposits)7.Offering Trust ServicesB. S ervices Banks and Many of Their Financial-Service Competitors HaveOffered More Recently1.Granting Consumer Loans2.Financial Advising3.Managing Cash4.Offering Equipment Leasing5.Making Venture Capital Loans6.Selling Insurance Policies7.Selling Retirement PlansC. Dealing in Securities: Offering Security Brokerage and Investment Banking Services1. Offering Security Underwriting2. Offering Mutual Funds and Annuities3. Offering Merchant Banking Services4. Offering Risk Management and Hedging ServicesV. Key Trends Affecting All Financial-Service FirmsA. S ervice ProliferationB. R ising CompetitionC. G overnment DeregulationD. A n Increasingly Interest-Sensitive Mix of FundsE. T echnological Change and AutomationF. C onsolidation and Geographic ExpansionG. C onvergenceH. G lobalizationVI. T he Plan of This BookVII. S ummaryConcept Checks1-1. What is a bank? How does a bank differ from most other financial-service providers?A bank should be defined by what it does; in this case, banks are generally those financial institutions offering the widest range of financial services. Other financial service providers offer some of the financial services offered by a bank, but not all of them within one institution.1-2. Under U.S. law what must a corporation do to qualify and be regulated as a commercial bank?Under U.S. law, commercial banks must offer two essential services to qualify as banks for purposes of regulation and taxation, demand (checkable) deposits and commercial loans.More recently, Congress defined a bank as any institution that could qualify for deposit insurance administered by the FDIC.1-3.Why are some banks reaching out to become one-stop financial service conglomerates? Is this a good idea in your opinion?There are two reasons that banks are increasingly becoming one-stop financial service conglomerates. The first reason is the increased competition from other types of financial institution s and t he erosion of banks’ traditional service areas. The second reason is the Financial Services Modernization Act which has allowed banks to expand their role to be full service providers.1-4. Which businesses are banking’s closest and toughest com petitors? What services do they offer that compete directly with banks’ services?Among a bank’s closest competitors are savings associations, credit unions, money market funds, mutual funds, hedge funds, security brokers and dealers, investment banks, finance companies, financial holding companies, and life and property-casualty insurance companies. All of these financial service providers are converging and embracing each other’s innovations. The Financial Services Modernization Act has allowed many of these financial service providers to offer the public one-stop shopping for financial services.1-5. What is happening to banking’s share of the financial mark etplace and why? What kind of banking and financial system do you foresee for the future if present trends continue?The Financial Services Modernization Act of 1999 allowed many of the banks’ closest competitors to offer a wide array of financial services thereby taking away market share from “traditional” banks. Banks and their closest competitors areconverging into one-stop shopping for financial services and this trend should continue in the future1-6. What different kinds of services do banks offer the public today? What services do their closest competitors offer?Banks offer the widest range of services of any financial institution. They offer thrift deposits to encourage saving and checkable (demand) deposits to provide a means of payment for purchases of goods and services. They also provide credit through direct loans, by discounting the notes that business customers hold, and by issuing credit guarantees. Additionally, they make loans to consumers for purchases of durable goods, such as automobiles, and for home improvements, etc. Banks also manage the property of customers under trust agreements and manage the cash positions of their business customers. They purchase and lease equipment to customers as an alternative to direct loans. Many banks also assist their customers with buying and selling securities through discount brokerage subsidiaries, the acquisition and sale of foreign currencies, the supplying of venture capital to start new businesses, and the purchase of annuities to supply future funding at retirement or for other long-term projects such as supporting a college education. All of these services are also offered by their closest competitors. Banks and their closest competitors are converging and becoming the financial department stores of the modern era.1-7. What is a financial department store? A universal bank? Why do you think these institutions have become so important in the modern financial system? Financial department store and universal bank refer to the same concept. A financial department store is an institution where banking, fiduciary, insurance, and security brokerage services are unified under one roof. A bankthat offers all these services is normally referred to as a universal bank. These have become important because of convergence and changes in regulations that have allowed financial service providers to offer all services under one roof1-8. Why do banks and other financial intermediaries exist in modern society, according to the theory of finance?There are multiple approaches to answering this question. The traditional view of banks as financial intermediaries sees them as simultaneously fulfilling the financial-service needs of savers (surplus-spending units) and borrowers(deficit-spending units), providing both a supply of credit and a supply of liquid assets. A newer view sees banks as delegated monitors who assess and evaluate borrowers on behalf of their depositors and earn fees for supplying monitoring services. Banks also have been viewed in recent theory as suppliers of liquidity andtransactions services that reduce costs for their customers and, through diversification, reduce risk. Banks are also critical in the payment system for goods and services and have played an increasingly important role as a guarantor and a risk management role for customers.1-9. How have banking and the financial services market changed in recent years? What powerful forces are shaping financial markets and institutions today? Which of these forces do you think will continue into the future?Banking is becoming a more volatile industry due, in part, to deregulation which has opened up individual banks to the full force of the financial marketplace. At the same time the number and variety of banking services has increased greatly due to the pressure of intensifying competition from nonbank financial-service providers and changing public demand for more conveniently and reliably provided services. Adding to the intensity of competition, foreign banks have enjoyed success in their efforts to enter countries overseas and attract away profitable domestic business and household accounts.1-10. Can you explain why many of the forces you named in the answer to the previous question have led to significant problems for the management of banks and other financial firms and their stockholders?The net result of recent changes in banking and the financial services market has been to put greater pressure upon their earnings, resulting in more volatile returns to stockholders and an increased bank failure rates. Some experts see banks' role and market share shrinking due to restrictive government regulations and intensifying competition. Institutions have also become more innovative in their service offerings and in finding new sources of funding, such as off-balance-sheet transactions. The increased risk faced by institutions today, therefore, has forced managers to more aggressively utilize a wide array of tools and techniques to improve and stabilize their earnings streams and manage the various risks they face. 1-11. What do you think the financial services industry will look like 20 years from now? What are the implications of your projections for its management today? There appears to be a trend toward continuing consolidation and convergence. There are likely to be fewer financial service providers in the future and many of these will be very large and provide a broad range of financial services under one roof. In addition, global expansion will continue and will be critical to the survival of many financial service providers. Management of financial service providers willhave to be more technologically astute and be able to make a more diverse set of decisions including decisions about mergers, acquisitions and global expansion as well as new services to add to the firm.Problems and Projects1. You have just been hired as the marketing officer for the new First National Bank of Vincent, a suburban banking institution that will soon be serving a local community of 120,000 people. The town is adjacent to a major metropolitan area with a total population of well over 1 million. Opening day for the newly chartered bank is just two months away, and the president and the board of directors are concerned that the new bank may not be able to attract enough depositors and good-quality loan customers to meet its growth and profit projections. There are 18 other financial-service competitors in town, including two credit unions, three finance companies, four insurance agencies, and two security broker offices. Your task is to recommend the various services the bank should offer initially to build up an adequate customer base. You are asked to do the following:a.Make a list of all the services the new bank could offer, according to current regulations.b.List the type of information you will need about the local community tohelp you decide which of the possible services are likely to have sufficientdemand to make them profitable.c.Divide the possible services into two groups--those you think are essentialto customers and should be offered beginning with opening day, and thosethat can be offered later as the bank grows.d. Briefly describe the kind of advertising campaign you would like to run tohelp the public see how your bank is different from all the other financialservice providers in the local area. Which services offered by the nonblankservice providers would be of most concern to the new bank’smanagement?Banks can offer, if they choose, a wide variety of financial services today. These services are listed below. However, unless they are affiliated with a larger bank holding company and can offer some of these services through that company, it may be more limited in what it can offer.Regular Checking Accounts Management Consulting Services NOW Accounts Letters of CreditPassbook Savings Deposits Business Inventory Loans Certificates of Deposit Asset-Based Commercial Loans Money Market Deposits Discounting of Commercial Paper Automobile Loans Plant and Equipment Loans Retirement Savings Plans Venture Capital LoansNonauto Installment Loans to IndividualsResidential Real Estate Loans Leasing Plans for Business Property and EquipmentHome Improvement Loans Security Dealing and Underwriting Personal Trust Management Services Discount Security BrokerageCommercial Trust Services Institutional Trust Services Foreign Currency Trading and ExchangePersonal Financial Advising Personal Cash-Management ServicesInsurance Policy Sales (Mainly Credit-Life)Insurance Today (Except in Some States)) Standby Credit Guarantees Acceptance FinancingTo help the new bank decide which services to offer it would be helpful to gather information about some of the following items in the local community:School Enrollments and Growth in School EnrollmentsEstimated Value of Residential and Commercial PropertyRetail SalesPercentage of Home Ownership Among Residents in the AreaNumber and Size (in Sales and Work Force) of Local Business Establishments Major Population Locations (i.e., Major Subdivisions, etc.) and Any Projected Growth AreasPopulation Demographics (i.e., Age Distribution of the Area) Projected Growth Areas of Industries in the AreaEssential services the bank would probably want to offer right from the beginning includes:Regular Checking Accounts Home Improvement Loans Automobile and other Consumer-type Money Market Deposit Accounts Installment Loans Retirement Savings Plans NOW Accounts Business Inventory LoansPassbook Savings Deposits Discounting of High-QualityCommercial NotesResidential Real Estate LoansCertificates of DepositAs the bank grows, opportunities for the profitable sale of additional services usually increase, especially for trust servicesfor individuals and smaller businesses and personal financial advising as well as some commercial (plant and equipment) loans and leases. Further growth may result in the expansion of commercial trust services as well as a widening variety of commercial loans and credit guarantees.The bank would want to develop an advertising campaign that sends a message to potential customers that the new bank is, indeed, different from its competitors. Small banks often have the advantage of offering highly personalized services in which their customers are known and recognized and services are tailored to each individual customer's special financial needs. Quality and reliability of banking service are often more important to individual customers than is price. A new bank must try to sell prospective customers, most of who will come from other banks in the area, on personalized services, quality, and reliability - all three of which should be emphasized in its advertising program.2. Leading money center banks in the United States have accelerated their investment banking activities all over the globe in recent years, purchasing corporate debt securities and stock from their business customers and reselling those securities to investors in the open market. Is this a desirable move by these banking organizations from a profit standpoint? From a risk standpoint? From the public interest point of view? How would you research their question? If you were managing a corporation that had placed large deposits with a bank engaged in such activities, would you be concerned about the risk to your company's funds? What could you do to better safeguard those funds?In the 1970's and early 1980's investment banking was soprofitable that commercial bankers were lured into the investment banking business largely because of its greater profit potential than possessed by more traditional commercial banking activities. Later foreign banks, particularly the British and Japanese banking firms, began to attract away large corporate customers from U.S. banks, who were restrained by regulation from offering many investment banking services. Thus, U.S. banks ran into severe difficulty in simply trying to hold onto their traditional corporate credit and deposit accounts because they could not compete service-wise in the investment banking field. Today, banks are allowed to underwrite securities through either a subsidiary or through a holding company structure. This change occurred as part of the Gramm-Leach-Bliley Act (Financial Services Modernization Act).Unfortunately, if investment banking is more profitable than traditional banking product lines, it is also more risky, consistent with the basic tenet of finance that risk and return are directly related. That is why the Federal Reserve Board has placed such strict limits on the type of organization that can offer these services. Currently, the underwriting of most corporate securities must be done through a subsidiary or as a separate part of the holding company so that, in theory at least, the bank is not responsible for any losses incurred. For this reason there may be little reason for depositors (including large corporate depositors) to be concerned about risk exposure from investment banking. Moreover, the ability to offer such services may make U.S. banks more viable in the long run which helps their corporate customers who depend upon them for credit.On the other hand, opponents of investment banking powers for bank operations inside the U.S. have some reasonableconcerns that must be addressed. There are, for example, possible conflicts of interest. Information gathered in the investment banking division could be used to the detriment of customers purchasing other bank services. For example, a customer seeking a loan may be told that he or she must buy securities from the bank's investment banking division in order to receive a loan. Moreover, banks could gain effective control over some nonblank industrial corporations which might subject them to added risk exposure and place industrial firms not allied with banks at a competitive disadvantage. As a result the Gramm-Leach-Bliley Act has built in some protections to prevent this from happening.3. The term bank has been applied broadly over the years to include a diverse set of financial-service institutions, which offer different financial service packages.Identify as many o f the different kinds of “banks” as you can. How do the “banks” y ou have identified compare to the largest banking group of all – the commercial banks? Why do you think so many different financial firms have been called banks? How might this terminological confusion affect financial-service customers?The general public tends to classify anything as a bank that offers some sort of financial service, especially deposit and loan services. Other institutions that are often referred to as a bank without being one are savings associations, credit unions, money market funds, mutual funds, hedge funds, security brokers and dealers, investment banks, finance companies, financial holding companies and life and property/casualty insurance companies. All of these institutions offer some of the services that a commercial bank offers, but generally not the entire scope ofservices. Since providers of financial services are normally called banks by the general public they are able to take away business from traditional banks and it is of utmost importance for commercial banks to clarify their unique position among financial services providers.4. What advantages can you see to banks affiliating with insurance companies? How might such an affiliation benefit a bank? An insurer? Can you identify any possible disadvantages to such an affiliation? Can you cite any real world examples of bank-insurer affiliations? How well do they appear to have worked out in practice?Before Glass-Steagall banks used to sell insurance services to their customers on a regular basis. in particular, banks would sell life insurance companies to loan customers to ensure repayment of the loan in case of death or disablement. These reasons still exist today and the right to sell insurances to customers again benefits banks in allowing them to offer their customers complete financial packages from financing the home or car to insure it, from giving investment advice to selling life insurance policies and annuities for retirement planning. Generally, a bank customer who is already purchasing a service from a bank might feel compelled to purchase an insurance product, as well. On the other hand, insurance companies sometimes have a negative image, which makes it more difficult to sell certain insurance products. Combining their products with the trust that people generally have in banks will make it easier for them to sell their products. The most prominent example of a bank-insurer affiliation is the merger of Citicorp and Traveler’s Insurance to Citigroup. However, given that Citigroup has sold Traveler’s Insurance indicates that the anticipated synergy effects did notmaterialize.5. Explain the difference between consolidation and convergence. Are these trends in banking and financial services related? Do they influence each other? How? Consolidation refers to increase in the size of financial institutions and the decline in the number of small independently owned banks and financial service providers. Convergence is the bringing together of firms from different industries to createconglomerate firms offering multiple services. Clearly, these two trends are related. In their effort to compete with each other, banks and their closest competitors have acquired other firms in their industry as well across industries to provide multiple financial services in multiple markets.6. What is a financial intermediary? What are their key characteristics? Is a bank a type of financial intermediary? Why? What other financial-services companies are financial intermediaries? What important role within the financial system do financial intermediaries play?A financial intermediary is a business that interacts with deficit spending individuals and institutions and surplus spending individuals and institutions. For that reason any financial service provider (including banks) is considered a financial intermediary. In their function as intermediaries they act as a bridge between the deficit and surplus spending units by offering financial services to the surplus spending individuals and then loaning those funds to the deficit spending individuals. Financial intermediaries accelerate economic growth by increasing the pool of available funds and lowering the risk of investments through diversification.。

mbafa《financialaccounting》习题答案9

mbafa《financialaccounting》习题答案9CHAPTER 9LONG-LIVED ASSETSBRIEF EXERCISESBE9–1a. The new method, straight-line depreciation, will increase net income in the early years andreduce income in the later years versus using an accelerated method. An accelerated method of depreciation increases the depreciation charges in the early years of the life of an asset and reduces the depreciation charges in the later years.b. Allegheny may have decided that it wanted depreciation charges to be spread evenly over thelife of an asset so that the impact on net income in any one reporting period was less. It may also feel that it will make its financial statements easier to compare with its competitors.During periods of high fixed asset investment Allegheny’s results may look unfavorable versus other companies that use a straight-line method instead of an accelerated method.c. In the annual report one could look through footnote #1. This footnote typically highlights all ofthe significant accounting policies and methods used by the company to prepare the financial statements.BE9–2a. The recognition of depreciation and amortization affects the basic accounting equation byreducing assets and reducing retained earnings in the stockholders’ equity section. Fixed assets such as property, plant and equipment are reduced through depreciation charges(which are collected in the contra asset account Accumulated Depreciation) which lower net income.Intangible assets are reduced by amortization charges which reduce the net income of the company. This reduction in net income reduces the retained earnings of the company.b. Boeing recognized a gain of $117 million, computed as follows:Accumulated depreciation 2002 $12,719 million+ Depreciation charges for 2003 1,005 million– Accumulated depreciation 2003 12,963 millionAccumulated depreciation on assets sold $ 761 millionPP&E 2002 $21,484 million+ PP&E purchases for 2003 741 million– PP&E 2003 21,395 millionPP&E sold $ 830 million1Derived Journal Entry:Cash (+A) 186Accumulated Depreciation (+A) 761Property, Plant & Equipment (-A) 830Gain on Sale (R, +SE) 117The gain on the sale of property, plant and equipment would be shown in the income state ment, usually in an “other gains and losses” section. These transactions would affect the statement of cash flows in the “funds from investing activities section”. Any sales would be a source of funds in the amount of cash received.BE9–3a. Johnson and Johnson invested $122 million ($594– $472) of land during 2003.b. Accumulated depreciation increased during 2003 because of depreciation expense taken byJohnson and Johnson. Instead of reducing the asset account directly, depreciation expense is added to accumulated depreciation, which offsets the asset account to show its reduction in value.c. During 2003 Johnson and Johnson must have sold some assets that were classified in thefixed assets accounts. These accounts are carried at historical cost so that only the sale of an asset will reduce the account. Any gains or losses on the sale of these assets would be shown on the income statement. The change from 2002 ($14,314) to 2003 ($17,052) is $2,738. Since Johnson & Johnson spent $5,074 on fixed assets, then $2,336 ($5,074 - $2,738) must have been sold.d. Johnson and Johnson would show $9,846 million for property, plant and equipment on itsfinancial statement for 2003. The gross amount and the accumulated depreciation would be disclosed in the footnote.EXERCISESE9–1a. Lowery, Inc., should capitalize all costs associated with getting the equipment in a serviceablecondition and location. These costs would be the actual purchase price of $920,000, the transportation cost of $62,000, and the insurance cost of $10,000. Therefore, the total cost of the equipment is $992,000.b. The depreciation base equals the dollar amount of a fixed asset's cost that the company doesnot expect to recover over the asset's useful life, but instead expects to consume over the asset's useful life. Since the plantequipment's total cost is $992,000 and since Lowery, Inc., expects to sell the equipment for $50,000 at the end of its useful life, Lowery, Inc., does not expect to recover $942,000 of the asset's cost. Therefore, the depreciation base equals $942,000. The depreciation base always equals the capitalized cost of a fixed asset less its estimated salvage value.c. The amount that will be depreciated over the life of the plant equipment is its depreciation base.The depreciation base equals the amount of the equipment's future benefits that the company will consume. The outflow of future benefits are expenses, in this case depreciation expense.Therefore, the total amount that Lowery, Inc., will depreciate over the equipment's useful life is $942,000.E9–2Lot 1 Lot 2 Lot 3 Lot 4Revenue $ 160,000 $ 120,000 $ 60,000 $ 60,000Expenses 128,000* 96,000* 48,000* 48,000*Net income $ 32,000 $ 24,000 $ 12,000 $ 12,000_______________* Expenses were calculated as follows:1. Calculate total market value.Total Market value = $160,000 + $120,000 + $60,000 + $60,000 = $400,0002. Allocate costs to each lot based upon relative market values.Lot 1 = $320,000 × (160,000/400,000) = $128,000Lot 2 = $320,000 × (120,000/400,000) = $ 96,000Lot 3 = $320,000 × (60,000/400,000) = $ 48,000Lot 4 = $320,000 × (60,000/400000) = $ 48,000E9–3a. All costs that are necessary and reasonable to get an asset ready for its intended use should becapitalized as part of the cost of that asset. In the case of property, plant, and equipment, "ready for its intended use" means that the asset is in a serviceable condition and location.LandItem Land Improvements Building Tract of land $90,000Demolition of warehouse 10,000Scrap from warehouse (7,000)Construction of building $140,000Driveway and parking lot $32,000Permanent landscaping 4,000Total $ 97,000 $32,000 $140,000b. Land:Since land is assumed to have an indefinite life, it is never depreciated.Land Improvements:Depreciation Expense—Land Improvements (E, –SE)................... 1,600 Accumulated Depreciation—Land Improvements (–A)............... 1,600 Depreciated land improvements.Building:Depreciation Expense—Building (E, –SE)....................................... 7,000 Accumulated Depreciation—Building (–A).................................. 7,000 Depreciated building.E9–4a. Maintenanceb. Maintenancec. Maintenanced. Bettermente. Maintenancef. Maintenanceg. Bettermenth. Maintenancei. BettermentNote:The classification of these expenditures can be quite subjective. Some accountants might very well classify some of these expenditures differently. For example, one might argue that the cost of the muffler in (h) is actually a betterment expenditure if the reduced noise allows workers to work more efficiently, thereby increasing the productive capacity of the machine.E9–5a. (1) Expensed immediately:Income Statement2008 2007 2006 Revenues $ 65,000 $ 65,000 $ 65,000Amortization 0 0 (40,000)Other expenses (20,000) (20,000) (20,000)Net income $ 45,000 $ 45,000 $ 5,000Balance Sheet12/31/08 12/31/07 12/31/06 AssetsCurrent assets $ 135,000 $ 90,000 $ 45,000Long-lived assets(including land) 50,000 50,000 50,000Total assets $ 185,000 $ 140,000 $ 95,000Liabilities and Stockholders' EquityLiabilities $ 35,000 $ 35,000 $ 35,000Stockholders' equity 150,000 105,000 60,000Total liabilities & stockholders'equity $ 185,000 $ 140,000 $ 95,000E9–5 Continued(2) Amortized over two years:Income Statement2008 2007 2006 Revenues $ 65,000 $ 65,000 $ 65,000 Amortization 0 20,000 20,000Other expenses 20,000 20,000 20,000Net income $ 45,000 $ 25,000 $ 25,000Balance Sheet12/31/08 12/31/07 12/31/06 AssetsCurrent assets $ 135,000 $ 90,000 $ 45,000Long-lived assets (includingland) 50,000 50,000 70,000Total assets $ 185,000 $ 140,000 $ 115,000 Liabilities and Stockholders' EquityLiabilities $ 35,000 $ 35,000 $ 35,000 Stockholders' equity 150,000 105,000 80,000Total liabilities & stockholders'equity $ 185,000 $ 140,000 $ 115,000(3) Amortized over three years:Income Statement2008 2007 2006 Revenues $ 65,000 $ 65,000 $ 65,000 Amortization 13,334 13,333 13,333Other expenses 20,000 20,000 20,000Net income $ 31,666 $ 31,667 $ 31,667Balance Sheet12/31/08 12/31/07 12/31/06 AssetsCurrent assets $ 135,000 $ 90,000 $ 45,000Long-lived assets (includingland) 50,000 63,334 76,667Total assets $ 185,000 $ 153,334 $ 121,667 Liabilities and Stockholders' EquityLiabilities $ 35,000 $ 35,000 $ 35,000Stockholders' equity 150,000 118,334 86,667Total liabilities & stockholders'equity $ 185,000 $ 153,334 $ 121,667b. 2008 2007 2006 TotalMethod 1: $45,000 $45,000 $ 5,000 $95,000 Method 2: 45,000 25,000 25,000 95,000 Method 3: 31,666 31,667 31,667 95,000E9–5 Concludedc. The balance sheets under all three methods report identical amounts for each balance sheetaccount. Since the asset was fully amortized by December 31, 2008, the method used to amortize the asset does not affect the amounts reported on the balance sheet as of December 31, 2008.E9–6a. andb.Stork Freight CompanyIncome StatementFor the Year Ended December 3112-Year Useful Life 6-Year Useful Life Revenues $ 50,000,000 $ 50,000,000 Expenses:Operating expenses $ 25,000,000 $ 25,000,000 Depreciation expense 1,250,000 2,500,000 Total expenses 26,250,000 27,500,000 Net income $ 23,750,000 $ 22,500,000 The percentage decrease in net income would be approximately 5.26% [($22,500,000 – $23,750,000) ÷ $23,750,000].c.12-Year Useful Life 6-Year Useful Life Net income $ 23,750,000 $ 22,500,000Dividend payout percentage 30% 30%Dividends $ 7,125,000 $ 6,750,000The difference in dividends due simply to using different estimated useful lives for the planes would be $375,000 ($7,125,000 – $6,750,000).E9–7a. An asset's book value equals the asset's initial capitalized value less the associatedaccumulated depreciation. With straight-line depreciation, accumulated depreciation equals depreciation expense per year times the number of years the asset has been used. Therefore, the asset's book value would be calculated as follows: Depreciation expense per year = (Cost –Salvage Value) ÷ Useful Life= ($60,000 –$12,000) ÷ 5 years= $9,600 per yearBook Value = Capitalized Cost – Accumulated Depreciation = $60,000 –($9,600 × 3 years)= $31,200E9–7 Concludedb. Depreciation Expense = [(Cost –Accumulated Depreciation) –Salvage Value] ÷Remaining Useful Life= (Book value –Salvage value) ÷ Remaining useful li fe= ($31,200 –$12,000) ÷ 5 remaining years= $3,840Depreciation Expense (E, –SE)....................................................... 3,840 Accumulated Depreciation (–A)................................................. 3,840 Depreciated asset for 2005.E9–8Straight- Double-Declining- ActivityObjective Line Balance Method(a) x1x1x1(b) x x x(c) x x2(d) x(e) x(f) x(g) x x3(h) x x x1Under certain conditions, all three methods could meet this objective. However, for the straight-line method and the double-declining-balance method, this objective will be met only by chance.The activity method will always meet this objective because depreciation is based upon the actual use of the asset.2It is possible that the activity method would generate the largest net income in the last year of an asset's useful life. However, this result would be due to the company's use patterns of the asset and would not be due to the depreciation method per se.3See note (2). The same rationale would hold in this case too.E9–9a. (1) Straight-line depreciation:Depreciation per Year = (Cost –Salvage Value) ÷ Useful Life = ($300,000 –$60,000) ÷ 4 years= $60,000 per year for 2005, 2006, 2007, and 2008E9–9 Concluded(2) Double-declining-balance depreciation:Depreciation Depreciation Accumulated Book Date Factor Expense Cost Depreciation Value1/1/05 $300,000 $ 0 $300,00012/31/05 50% $150,000a300,000 150,000 150,00012/31/06 50% 75,000 300,000 225,000 75,00012/31/07 50% 15,000b300,000 240,000 60,00012/31/08 50% 0 300,000 240,000 60,000 ______________a Depreciation Expense = Book Value at Beginning of the Period × Depreciation Factorb Book Value ×Depreciation Factor = $75,000 ×50% = $37,500. If Benick Industriesdepreciated $37,500 in 2007, the asset's book value would drop below its salvage value. To prevent this from happening, depreciation expense for 2007 can be only $15,000.b. A manager should consider the costs and benefits associated with each depreciation method.The most likely benefit is the impact of depreciation methods on income taxes. An accelerated method decreases the present value of tax payments. However, since there is no requirement that a company use the same depreciation method for financial reporting purposes as it does for tax reporting, tax considerations are not an issue for financial reporting. A manager should also consider the bookkeeping costs associated with each method. However, with computers the bookkeeping costs should be relatively consistent across methods. Finally, since the choice of depreciation methods affects net income, managers might consider the impact of the different depreciation methods on contracts such as debt covenants and incentive compensation contracts. Comparability with other in the same industry may also be a factor.E9–10a. Computer System (+A)....................................................................335,000Cash (–A)........................................................................... 335,000 Purchased computer system.Note: Capitalizing the $10,000 of training costs could be debated. But, without incurring these costs, the computer system would not be in a serviceable condition. Hence, thetraining costs meet the requirement to be capitalized as part of the fixed asset.b. (1) Straight-line depreciation:Depreciation per Year = (Cost –Salvage Value) ÷ Useful Life = ($335,000 –$70,000) ÷ 5 years= $53,000 per year for 2005, 2006, 2007, 2008, and 2009E9–10 Concluded(2) Double-declining-balance depreciation:Depreciation Depreciation Accumulated Book Date Factor Expense Cost Depreciation Value1/1/05 $335,000 $ 0 $335,00012/31/05 40% $134,000a335,000 134,000 201,00012/31/06 40% 80,400 335,000 214,400 120,60012/31/07 40% 48,240 335,000 262,640 72,36012/31/08 40% 2,360b335,000 265,000 70,00012/31/09 40% 0 335,000_____________a Depreciation expense = Book value at beginning of the period×Depreciation factorb Book value ×Depreciation factor = $72,360 ×40% = $28,944. If Stockton Corporationdepreciated $28,944 in 2008, the asset's book value would drop below its salvage value. To prevent this from happening, depreciation expense for 2008 can be only $2,360.c. Depreciation Expense (E, –SE)................................................. 134,000Accumulated Depreciation (–A)......................................... 134,000 Depreciated fixed asset for 2005.E9–111. Activity Method:Depreciation Expense per Mile = ($100,000 –$20,000) ÷ 200,000 Miles= $0.4/MileDepreciation Expense (E, –SE)....................................................... 19,200 Accumulated Depreciation (–A)................................................. 19,200 Depreciated asset for 2005.Depreciation Expense (E, –SE)....................................................... 14,000 Accumulated Depreciation (–A)................................................. 14,000 Depreciated asset for 2006.Depreciation Expense (E, –SE)....................................................... 16,000 Accumulated Depreciation (–A)................................................. 16,000 Depreciated asset for 2007.Depreciation Expense (E, –SE)....................................................... 10,000 Accumulated Depreciation (–A)................................................. 10,000 Depreciated asset for 2008.E9–11 ConcludedDepreciation Expense (E, –SE)....................................................... 14,000Accumulated Depreciation (–A)................................................. 14,000 Depreciated asset for 2009.Depreciation Expense (E, –SE)....................................................... 4,000 Accumulated Depreciation (–A)................................................. 4,000 Depreciated asset for 2010.Cash (+A) .........................................................................................12,000Accumulated Depreciation (+A)....................................................... 77,200Loss on Sale of Truck (Lo, –SE)...................................................... 10,800 Truck (–A)................................................................................... 100,000 Sold truck.2. Straight-line Method:Depreciation Expense per Year = ($100,000 –$20,000) ÷ 5 Years= $16,000/yearDepreciation Expense (E, –SE)....................................................... 16,000 Accumulated Depreciation (–A)................................................. 16,000 Depreciated asset.Note:This entry would be made each year for five years. No entry would be made in Year 6 since the truck's estimated useful life ended at the end of Year 5, which means that the truck would have been depreciated down to its estimated salvage value.Cash (+A) ....................................................................................... 12,000Accumulated Depreciation (+A)....................................................... 80,000Loss on Sale of Truck (Lo, –SE)...................................................... 8,000 Truck (–A)................................................................................. 100,000 Sold truck.E9–12a. Depletion (E, –SE)............................................................................ 1,200,000*Oil Deposits (–A)........................................................................ 1,200,000 Depleted oil deposits.___________* $1,200,000 = ($4,000,000 ÷ 100,000 barrels)×30,000 barrels extractedb. Depletion (E, –SE)............................................................................ 2,000,000*Oil Deposits (–A)........................................................................ 2,000,000 Depleted oil deposits.___________* $2,000,000 = ($4,000,000 ÷ 100,000 barrels)×50,000 barrels extractedc. $800,000E9–13a.Depreciation Expense Correct Annual Cumulative Year Per Company's Books Depr. Exp. Difference Difference2005 $120,000 $25,000 $95,000 $95,0002006 0 25,000 (25,000) 70,0002007 0 25,000 (25,000) 45,0002008 0 25,000 (25,000) 20,000b. After adjusting entries are prepared and posted on December 31, 2007, AccumulatedDepreciation will be understated by $75,000.c. After adjusting entries, but before closing entries have been prepared and posted on December31, 2007, Retained Earnings will be understated by $70,000.d. After both adjusting and closing entries have been prepared and posted on December 31, 2007,Retained Earnings will be understated by $45,000.E9–14a. Cash (+A) .......................................................................................235,000Accumulated Depreciation—Office Equipment (+A)....................... 300,000 Office Equipment (–A)............................................................... 500,000 Gain on Sale of Fixed Assets (Ga, +SE)................................... 35,000 Sold office equipment.b. Cash (+A) ......................................................................................... 185,000Accumulated Depreciation—Office Equipment (+A)....................... 300,000Loss on Sale of Fixed Assets (Lo, –SE)........................................... 15,000 Office Equipment (–A)............................................................... 500,000 Sold office equipment.E9–15Assuming that Paris Company kept the equipment for its entire five-year estimated useful life, the depreciation schedule on the equipment would be as follows.Depreciation Depreciation Accumulated Book Date Factor Expense Cost Depreciation Value1/1/03 $25,000 $ 0 $25,00012/31/03 40% $10,000 25,000 10,000 15,00012/31/04 40% 6,000 25,000 16,000 9,00012/31/05 40% 3,600 25,000 19,600 5,40012/31/06 40% 400* 25,000 20,000 5,00012/31/07 40% 0 25,000 20,000 5,000__________________* Because the equipment's book value cannot drop below its estimated salvage value, depreciation expense for 2006 cannot exceed $400.a. Accumulated Depreciation—Equipment (+A).................................. 19,600Loss on Disposal of Equipment (Lo, –SE)....................................... 5,400 Equipment (–A).......................................................................... 25,000 Disposed of equipment.b. Accumulated Depreciation—Equipment (+A).................................. 20,000Loss on Disposal of Equipment (Lo, –SE)....................................... 5,000 Equipment (-A)........................................................................... 25,000 Disposed of equipment.c. Cash (+A) ....................................................................................... 8,000Accumulated Depreciation—Equipment (+A).................................. 19,600 Equipment (–A).......................................................................... 25,000 Gain on Sale of Fixed Assets (Ga, +SE)................................... 2,600 Sold equipment.d. Fixed Asset (new) (+A).................................................................... 30,000Accumulated Depreciation—Equipment (+A).................................. 20,000Loss on Disposal of Fixed Asset (Lo, –SE)...................................... 3,000 Cash (–A)................................................................................... 28,000 Equipment (old) (–A).................................................................. 25,000 Exchanged fixed assets.E9–16a. andb. First, let us compute the original cost of the equipment that was sold in 2005 asfollows:Equipment Equipment Equipment Equipmentat the End + Purchased – sold during = at the Endof 2004 during 2005 2005 of 2005$32,700 + $12,000 – X = $37,500X = $7,200Now, let us compute the related accumulated depreciation for the equipment sold during 2005 as follows:Accumulated Depreciation Exp. Accumulated Accumulated Depreciation at + for 2005 – Depreciation = Depreciationthe End of 2004 for the Sold at the EndEquipment of 2005during 2005$14,300 + $7,200 – X = $17,600X = $ 3,900 Now, we can reconstruct the journal entry.Cash.................................................................................................5,400*Accumulated Depreciation............................................................... 3,900 Equipment.................................................................................. 7,200 Gain on Sale of Equipment........................................................ 2,100 ___________* $7,200 + $2,100 – $3,900 = $5,400E9–17Account Financial Statementa. Property, plant & equipment Balance SheetLess: accumulated depreciation Balance SheetDepreciation expense Income StatementInvestments in property, plant & equipment Statement of Cash Flowsb. Property, plant & equipment – 2002 $36,912Plus: investments in property, plant & equipment 3,656Less: property, plant & equipment – 2003 38,692Property, plant & equipment sold in 2003 $ 1,876c. Accumulated depreciation – 2002 $19,065Plus: depreciation expense – 2003 4,651Less: accumulated depreciation – 2003 22,031Accumulated depreciation – sold property $ 1,685E9–17 Concludedd. Compute the gain on the sale:Cost of property sold $1,876Less: accumulated depreciation 1,685Book value of property sold $ 191Sales price of property $100Less: book value of property 191Loss on sale of property $ 91This loss on sale of property would appear on the income statement.E9–18a. First, let us compute the related accumulated depreciation for the equipment sold during 2005as follows:Accumulated Depreciation Cap. Accumulated Accumulated Depreciation at + for 2005 – Depreciation = Depreciationthe End of 2004 for the Sold at the EndEquipment 0f 2005during 2005$9,800 + $3,800 – X = $10,500X = $ 3,100 Now, we can reconstruct the journal entry.Cash................................................................................................. 4,300 Loss on Sale of Equipment (900)Accumulated Depreciation............................................................... 3,100 Equipment.................................................................................. 8,300 b. Equipment Equipment Equipment Equipmentat the End + Purchased – sold during = at the Endof 2004 during 2005 2005 of 2005$23,400 + X – $8,300 = $26,900X = $11,800___________Equipment purchased during 2000 = $11,800E9–19a. Swift Corporation should capitalize these costs. Assets are defined as items that are expectedto provide future economic benefits to the entity. Organization costs are costs incurred by an entity prior to starting operations. Such costs include legal fees to incorporate and accountant's fees to set up an accounting system. Without incurring these costs, most companies could not be in business. Consequently, organization costs allow a company to be in business, thereby helping it to generate future benefits. Since these costs help in generating future benefits, they should most definitely be capitalized.b. Theoretically, organization costs should be amortized over their useful life. In the extreme,organization costs provide a benefit over the entire life of a company. Since under the going concern assumption accountants assume that entities will exist indefinitely, it would seem that organization costs should be amortized over an indefinite period. Since this position is not practical, the accounting profession has decided that organization costs should be amortized over a period not to exceed forty years.Assuming that Swift Corporation amortizes its organization costs over the maximum period of forty years, the appropriate adjusting journal entry for a single year would be as follows: Amortization Expense (E, –SE)........................................................1,125 Organization Costs (–A)............................................................. 1,125 Amortized organization costs.c. As mentioned in part (b), organization costs theoretically provide benefits over the entire life ofthe company. Under the going concern assumption, the company is assumed to exist indefinitely. If the company is assumed to exist indefinitely and if organization costs provide benefits over the entire life of the company, then these costs should provide an indefinite benefit. Consequently, organization costs should provide a benefit for an indefinite period of time, which implies that they should be reported as an asset (i.e., future benefit) indefinitely.But if organization costs are amortized, the asset will at some point in time have a zero balance, and the cost of the asset cannot be matched against the benefits the asset will help generate in the future. This situation contradicts the matching principle and the concept of an asset.d. A patent gives a company the exclusive right to use or market a particular product or process,thereby providing the company with an expected future benefit. Consequently, the costs incurred to acquire a patent should be capitalized as an asset and amortized over the patent's useful life. If Swift were to immediately expense the $65,000, the company would be implying that it did not expect to receive any benefits from the patent in the future. If this were the case, one would have to question why Swift purchased the patent in the first place.e. Research and development costs may or may not provide a company with future benefits. Thecompany will not know whether or not a particular R & D。

chapter_9

– Perform specialized services for businesses – Markets in the primary market
1-10
Table 1: Balance Sheet of Commercial Banks, 2007
1-11
Table 2: Balance Sheet of Nonfinancial U.S. Business, 2007
1-9
Players in the Financial Markets
• Business Firms – net borrowers • Households – net savers • Governments – can be both borrowers and savers • Financial Intermediaries – investment companies, banks, insurance companies, credit unions, etc. • Investment Bankers –
1-2
Invesቤተ መጻሕፍቲ ባይዱments & Financial Assets
• An investment is the current commitment of money or other resources in the expectations of reaping future benefits. • Essential nature of investment – Reduced current consumption – Planned later consumption
1-13
1-7
The Investment Process

国际金融-chapter nine

金币本位制
金块本位制金汇兑本位制
布雷顿森林体系时期
牙买加货币体系
1 .Gold Standard system, 1870-1914
• Origins of the Gold Standard
– The Resumption Act (1819) marks the first adoption of a true gold standard. – 《恢复条令》 (1819) 标志着金本位制的正式采用。 – The U.S. Gold Standard Act of 1900 institutionalized the dollar-gold link. – 1900年的《美国的金本位制法案》建立了美元和黄金的联系
Key terms
• The international monetary system 国际货币体系 • the Gold Standard 金本位制 • Gold Parity 铸币平价 • Bretton woods system 布雷顿森林体系 • IMF 国际货币基金组织 • Triffin problem—特里芬难题 • Optimum Currency Areas—最优货币区
The international monetary system
• International Macroeconomic Policy Under the Gold Standard, 1870-1914 • The Interwar Years, 1918-1939 • The Bretton Woods System and the International Monetary Fund
characters：
• （A）official international reserves take the form of gold. • （B）unhindered imports and exports of gold across its borders. • (C) trade currency for gold free

英文版罗斯公司理财习题答案chap009.doc

CHAPTER 9RISK ANALYSIS, REAL OPTIONS, AND CAPITAL BUDGETINGAnswers to Concepts Review and Critical Thinking Questions1.Forecasting risk is the risk that a poor decision is made because of errors in projected cash flows.The danger is greatest with a new product because the cash flows are probably harder to predict.2.With a sensitivity analysis, one variable is examined over a broad range of values. With a scenarioanalysis, all variables are examined for a limited range of values.3.It is true that if average revenue is less than average cost, the firm is losing money. This much of thestatement is therefore correct. At the margin, however, accepting a project with marginal revenue in excess of its marginal cost clearly acts to increase operating cash flow.4.From the shareholder perspective, the financial break-even point is the most important. A project canexceed the accounting and cash break-even points but still be below the financial break-even point.This causes a reduction in shareholder (your) wealth.5.The project will reach the cash break-even first, the accounting break-even next and finally thefinancial break-even. For a project with an initial investment and sales after, this ordering will always apply. The cash break-even is achieved first since it excludes depreciation. The accounting break-even is next since it includes depreciation. Finally, the financial break-even, which includes the time value of money, is achieved.6.Traditional NPV analysis is often too conservative because it ignores profitable options such as theability to expand the project if it is profitable, or abandon the project if it is unprofitable. The option to alter a project when it has already been accepted has a value, which increases the NPV of the project.7.The type of option most likely to affect the decision is the option to expand. If the country justliberalized its markets, there is likely the potential for growth. First entry into a market, whether an entirely new market, or with a new product, can give a company name recognition and market share.This may make it more difficult for competitors entering the market.8.Sensitivity analysis can determine how the financial break-even point changes when some factors(such as fixed costs, variable costs, or revenue) change.9.There are two sources of value with this decision to wait. Potentially, the price of the timber canpotentially increase, and the amount of timber will almost definitely increase, barring a natural catastrophe or forest fire. The option to wait for a logging company is quite valuable, and companies in the industry have models to estimate the future growth of a forest depending on its age.10.When the additional analysis has a negative NPV. Since the additional analysis is likely to occuralmost immediately, this means when the benefits of the additional analysis outweigh the costs. The benefits of the additional analysis are the reduction in the possibility of making a bad decision. Of course, the additional benefits are often difficult, if not impossible, to measure, so much of this decision is based on experience.Solutions to Questions and ProblemsNOTE: All end of chapter problems were solved using a spreadsheet. Many problems require multiple steps. Due to space and readability constraints, when these intermediate steps are included in this solutions manual, rounding may appear to have occurred. However, the final answer for each problem is found without rounding during any step in the problem.Basic1.a. To calculate the accounting breakeven, we first need to find the depreciation for each year. Thedepreciation is:Depreciation = $896,000/8Depreciation = $112,000 per yearAnd the accounting breakeven is:Q A = ($900,000 + 112,000)/($38 – 25)Q A = 77,846 unitsb.We will use the tax shield approach to calculate the OCF. The OCF is:OCF base = [(P – v)Q – FC](1 – t c) + t c DOCF base = [($38 – 25)(100,000) – $900,000](0.65) + 0.35($112,000)OCF base = $299,200Now we can calculate the NPV using our base-case projections. There is no salvage value or NWC, so the NPV is:NPV base = –$896,000 + $299,200(PVIFA15%,8)NPV base = $446,606.60To calculate the sensitivity of the NPV to changes in the quantity sold, we will calculate the NPV at a different quantity. We will use sales of 105,000 units. The NPV at this sales level is:OCF new = [($38 – 25)(105,000) – $900,000](0.65) + 0.35($112,000)OCF new = $341,450And the NPV is:NPV new = –$896,000 + $341,450(PVIFA15%,8)NPV new = $636,195.93So, the change in NPV for every unit change in sales is:∆NPV/∆S = ($636,195.93 – 446,606.60)/(105,000 – 100,000)∆NPV/∆S = +$37.918If sales were to drop by 100 units, then NPV would drop by:NPV drop = $37.918(100) = $3,791.80You may wonder why we chose 105,000 units. Because it doesn’t matter! Whatever sales number we use, when we calculate the change in NPV per unit sold, the ratio will be the same.c.To find out how sensitive OCF is to a change in variable costs, we will compute the OCF at avariable cost of $24. Again, the number we choose to use here is irrelevant: We will get the same ratio of OCF to a one dollar change in variable cost no matter what variable cost we use.So, using the tax shield approach, the OCF at a variable cost of $24 is:OCF new = [($38 – 24)(100,000) – 900,000](0.65) + 0.35($112,000)OCF new = $364,200So, the change in OCF for a $1 change in variable costs is:∆OCF/∆v = ($299,200 – 364,200)/($25 – 24)∆OCF/∆v = –$65,000If variable costs decrease by $5 then, OCF would increase byOCF increase = $65,000*5 = $325,0002.We will use the tax shield approach to calculate the OCF for the best- and worst-case scenarios. Forthe best-case scenario, the price and quantity increase by 10 percent, so we will multiply the base case numbers by 1.1, a 10 percent increase. The variable and fixed costs both decrease by 10 percent, so we will multiply the base case numbers by .9, a 10 percent decrease. Doing so, we get:OCF best = {[($38)(1.1) – ($25)(0.9)](100K)(1.1) – $900K(0.9)}(0.65) + 0.35($112K)OCF best = $892,650The best-case NPV is:NPV best = –$896,000 + $892,650(PVIFA15%,8)NPV best = $3,109,607.54For the worst-case scenario, the price and quantity decrease by 10 percent, so we will multiply the base case numbers by .9, a 10 percent decrease. The variable and fixed costs both increase by 10 percent, so we will multiply the base case numbers by 1.1, a 10 percent increase. Doing so, we get: OCF worst = {[($38)(0.9) – ($25)(1.1)](100K)(0.9) – $900K(1.1)}(0.65) + 0.35($112K)OCF worst = –212,350The worst-case NPV is:NPV worst = –$896,000 – $212,350(PVIFA15%,8)NPV worst = –$1,848,882.723.We can use the accounting breakeven equation:Q A = (FC + D)/(P – v)to solve for the unknown variable in each case. Doing so, we find:(1): Q A = 130,200 = (€850,000 + D)/(€41 – 30)D = €582,200(2): Q A = 135,000 = (€3.2M + 1.15M)/(P –€56)P = €88.22(3): Q A = 5,478 = (€160,000 + 105,000)/(€105 – v)v = €56.624.When calculating the financial breakeven point, we express the initial investment as an equivalentannual cost (EAC). Dividing the in initial investment by the seven-year annuity factor, discounted at12 percent, the EAC of the initial investment is:EAC = Initial Investment / PVIFA12%,5EAC = £200,000 / 3.60478EAC = £55,481.95Note, this calculation solves for the annuity payment with the initial investment as the present value of the annuity, in other words:PVA = C({1 – [1/(1 + R)]t } / R)£200,000 = C{[1 – (1/1.12)5 ] / .12}C = £55,481.95The annual depreciation is the cost of the equipment divided by the economic life, or:Annual depreciation = £200,000 / 5Annual depreciation = £40,000Now we can calculate the financial breakeven point. The financial breakeven point for this project is: Q F = [EAC + FC(1 – t C) – Depreciation(t C)] / [(P – VC)(1 – t C)]Q F = [£55,481.95 + £350,000(.75) – £40,000(0.25)] / [(£25 – 5) (.25)]Q F = 20,532.13 or about 20,532 units5.If we purchase the machine today, the NPV is the cost plus the present value of the increased cashflows, so:NPV0 = –฿1,500,000 + ฿280,000(PVIFA12%,10)NPV0 = ฿82,062.45We should not purchase the machine today. We would want to purchase the machine when the NPV is the highest. So, we need to calculate the NPV each year. The NPV each year will be the cost plus the present value of the increased cash savings. We must be careful however. In order to make the correct decision, the NPV for each year must be taken to a common date. We will discount all of the NPVs to today. Doing so, we get:Year 1: NPV1 = [–฿1,375,000 + ฿280,000(PVIFA12%,9)] / 1.12NPV1 = ฿104,383.88Year 2: NPV2 = [–฿1,250,000 + ฿280,000(PVIFA12%,8)] / 1.122NPV2 = ฿112,355.82Year 3: NPV3 = [–฿1,125,000 + ฿280,000(PVIFA12%,7)] / 1.123NPV3 = ฿108,796.91Year 4: NPV4 = [–฿1,000,000 + ฿280,000(PVIFA12%,6)] / 1.124NPV4 = ฿96,086.55Year 5: NPV5 = [–฿1,000,000 + ฿280,000(PVIFA12%,5)] / 1.125NPV5 = ฿5,298.26Year 6: NPV6 = [–฿1,000,000 + ฿280,000(PVIFA12%,4)] / 1.126NPV6 = –฿75,762.72The company should purchase the machine two years from now when the NPV is the highest.6.We need to calculate the NPV of the two options, go directly to market now, or utilize test marketingfirst. The NPV of going directly to market now is:NPV = C Success (Prob. of Success) + C Failure (Prob. of Failure)NPV = $20,000,000(0.45) + $5,000,000(0.55)NPV = $11,750,000Now we can calculate the NPV of test marketing first. Test marketing requires a $2 million cashoutlay. Choosing the test marketing option will also delay the launch of the product by one year.Thus, the expected payoff is delayed by one year and must be discounted back to year 0.NPV= C0 + {[C Success (Prob. of Success)] + [C Failure (Prob. of Failure)]} / (1 + R)tNPV = –$2,000,000 + {[$20,000,000 (0.75)] + [$5,000,000 (0.25)]} / 1.15NPV = $12,130,434.78The company should not go directly to market with the product since that option has lower expected payoff.7.We need to calculate the NPV of each option, and choose the option with the highest NPV. So, theNPV of going directly to market is:NPV = C Success (Prob. of Success)NPV = Rs.1,200,000 (0.55)NPV = Rs.660,000The NPV of the focus group is:NPV = C0 + C Success (Prob. of Success)NPV = –Rs.120,000 + Rs.1,200,000 (0.70)NPV = Rs.720,000And the NPV of using the consulting firm is:NPV = C0 + C Success (Prob. of Success)NPV = –Rs.400,000 + Rs.1,200,000 (0.90)NPV = Rs.680,000The firm should conduct a focus group since that option has the highest NPV.8.The company should analyze both options, and choose the option with the greatest NPV. So, if thecompany goes to market immediately, the NPV is:NPV = C Success (Prob. of Success) + C Failure (Prob. of Failure)NPV = ₦30,000,000(.55) + ₦3,000,000(.45)NPV = ₦17,850,000.00Customer segment research requires a ₦1 million cash outlay. Choosing the research option will also delay the launch of the product by one year. Thus, the expected payoff is delayed by one year and must be discounted back to year 0. So, the NPV of the customer segment research is:NPV= C0 + {[C Success (Prob. of Success)] + [C Failure (Prob. of Failure)]} / (1 + R)tNPV = –₦1,000,000 + {[₦30,000,000 (0.70)] + [₦3,000,000 (0.30)]} / 1.15NPV = ₦18,043,478.26Graphically, the decision tree for the project is:₦3 million at t = 0The company should undertake the market segment research since it has the largest NPV.9. a.The accounting breakeven is the aftertax sum of the fixed costs and depreciation charge dividedby the aftertax contribution margin (selling price minus variable cost). So, the accounting breakeven level of sales is:Q A = [(FC + Depreciation)(1 – t C)] / [(P – VC)(1 – t C)]Q A = [($340,000 + $20,000) (1 – 0.35)] / [($2.00 – 0.72) (1 – 0.35)]Q A = 281,250.00b.When calculating the financial breakeven point, we express the initial investment as anequivalent annual cost (EAC). Dividing the in initial investment by the seven-year annuity factor, discounted at 15 percent, the EAC of the initial investment is:EAC = Initial Investment / PVIFA15%,7EAC = $140,000 / 4.1604EAC = $33,650.45Note, this calculation solves for the annuity payment with the initial investment as the presentvalue of the annuity, in other words:PVA = C({1 – [1/(1 + R)]t } / R)$140,000 = C{[1 – (1/1.15)7 ] / .15}C = $33,650.45Now we can calculate the financial breakeven point. The financial breakeven point for this project is:Q F = [EAC + FC(1 – t C) – Depreciation(t C)] / [(P – VC)(1 – t C)]Q F = [$33,650.45 + $340,000(.65) – $20,000(.35)] / [($2 – 0.72) (.65)]Q F = 297,656.79 or about 297,657 units10.When calculating the financial breakeven point, we express the initial investment as an equivalentannual cost (EAC). Dividing the in initial investment by the five-year annuity factor, discounted at 8 percent, the EAC of the initial investment is:EAC = Initial Investment / PVIFA8%,5EAC = ¥300,000 / 3.60478EAC = ¥75,136.94Note, this calculation solves for the annuity payment with the initial investment as the present value of the annuity, in other words:PVA = C({1 – [1/(1 + R)]t } / R)¥300,000 = C{[1 – (1/1.08)5 ] / .08}C = ¥75,136.94The annual depreciation is the cost of the equipment divided by the economic life, or:Annual depreciation = ¥300,000 / 5Annual depreciation = ¥60,000Now we can calculate the financial breakeven point. The financial breakeven point for this project is: Q F = [EAC + FC(1 – t C) – Depreciation(t C)] / [(P – VC)(1 – t C)]Q F = [¥75,136.94 + ¥100,000(.66) – ¥60,000(0.34)] / [(¥60 – 8) (.34)]Q F = 3,517.98 or about 3,518 unitsIntermediate11.a. At the accounting breakeven, the IRR is zero percent since the project recovers the initialinvestment. The payback period is N years, the length of the project since the initial investmentis exactly recovered over the project life. The NPV at the accounting breakeven is:NPV = I [(1/N)(PVIFA R%,N) – 1]b. At the cash breakeven level, the IRR is –100 percent, the payback period is negative, and theNPV is negative and equal to the initial cash outlay.c. The definition of the financial breakeven is where the NPV of the project is zero. If this is true,then the IRR of the project is equal to the required return. It is impossible to state the paybackperiod, except to say that the payback period must be less than the length of the project. Sincethe discounted cash flows are equal to the initial investment, the undiscounted cash flows aregreater than the initial investment, so the payback must be less than the project life.ing the tax shield approach, the OCF at 110,000 units will be:OCF = [(P – v)Q – FC](1 – t C) + t C(D)OCF = [($28 – 19)(110,000) – 150,000](0.66) + 0.34($420,000/4)OCF = $590,100We will calculate the OCF at 111,000 units. The choice of the second level of quantity sold is arbitrary and irrelevant. No matter what level of units sold we choose, we will still get the same sensitivity. So, the OCF at this level of sales is:OCF = [($28 – 19)(111,000) – 150,000](0.66) + 0.34($420,000/4)OCF = $596,040The sensitivity of the OCF to changes in the quantity sold is:Sensitivity = ∆OCF/∆Q = ($596,040 – 590,100)/(111,000 – 110,000)∆OCF/∆Q = +$5.94OCF will increase by $5.94 for every additional unit sold.13.a. The base-case, best-case, and worst-case values are shown below. Remember that in the best-case, sales and price increase, while costs decrease. In the worst-case, sales and price decrease,and costs increase.Scenario Unit sales Variable cost Fixed costsBase 190 元15,000 元225,000Best 209 元13,500 元202,500Worst 171 元16,500 元247,500Using the tax shield approach, the OCF and NPV for the base case estimate is:OCF base = [(元21,000 – 15,000)(190) –元225,000](0.65) + 0.35(元720,000/4)OCF base = 元657,750NPV base = –元720,000 + 元657,750(PVIFA15%,4)NPV base = 元1,157,862.02The OCF and NPV for the worst case estimate are:OCF worst = [(元21,000 – 16,500)(171) –元247,500](0.65) + 0.35(元720,000/4)OCF worst = 元402,300NPV worst = –元720,000 + 元402,300(PVIFA15%,4)NPV worst = +元428,557.80And the OCF and NPV for the best case estimate are:OCF best = [(元21,000 – 13,500)(209) –元202,500](0.65) + 0.35(元720,000/4)OCF best = 元950,250NPV best = –元720,000 + 元950,250(PVIFA15%,4)NPV best = 元1,992,943.19b. To calculate the sensitivity of the NPV to changes in fixed costs we choose another level offixed costs. We will use fixed costs of 元230,000. The OCF using this level of fixed costs and the other base case values with the tax shield approach, we get:OCF = [(元21,000 – 15,000)(190) –元230,000](0.65) + 0.35(元720,000/4)OCF = 元654,500And the NPV is:NPV = –元720,000 + 元654,500(PVIFA15%,4)NPV = 元1,148,583.34The sensitivity of NPV to changes in fixed costs is:∆NPV/∆FC = (元1,157,862.02 – 1,148,583.34)/(元225,000 – 230,000)∆NPV/∆FC = –元1.856For every dollar FC increase, NPV falls by 元1.86.c. The accounting breakeven is:Q A= (FC + D)/(P – v)Q A = [元225,000 + (元720,000/4)]/(元21,000 – 15,000)Q A = 68At the accounting breakeven, the DOL is:DOL = 1 + FC/OCFDOL = 1 + (元225,000/元180,000) = 2.25For each 1% increase in unit sales, OCF will increase by 2.25%.14.The marketing study and the research and development are both sunk costs and should be ignored.We will calculate the sales and variable costs first. Since we will lose sales of the expensive clubs and gain sales of the cheap clubs, these must be accounted for as erosion. The total sales for the new project will be:SalesNew clubs €700 ⨯ 55,000 = €38,500,000Exp. clubs €1,100 ⨯ (–13,000) = –14,300,000Cheap clubs €400 ⨯ 10,000 = 4,000,000€28,200,000For the variable costs, we must include the units gained or lost from the existing clubs. Note that the variable costs of the expensive clubs are an inflow. If we are not producing the sets anymore, we will save these variable costs, which is an inflow. So:Var. costsNew clubs –€320 ⨯ 55,000 = –€17,600,000Exp. clubs –€600 ⨯ (–13,000) = 7,800,000Cheap clubs –€180 ⨯ 10,000 = –1,800,000–€11,600,000The pro forma income statement will be:Sales €28,200,000Variable costs 11,600,000Costs 7,500,000Depreciation 2,600,000EBT 6,500,000Taxes 2,600,000Net income € 3,900,000Using the bottom up OCF calculation, we get:OCF = NI + Depreciation = €3,900,000 + 2,600,000OCF = €6,500,000So, the payback period is:Payback period = 2 + €6.15M/€6.5MPayback period = 2.946 yearsThe NPV is:NPV = –€18.2M – .95M + €6.5M(PVIFA14%,7) + €0.95M/1.147NPV = €9,103,636.91And the IRR is:IRR = –€18.2M – .95M + €6.5M(PVIFA IRR%,7) + €0.95M/IRR7IRR = 28.24%15.The upper and lower bounds for the variables are:Base Case Lower Bound Upper Bound Unit sales (new) 55,000 49,500 60,500Price (new) €700 €630 €770VC (new) €320 €288 €352Fixed costs €7,500,000 €6,750,000 €8,250,000Sales lost (expensive) 13,000 11,700 14,300Sales gained (cheap) 10,000 9,000 11,000 Best-caseWe will calculate the sales and variable costs first. Since we will lose sales of the expensive clubs and gain sales of the cheap clubs, these must be accounted for as erosion. The total sales for the new project will be:SalesNew clubs €770 ⨯ 60,500 = €46,585,000Exp. clubs €1,100 ⨯ (–11,700) = – 12,870,000Cheap clubs €400 ⨯ 11,000 = 4,400,000€38,115,000For the variable costs, we must include the units gained or lost from the existing clubs. Note that the variable costs of the expensive clubs are an inflow. If we are not producing the sets anymore, we will save these variable costs, which is an inflow. So:Var. costsNew clubs €288 ⨯ 60,500 = €17,424,000Exp. clubs €600 ⨯ (–11,700) = – 7,020,000Cheap clubs €180 ⨯ 11,000 = 1,980,000€12,384,000Sales €38,115,000Variable costs 12,384,000Costs 6,750,000Depreciation 2,600,000EBT 16,381,000Taxes 6,552,400Net income €9,828,600Using the bottom up OCF calculation, we get:OCF = Net income + Depreciation = €9,828,600 + 2,600,000OCF = €12,428,600And the best-case NPV is:NPV = –€18.2M – .95M + €12,428,600(PVIFA14%,7) + .95M/1.147NPV = €34,527,280.98Worst-caseWe will calculate the sales and variable costs first. Since we will lose sales of the expensive clubs and gain sales of the cheap clubs, these must be accounted for as erosion. The total sales for the new project will be:SalesNew clubs €630 ⨯ 49,500 = €31,185,000Exp. clubs €1,100 ⨯ (– 14,300) = – 15,730,000Cheap clubs €400 ⨯ 9,000 = 3,600,000€19,055,000For the variable costs, we must include the units gained or lost from the existing clubs. Note that the variable costs of the expensive clubs are an inflow. If we are not producing the sets anymore, we will save these variable costs, which is an inflow. So:Var. costsNew clubs €352 ⨯ 49,500 = €17,424,000Exp. clubs €600 ⨯ (– 14,300) = – 8,580,000Cheap clubs €180 ⨯ 9,000 = 1,620,000€10,464,000Sales €19,055,000Variable costs 10,464,000Costs 8,250,000Depreciation 2,600,000EBT – 2,259,000Taxes 903,600 *assumes a tax creditNet income –€1,355,400Using the bottom up OCF calculation, we get:OCF = NI + Depreciation = –€1,355,400 + 2,600,000OCF = €1,244,600And the worst-case NPV is:NPV = –€18.2M – .95M + €1,244,600(PVIFA14%,7) + .95M/1.147NPV = –€13,433,120.3416.To calculate the sensitivity of the NPV to changes in the price of the new club, we simply need tochange the price of the new club. We will choose €750, but the choice is irrelevant as the sensitivity will be the same no matter what price we choose.We will calculate the sales and variable costs first. Since we will lose sales of the expensive clubs and gain sales of the cheap clubs, these must be accounted for as erosion. The total sales for the new project will be:SalesNew clubs €750 ⨯ 55,000 = €41,250,000Exp. clubs €1,100 ⨯ (– 13,000) = –14,300,000Cheap clubs €400 ⨯ 10,000 = 4,000,000€30,950,000For the variable costs, we must include the units gained or lost from the existing clubs. Note that the variable costs of the expensive clubs are an inflow. If we are not producing the sets anymore, we will save these variable costs, which is an inflow. So:Var. costsNew clubs €320 ⨯ 55,000 = €17,600,000Exp. clubs €600 ⨯ (–13,000) = –7,800,000Cheap clubs €180 ⨯ 10,000 = 1,800,000€11,600,000Sales €30,950,000Variable costs 11,600,000Costs 7,500,000Depreciation 2,600,000EBT 9,250,000Taxes 3,700,000Net income € 5,550,000Using the bottom up OCF calculation, we get:OCF = NI + Depreciation = €5,550,000 + 2,600,000OCF = €8,150,000And the NPV is:NPV = –€18.2M – 0.95M + €8.15M(PVIFA14%,7) + .95M/1.147NPV = €16,179,339.89So, the sensitivity of the NPV to changes in the price of the new club is:∆NPV/∆P = (€16,179,339.89 – 9,103,636.91)/(€750 – 700)∆NPV/∆P = €141,514.06For every euro increase (decrease) in the price of the clubs, the NPV increases (decreases) by €141,514.06.To calculate the sensitivity of the NPV to changes in the quantity sold of the new club, we simply need to change the quantity sold. We will choose 60,000 units, but the choice is irrelevant as the sensitivity will be the same no matter what quantity we choose.We will calculate the sales and variable costs first. Since we will lose sales of the expensive clubs and gain sales of the cheap clubs, these must be accounted for as erosion. The total sales for the new project will be:SalesNew clubs €700 ⨯ 60,000 = €42,000,000Exp. clubs €1,100 ⨯ (– 13,000) = –14,300,000Cheap clubs €400 ⨯ 10,000 = 4,000,000€31,700,000For the variable costs, we must include the units gained or lost from the existing clubs. Note that the variable costs of the expensive clubs are an inflow. If we are not producing the sets anymore, we will save these variable costs, which is an inflow. So:Var. costsNew clubs €320 ⨯ 60,000 = €19,200,000Exp. clubs €600 ⨯ (–13,000) = –7,800,000Cheap clubs €180 ⨯ 10,000 = 1,800,000€13,200,000The pro forma income statement will be:Sales €31,700,000Variable costs 13,200,000Costs 7,500,000Depreciation 2,600,000EBT 8,400,000Taxes 3,360,000Net income € 5,040,000Using the bottom up OCF calculation, we get:OCF = NI + Depreciation = €5,040,000 + 2,600,000OCF = €7,640,000The NPV at this quantity is:NPV = –€18.2M –€0.95M + €7.64(PVIFA14%,7) + €0.95M/1.147NPV = €13,992,304.43So, the sensitivity of the NPV to changes in the quantity sold is:∆NPV/∆Q = (€13,992,304.43 – 9,103,636.91)/(60,000 – 55,000)∆NPV/∆Q = €977.73For an increase (decrease) of one set of clubs sold per year, the NPV increases (decreases) by€977.73.17.a. The base-case NPV is:NPV = –£1,750,000 + £420,000(PVIFA16%,10)NPV = £279,955.54b.We would abandon the project if the cash flow from selling the equipment is greater than thepresent value of the future cash flows. We need to find the sale quantity where the two are equal, so:£1,500,000 = (£60)Q(PVIFA16%,9)Q = £1,500,000/[£60(4.6065)]Q = 5,427.11Abandon the project if Q < 5,428 units, because the NPV of abandoning the project is greater than the NPV of the future cash flows.c.The £1,500,000 is the market value of the project. If you continue with the project in one year,you forego the £1,500,000 that could have been used for something else.18. a.If the project is a success, present value of the future cash flows will be:PV future CFs = £60(9,000)(PVIFA16%,9)PV future CFs = £2,487,533.69From the previous question, if the quantity sold is 4,000, we would abandon the project, and the cash flow would be £1,500,000. Since the project has an equal likelihood of success or failure in one year, the expected value of the project in one year is the average of the success and failure cash flows, plus the cash flow in one year, so:Expected value of project at year 1 = [(£2,487,533.69 + £1,500,000)/2] + £420,000Expected value of project at year 1 = £2,413,766.85The NPV is the present value of the expected value in one year plus the cost of the equipment, so:NPV = –£1,750,000 + (£2,413,766.85)/1.16NPV = £330,833.49b. If we couldn’t abandon the project, the present value of the fut ure cash flows when the quantityis 4,000 will be:PV future CFs = £60(4,000)(PVIFA16%,9)PV future CFs = £1,105,570.53The gain from the option to abandon is the abandonment value minus the present value of the cash flows if we cannot abandon the project, so:Gain from option to abandon = £1,500,000 – 1,105,570.53Gain from option to abandon = £394,429.47We need to find the value of the option to abandon times the likelihood of abandonment. So, the value of the option to abandon today is:Option value = (.50)(£394,429.47)/1.16Option value = £170,012.70。

金融英语简答题

Chapter 11. What are the five parts of the financial system and their functions?The five parts of the financial system are money, financial instruments, financial markets, financial institutions, and central banks. We use money to pay for our purchases and to store wealth. We use financial instruments to transfer resources from savers to investors and to transfer risk to those who are best equipped to bear it. Financial markets allow us to buy and sell financial instruments quickly and cheaply. Financial institutions provide a number of services, including access to the financial markets and collection of information about prospective borrowers to ensure they are creditworthy. Central banks monitor and stabilize the economy.2. What does the international financial system include?The international financial system includes the international money and capital markets and the foreign exchange market. The international money market trades short-term claims with an original maturity of one year or less while the international capital market trades capital market instruments with an original maturity greater than one year. A crucial part of the international financial system is the foreign exchange market, where foreign currencies are bought and sold in the course of trading goods, services, and financial claims among countries.Chapter 21. What is the difference between money and currency?Economists define money(also referred to as the money supply) as anything that is generally accepted in payment for goods or services or in the repayment of debts. Currency, consisting of dollar bills and coins, clearly fits this definition and is one type of money.2.Please summarize the measures of the monetary aggregates as defined by the Federal Reserve of the United States.M1=currency+Demand deposits+Other checkable depositsM2=M1+Small-denomination time deposits+ Savings deposits and money market deposit accounts+ Money market mutual fund shares( non-institutional)M3=M2+Large-denomination time deposits+ Money market mutual fund shares( institutional)+Repurchase agreements+Eurodollars.Chapter 31. What are commercial banks?A commercial bank is an institution that accepts deposits and uses the proceeds to make consumer, commercial, and mortgage loans. Originally established to meet the needs of businesses, many of these banks now serve individual customers as well. Today, commercial banks tend to specialize as community, regional and super-regional, or money center banks.2.How are saving banks different from savings and loan institutions?Saving banks respond more flexibly to the changing economic and financial circumstances than S&Ls. A higher proportion of savings banks have remained mutual than has been the case with S&Ls.Chapter 41. What is the difference between the financial intermediation process of finance companies and that of banking institutions?The financial intermediation process of finance companies can be described by saying that they borrow in large amounts but often lend in small amounts▬ a process quite different from that of banking institutions, which collect deposits in small amounts and then often make large loans.2.Please compare the function of securities brokers and dealers.Brokers are pure intermediaries who act as agents for investors in the purchase or sale of securities. Their function is to match buyers with sellers, a function for which they are paid brokerage commissions. In contrast to brokers, dealers link buyers and sellers by standing ready to buy and sell securities at given prices. Therefore dealers hold inventories of securities and make their living by selling these securities for a slightly higher price than they paid for them.Chapter 51.What is the difference between the nominal interest and the real interest?The interest that makes no allowance of inflation is referred to as the nominal interest rate, which is distinguish it from the real rate, the interest that is adjusted for expected changes in the price level so that it more accurately reflects the true cost of borrowing.2.Why is the concept of the present value extremely useful?The concept of the pres ent value is extremely useful because it allows us to figure out today’s value of credit market instrument at a given sample of interest rate I by just adding up the individual present values of all the future payments received. The concept allows us to obtain an equivalent measure of the interest rate on all types of credit market instruments.Chapter 61. What are the characteristics of money market securities?●They are usually sold in large denominations.●They have low default risk.●The mature in one year or less from their original issue date. Most money market instrumentsmature in less than 120 days.2. Please name at least three kinds of money market instruments.●Treasury bills●Negotiable certificates of the deposit●Commercial paper●Banker’s acceptance●Repurchase agreementsChapter 71.What are the day-to-day jobs of central banks?Provide loans during times of financial stressManage the payments systemOversee the commercial banks and the financial system2.What are the differences between central banks and national banks?Any central bank’s main responsibility is the management of the monetary policy to ensure a stable currency. This is distinct from the goal of a national bank which to ensure a stable domestic economy. Unlike the national bank, a central bank usually quite narrowly aims to manage inflation as well as deflation, and intervenes primarily through open market operations in which it achieves its monetary tasks by massive buying or selling, rather than by regulations. A national bank will have more mechanisms to deal with asset inflation, regional development, and to require that sustainable development, and industrial policy, or domestic-focused industries are favored. A national bank is rarely separate from its government.Chapter 81.What are the advantages of open market operations over the other tools of monetarypolicy?●Central banks have complete control over open market operations over their volume.●Open market operations are flexible and precise; they can be used to any extent.●Open market operations are easily reversed.●Open market operations can be implemented quickly; they involve no administrative delays.2.What are the goals of monetary policy?●high employment●economic growth●price stability●interest-rate stability●stability of financial marketsChapter 91.What are the primary market and secondary market?Capital market trading occurs in either the primary market or the secondary markets. The primary market is where new issues of stocks and bonds are introduced. A secondary market is where the sale of previously issued securities takes place. There are two types of exchanges in the secondary market for capital securities: organized exchanges and over-the-counter (OTC) exchanges.2.What is a down payment?To obtain a mortgage loan, the lender-usually requires the borrower to make a down payment on the property, that is, to pay a portion of the purchase price. Down payments are intended to make the borrower less likely to default on the loan and reduce moral hazard for the borrower. Chapter 101.How do futures contract differ from forwards contract?Forward contracts are negotiated between t wo parties and, therefore, can have unique specifications that depend on the demands of those parties. Because they are customized, forward contracts are very difficult to resell to someone else. Forward contracts, on the other hand, tend to be used when the credit rating of the contracting parties is high and easy to verify.By contrast, futures contracts are standardized contracts that are traded on exchanges.The exchange specifies the exact commodity, the contract size, and where and when delivery will be made. It is, therefore, easy for parties to a futures contract to t erminate their positions before the specified delivery date. Because of t heir careful procedures to protect against the risk of contract default by requiring the posting of margin,furthers markets are used by individuals and firms whose credit rating may be costly to check.2.What are the three stages does currency swap have?●an initial exchange of principal: the two counterparties exchange principal amounts at anagreed exchange rate. This can be a notional exchange since its purpose is to establish the principal amounts as a reference point for the calculation of interest payments and the re-exchange of the principal amounts.●exchange of interest payments on agreed dates based on outstanding principal amounts andagreed fixed interest rates.●re-exchange of the principal amounts at a predetermined exchange rate so the parties end upwith their original currencies.Chapter111.What is the different between a spot transaction and an outright forward transaction? The only difference is that spot is settled, or delivered, on a value date no later than two business days after the deal date, while outright forward is settled on any pre-agreed date three or more business days after the deal date.2. How are option different from a forward contract and future contract?Options are unique in that the right to execute will be ex ercised only if it is in the holder’s interest to do so.That differs from a forward contract, in which the parties are obligated to execute the transaction on the maturity date, and it differs from a futures contract, in which the parties are obligated, in principle to transact at maturity, but that obligation easily can be—and normally is—bought out and liquidated before the maturity or delivery date.Chapter121.What are the four basic categories within the current account?The four basic categories within the current account are:The goods category includes imports and exports of tangible goodsThe services category includes flows of payment in exchange for services countries provide to each otherThe income category measures cross-border compensation of employees. It also includes interest and dividend payments to foreign residents and governments who hold domestic financial assets, as well as payments received by domestic residents and governments who hold financial assets abroad.Transfer payments include unilateral gifts or payments from private citizens and government of a country to people living abroad or vice versa.2.How do you understand a balance-of-payment deficit, surplus, and equilibrium?A balance-of-payments deficit refers to a situation in which the official settlements balance is positive. Ignoring a statistical discrepancy, if the sum of the credits and debits in the current account and the capital and financial account is negative, private payments made to foreigners exceed private payments received from foreigners. In this case, the official settlements balance must be positive. This is called a balance-of-payments deficit. A situation where the sum of the debits and credits in the current and the capital and financial account is positive means that private payments received from foreigners exceed private payments made to foreigners. In this case, the official settlements balance is negative, and there is a balance-of-payments surplus. A balance-of-payments equilibrium refers to a situation where the sum of the debits and credits in the current account and capital and financial account is zero, and thus the official settlements balance is zero.Chapter131.Why are many commercial banks establishing branches around the world? International business allows companies to diversify among various economies so that their performance is less dependent on economic conditions of any single country.Furthermore, the establishment of branches allows a bank to do business face to face with subsidiaries of multinational corporations. The global expertise of some of the larger banks distinguishes them from the small and medium banks and enables them to dominate business by attracting the large corporations.2.What are the most common types of risk to which multinational banks are exposed?The most common types of risk to which multinational banks are exposed are:credit risk, exchange rate risk, settlement risk, interest rate risk as well as country risk.。

国际贸易实务英文版参考答案

Chapter 1I .YES，Please refer to the 1st paragraph of the text.II. 流动性过剩自给自足经济资源直接投资国际收支易货交易出口退税倾销出口型经济增长东道国贸易差额贸易顺差／贸易逆差欧盟国际收支顺差／国际收支逆差有形贸易无形贸易货物贸易服务贸易excess liquidity self-sufficienteconomic resources direct investment balance of payments barterexport tax rebate dumpingexport-driven economic growth host country balance of tradefavorable/unfavorable balance of trade European Unionfavorable/unfavorable balance of payments visible trade invisible trade trade in goods trade in serv icesIIIThe chart above shows the U.S. imports from China, U.S. exports to China and the trade balance . The U.S. has a negative trade balance with China, and it has been growing. During the period fro m 1997 to 2003, imports from China have grown 244% while exports to China have grown 221%, indicating that the trade deficit is increasing. There had already been a sizeable trade balance defi cit with China in 1996, totaling $ 39.5 billion at the end of the year. IV1. Export goods are tangible goods sent out of countries.2. Trade in services are international earnings other than those derived from the exporting and i mporting of tangible goods.3. Import goods are tangible goods brought in.4. International trade is all business transactions that involve two or more countries.5. FDI is one t hat gives the investor a controlling interest in a foreign company.6. Investment is used primarily as financial means for a company to earn more money on its mo ney with relative safety. V1. International trade is the fair and deliberate exchange of goods and/or services across national boundaries. It concerns trade operations of both import and export and includes the purchase and s ale of both visible and invisible goods.2. In today's complex economic world, neither individuals nor nations are self-sufficient. Nation s participate in the international trade for many reasons. As to the economic reasons, no nation has all of the economic resources (land, labor and capital) that it needs to develop its economy and cu lture, and no country enjoys a particular item sufficient enough to meet its needs. As for the prefer ence reasons, international trade takes place because of innovation of style. Besides, every nation can specialize in a certain field and enjoy a comparative advantage in some particular area in term s of trade so that they need to do business with each other to make use of resources more efficientl y and effectively.3. In measuring the effectiveness of global trade, nations carefully follow two key indicators, na mely, balance of trade and balance of payments.4. FDI, the abbreviation form Foreign Direct Investment, means buying of permanent property a nd business in foreign nations. It occurs when acquisition of equity interest in a foreign company is trade. The great significance of FDI for China might be that: FDI solve the problem of capital s hortage for China so that China may spend the money on importing advanced equipment and technologies for its infrastructure, national supporting industry, key projects, etc.Chapter 2 I关税壁垒非关税壁垒从量税配额保护性关税市场失灵幼稚产业许可证制度财政关税政府采购贸易保护主义从价税最低限价本地采购规则增加内需Domestic content Red-tape barriers Export subsidies Binding quota Absolute quotas VERTariff-rate quotas Zero quota"Buy local" rules Tariff barriers non-tariff barriers specific duties quotaprotective tariff market failure infant industry licensing system Revenue tariffgovernment procurement trade protectionism Ad Valorem Duties floor price"buy local" rulesraise domestic demand 国内含量进口环节壁垒出口补贴绑定配额绝对配额自愿出口限制关税配额零配额本地采购原则II1. Protectionism means the deliberate use or encouragement of restrictions on imports to enable re latively inefficient domestic producers to compete successfully with foreign producers. 保护主义是指蓄意使用或鼓励进口限制，以此使本国相对效率低的产品能成功地和外国产品竞争。

经济学原理英文版课件-金融体系

Y=C+I+G Solve for I:
national saving
I = Y – C – G = (Y – T – C) + (T – G)
Saving = investment in a closed economy
8
m use.
Budget Deficits and Surpluses
Budget surplus = an excess of tax revenue over govt spending = T–G = public saving
▪ Decline in confidence in financial institutions ▪ 2008–2009: Customers with uninsured deposits began pulling their funds out of financial institutions.
6
m use.
National Saving
National saving
= private saving + public saving
= (Y – T – C) + (T – G)
=
Y–C–G
= the portion of national income that is not used for consumption or government purchases
5
m use.
Different Kinds of Saving
Private saving = The portion of households’ income that is not used for consumption or paying taxes =Y–T–C

商务英语阅读(第二版)王关富unit9econ-beyondbrettonwoods课后答案

Unit 9Beyond Bretton Woods 2Exercises1.Answer the questions on the text:1)According to the article, what is the essence of “quantitative easing” restartedby the FedPrinting money to buy government bonds.2)Why is no one satisfied with today’s international monetary systemBecause:Reason 1: D ominance of the dollar as a reserve currency and America’s management of it fail to reflect the realities of the world economy and leave others vulnerable to America’s domestic monetary policy.Reason 2: The system has fostered the creation of vast foreign-exchange reserves, particularly by emerging economies, thus poor countries lend to rich ones and lose investment opportunities.Reason 3: Scale and volatility of capital flow render unsteadiness for emerging economies.3)What is “trilemma” according to the textThe independence of domestic monetary policies, stability of exchange rate and perfect capital mobility can’t be realized at the same time. One must give up one factor to uphold the other two.4)What is the reason for a freer capital flow in these daysGlobalization as much as to the removal of restrictions.5)Why are countries unwilling to have their currency exchange rate to rise greatlyand how do they control itBecause abrupt rise in exchange rate would cripple export and countries want an undervalued currency to encourage export-led growth, so they buy foreign exchange to stem the rise.6)How is “Bretton Woods 2”created, according to the authorEmerging economies are coping the behavior of China, keeping their exchange rate at a low level so as to maintain their international competitiveness, thus they have to be tied to US dollars. This phenomenon then results in Bretton Woods 2.7)What is “Triffin dilemma”The conflict between the benefits and costs of a country with a reserve currency running a large current account deficit. The reserve-currency country enjoys the consumption benefit of running a trade deficit, while the rest of the world benefits from the additional liquidity, which helps facilitate trade. The cost comes from the declining value and credibility of any currency which runs a persistent trade deficit - eventually leading to a reluctance of creditors to holdthe reserve currency.8)Why can’t SDRs become a central reserve assetBecause as Mr Eichengreen w rites: “No global government… means no global central bank, which means no global currency.9)According to the text, what is the measure that the G20 could possibly take torebalance world economyIt can develop a plan with target ranges for current-account balances and real exchange rates and make it supported by peer pressure rather than explicit sanctions.10)What can be inferred from the title “Beyond Bretton Woods 2” in relation tothe world economyThere are probably two results of the world economy:One is that i f America’s economy recovers and its medium-term fiscal outlook improves, the pace at which capital shifts to the emerging world will slow. And if China makes its currency more flexible and its capital account more open in good time, the international monetary system will be better able to cope with continued financial globalisation and a wide growth gap between rich and emerging markets.The other is that if the world’s biggest economy stagnates and the second-biggest does not change its monetary policy, a rigid monetary system will eventually buckle.)2. Fill in each blank of the following sentences with one of the phrases in the list given below:1)The latest statistics indicate that this region’s economic recovery is tied to highereducation.2)According to financial news, this nation’s currency will appreciate against euro inreal terms.3)The couple described their narrow escape from the earthquake in New Zealandas they were inside the church when it began to fall apart.4)If you never take initiative to make it happen, this scheme is only something onpaper.5)At times of critical moment, one must subordinate passions to reasoning toavoid any possible blunders.6)Over two million migrant workers flooded into Beijing last year from all parts ofChina to seek potential opportunities for personal development.7)Thousands of city school teachers stand to lose their jobs under a tough budgetthat is set to unveil this coming Thursday.8)The car dealer guarantees that if customer is unhappy with the model hepurchases, whether on a bill of sale or hire purchase, he can totally swap it for a new one.9)Authorities in Zimbabwe have issued a new mega bank note in an attempt tocope with the troubled African country's runaway inflation.10)Economists use the term liquidity to describe the ease with which an asset canbe converted into the economy's medium of exchange.3. Match the terms in column A with the explanations in column B:A B1) reserve currency a) Ability of money to move across nationalboundaries freely in pursuit of higherreturns. 42) treasury bond b) A government monetary policyoccasionally used to increase the moneysupply by buying governmentsecurities or other securities from themarket. 73) currency war c) The actions of a central bank, currencyboard or other regulatory committee thatdetermine the size and rate of growth of themoney supply. 54) capital mobility d) A mechanism used by central banks to providefinancial institutions withaccess to funds tosatisfy reserve requirements and to increaseliquidity over longer periods. 85) monetary policy e) A currency held by many governments and aspart of their foreign exchange reserves andalso used as the international pricingcurrency for products traded on a globalmarket. 16) Special Drawing Right (SDR) f) A condition in international affairs wherecountries compete against each other toachieve a relatively low exchange rate for theirhome currency. 37) quantitative easing g) A marketable, fixed-interest U.S. governmentdebt security with a maturity ofmore than10years. 28) lending facility h) A period of time in which loans are lent by thegovernment and banks in an unrestrained way .99) credit binge i) A situation where a country's total import ofgoods, services and transfers are greater thanits total export of goods, services andtransfers..1010) current account deficit j) An international type of monetary reservecurrency created by the InternationalMonetary Fund and used as a supplement tothe existing reserves of member countries.. 64.Translate the following into Chinese:如果国际组织间举行一场全球性的声望比赛，国际货币基金组织毫无疑问会是最后一名。

货币银行学名词解释

货币银行学名词解释Chapter2: An Overview of the Financial System一级市场：筹集资金的公司或政府机构将其新发行的股票或债券等证券销售给最初购买者的金融市场。

Primary market:A financial market in which new issues of a security are sold to initial buyers by the corporation or government agency borrowing the funds.二级市场：交易已经发行的证券的金融市场。

Secondary market:A financial market in which securities that have been previously issued can be resold.场外市场：二级市场的一种组织形态，即分处各地的拥有证券存货的交易商随时向与它们联系并愿意接受它们报价的人在柜台上买卖证券。

Over-the-counter (OTC) market: A method of organizing a secondary market in which dealers at different locations who have an inventory of securities stand ready to buy and sell securities “over-the-counter” to anyone who comes to them and is willing to accept their prices.货币市场：交易短期债务工具（通常原始期限为1年以下）的金融市场。

Money market:A financial market in which only short-term debt instruments (generally those with original maturity of less than one year) are traded.资本市场：交易长期债务工具（通常原始期限在1年或1年以上）与股权工具的金融市场。