国际金融英文版习题chapter2
国际金融英文版习题
Chapter1 balance of paymentsBalance of Payments Accounting1Balance of paymentsa)is defined as the statistical record of a country’sinternational transactions over a certain period of timepresented in the form of a double-entry bookkeepingb)provides detailed information concerning the demand and supplyof a country’s currencyc)can be used to evaluate the performance of a country ininternational economic competitiond)all of the aboveAnswer: d2Generally speaking, any transaction that results in a receipt from foreignersa)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsb)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsc)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsd)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer d3 Generally speaking, any transaction that results in a payment to foreignerse)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsf)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsg)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsh)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer a)4 Suppose the McDonalds Corporation imports 100 tons of Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef Conglomerate.i)Payment by McDonalds will be recorded as a debitj)The deposit of the funds by the seller will be recorded as a debitk)Payment by McDonalds will be recorded as a creditl)The deposit of the funds by the buyer will be credit Answer: a5Since the balance of payments is presented as a system of double-entry bookkeeping,a)Every credit in the account is balanced by a matching debitb)Every debit in the account is balanced by a matching creditc)a) and b) are both trued)None of the aboveAnswer c)6 A country’s international transactions can be grouped into thefollowing three main types:a)current account, medium term account, and long term capitalaccountb)current account, long term capital account, and officialreserve accountc)current account, capital account, and official reserveaccountd)capital account, official reserve account, trade account Answer: c7Invisible trade refers to:a)services that avoid tax paymentsb)underground economyc)legal, consulting, and engineering servicesd)tourist expenditures, onlyAnswer: c8The current account is divided into four finer categories:a)Merchandise trade, services, income, and statisticaldiscrepancy.b)Merchandise trade, services, income, and unilateraltransfersc)Merchandise trade, services, portfolio investment, andunilateral transfersd)Merchandise trade, services, factor income, and directinvestmentAnswer: b9Factor incomea)Consists largely of interest, dividends, and other incomeon foreign investments.b)Is a theoretical construct of the factors of production,land, labor, capital, and entrepreneurial ability.c)Is generally a very minor part of national income accounting,smaller than the statistical discrepancy.d)None of the aboveAnswer: aUSE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS10 The entries in the “current account” and the “capital account”, combined together, can be outlined (in alphabetic order) as:(i)- direct investment(ii)- factor income (iii)- merchandise (iv)- official transfer (v)- other capital (vi)- portfolio investment(vii)- private transfer(viii)- services11Current account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: b12Capital account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: d13The difference between Foreign Direct Investment and Portfolio Investment is that:a)Portfolio Investment mostly represents the sale and purchaseof foreign financial assets such as stocks and bonds that donot involve a transfer of control.b)Foreign Direct Investment mostly represents the sale andpurchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds.c)Foreign direct investment is about buying land and buildingfactories, whereas portfolio investment is about buying stocks and bonds.d)All of the aboveAnswer: a14In the latter half of the 1980s, with a strong yen, Japanese firmsa)Faced difficulty exportingb)Could better afford to acquire U.S. assets that had become lessexpensive in terms of yen.c)Financed a sharp increase in Japanese FDI in the United Statesd)All of the aboveAnswer: d15International portfolio investments have boomed in recent years, as a result ofa)A depreciating U.S. dollarb)Increased gasoline and other commodity prices.c)The general relaxation of capital controls and regulation inmany countriesd)None of the aboveAnswer: cAnswer: c)16The capital account measuresa)The sum of U.S. sales of assets to foreigners and U.S. purchasesof foreign assets.b)The difference between U.S. sales of assets to foreigners andU.S. purchases of foreign assets.c)The difference between U.S. sales of manufactured goods toforeigners and U.S. purchases of foreign products.d)None of the aboveAnswer: b) page 6417When Honda, a Japanese auto maker, built a factory in Ohio,a)It was engaged in foreign direct investmentb)It was engaged in portfolio investmentc)It was engaged in a cross-border acquisitiond)None of the above.Answer: a) page 64.18The capital account may be divided into three categories:a)Cross-border mergers and acquisitions, portfolio investment,and other investmentb)Direct investment, portfolio investment, and Cross-bordermergers and acquisitionsc)Direct investment, mergers and acquisitions, and otherinvestmentd)Direct investment, portfolio investment, and other investment Answer: d)19When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only boughta non-controlling number of shares of the firma)Nestlé would have been engaged in portfolio investmentb)Nestlé wo uld have been engaged in a cross-border acquisitionc)It would depend if they bought the shares from an American ora Canadiand)None of the above.Answer: a)20Foreign direct investment (FDI) occursa)when an investor acquires a measure of control of a foreignbusinessb)when there is an acquisition, by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a businessc)with sales and purchases of foreign stocks and bonds that donot involve a transfer of controld)a and bAnswer: d21Statistical discrepancy, which by definition represents errors and omissionsa)Cannot be calculated directlyb)Is calculated by taking into account the balance-of-paymentsidentityc)Probably has some elements that are honest mistakes, it can’tall be money laundering and drugs.d)All of the aboveAnswer: d)22The statistical discrepancy in the balance-of-payments accountsa)Arise since recordings of payments and receipts are done atdifferent times, in different places, possibly using different methods.b)Arise since some transactions (illegal transactions?) occur“off the books”.c)Represents omitted and misrecorded transactions.d)All of the aboveAnswer: d)23Regarding the statistical discrepancy in the balance-of-payments accountsa)There is some evidence that financial transactions may be mainlyresponsible for the discrepancy.b)The sum of the balance on the capital account and the statisticaldiscrepancy is very close to the balance of the current accountin magnitude.c)It tends to be positive one year and negative in others, so it’ssafe to ignore itd)a) and b)Answer: d)24When a country must make a net payment to foreigners because ofa balance-of-payments deficit, the central bank of the countrya)Should do nothingb)Should run down its official reserve assets (e.g. gold, foreignexchanges, and SDRs)c)Should borrow anew from foreign central banks.d)b) or c) will workAnswer: d)25Continued U.S. trade deficits coupled with foreigners’ desire to diversify their currency holdings away from U.S. dollarsa)could further diminish the position of the dollar as thedominant reserve currencyb)could affect the value of U.S. dollar (e.g. through the currencydiversification decisions of Asian central banks)c)Could lend steam to the emergence of the euro as a crediblereserve currencyd)All of the aboveAnswer: d26Currently, international reserve assets are comprised ofa)gold, platinum, foreign exchanges, and special drawing rights(SDRs)b)gold, foreign exchanges, special drawing rights (SDRs), andreserve positions in the International Monetary Fund (IMF)c)gold, diamonds, foreign exchanges, and special drawing rights(SDRs)d)reserve positions in the International Monetary Fund (IMF),onlyAnswer: b27International reserve assets include “foreign exchanges”. These area)Special Drawing Rights (SDRs) at the IMFb)reserve positions in the International Monetary Fund (IMF)c)Foreign currency held by a country’s central bankd)None of the aboveAnswer: c28The most important international reserve asset, comprising 94 percent of the total reserve assets held by IMF member countries isa)Goldb)Foreign exchangesc)Special Drawing Rights (SDRs)d)Reserve positions in the International Monetary Fund (IMF) Answer: b29The vast majority of the foreign-exchange reserves held by central banks are denominated ina)Local currenciesb)U.S. dollarsc)Yend)EuroAnswer: b30The U.S. Trade Deficita)Is a capital account surplusb)Is a current account deficitc)Is both a capital account surplus and a current account deficitd)None of the aboveAnswer: c31Over the last several years the U.S. has run persistenta)Balance-of-payments deficitsb)Balance-of-payments surplusesc)Current Account deficitsd)Capital Account deficitsAnswer: c32More important than he absolute size of a country’sbalance-of-payments disequilibriuma)is the nature and cause of the disequilibriumb)is whether it is a trade surplus or deficitc)is whether the local government is mercantilist or notd)Nothing is more important than he absolute size of a country’sbalance-of-payments disequilibriumAnswer: aThe Relationship between Balance of Payments and National Income Accounting For questions in this section, the notation isY = GNP = national incomeC = consumptionI = private investmentG = government spendingX = exportsM = imports33National income, or Gross National Product is given by:a)GNP = Y = C + I + G + X + Mb)GNP = Y = C + I + G + X – Mc)GNP = I = C + Y + G + X – Md)GNP = Y = C + I + X + M – GAnswer: b)34Which of the following is a true statement?a)BCA ≡ X – Mb)BKA ≡ X – Mc)BKA –BCA ≡ X – Md)BKA ≡ X – MAnswer a)35There is an intimate relationship betwe en a country’s BCA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of the following is a true statement?a)If (S – I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)both a) and b) are trued)none of the aboveAnswer c)36There is an intim ate relationship between a country’s BCA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of the following is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)when BCA is negative, it implies that government budget deficitsan/or part of domestic investment are being finance withforeign-controlled capitald)all of the above are trueAnswer d)37There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, in order for a country to reduce a BCA deficit, which of the following must occur?a)For a given level of S and I, the government budget deficit (T– G) must be reducedb)For a given level of I and (T – G), S must be increasedc)For a given level of S and (T – G), I must falld)All of the above would work to reduce a BCA deficitAnswer d)Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds andpays out of its bank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and payswith her American Express card.(3) A Indian immigrant living in Los Angeles sends a check drawn onhis L.A. bank account as a gift to his parents living in Bombay.(4) A U.S. computer programmer is hired by a British company for consultingand gets paid from the U.S. bank account maintained by the British company.In contrast to the U.S., Japan has realized continuous current account surpluses. What could be the main causes for these surpluses? Is it desirable to have continuous current account surpluses?。
国际金融英文chapter 2
Chapter 2
Payments among Nations 国际收支
Balance of payments 国际收支平衡表
The set of accounts recording all flows of value between a nation’s residents and the residents of the rest of the world during a period of time. 一个国家的居民与非居民一定时期内的全部国 际经济交易。
Balanபைடு நூலகம்e of payments
The main kinds of flows in the balance of payments accounts
Merchandise trade flows Service flows Income flows Unilateral transfers (gifts) Private capital flows Official reserve asset flows
The Current Account (CA) Balance
3.Domestic production (Y) versus national expenditure (E). Y = C + Id + G +(X – M), E = C + Id + G, and CA = (X – M) approximately, so that CA = Y – E
国际金融英文版习题
Chapter1 balance of paymentsBalance of Payments Accounting1Balance of paymentsa)is defined as the statistical record of a country’s international transactions over acertain period of time presented in the form of a double-entry bookkeepingb)provides detailed information concerning the demand and supply of a country’scurrencyc)can be used to evaluate the performance of a country in international economiccompetitiond)all of the aboveAnswer: d2Generally speaking, any transaction that results in a receipt from foreignersa)Will be recorded as a debit, with a negative sign, in the U.S. balance of paymentsb)Will be recorded as a debit, with a positive sign, in the U.S. balance of paymentsc)Will be recorded as a credit, with a negative sign, in the U.S. balance ofpaymentsd)Will be recorded as a credit, with a positive sign, in the U.S. balance of payments Answer d3 Generally speaking, any transaction that results in a payment to foreignerse)Will be recorded as a debit, with a negative sign, in the U.S. balance of paymentsf)Will be recorded as a debit, with a positive sign, in the U.S. balance of paymentsg)Will be recorded as a credit, with a negative sign, in the U.S. balance ofpaymentsh)Will be recorded as a credit, with a positive sign, in the U.S. balance of payments Answer a)4 Suppose the McDonalds Corporation imports 100 tons of Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef Conglomerate.i)Payment by McDonalds will be recorded as a debitj)The deposit of the funds by the seller will be recorded as a debitk)Payment by McDonalds will be recorded as a creditl)The deposit of the funds by the buyer will be creditAnswer: a5Since the balance of payments is presented as a system of double-entry bookkeeping,a)Every credit in the account is balanced by a matching debitb)Every debit in the account is balanced by a matching creditc)a) and b) are both trued)None of the aboveAnswer c)6 A country’s international transactions can be grouped into the following threemain types:a)current account, medium term account, and long term capital accountb)current account, long term capital account, and official reserve accountc)current account, capital account, and official reserve accountd)capital account, official reserve account, trade accountAnswer: c7Invisible trade refers to:a)services that avoid tax paymentsb)underground economyc)legal, consulting, and engineering servicesd)tourist expenditures, onlyAnswer: c8The current account is divided into four finer categories:a)Merchandise trade, services, income, and statistical discrepancy.b)Merchandise trade, services, income, and unilateral transfersc)Merchandise trade, services, portfolio investment, and unilateral transfersd)Merchandise trade, services, factor income, and direct investment Answer: b9Factor incomea)Consists largely of interest, dividends, and other income on foreigninvestments.b)Is a theoretical construct of the factors of production, land, labor, capital,and entrepreneurial ability.c)Is generally a very minor part of national income accounting, smaller thanthe statistical discrepancy.d)None of the aboveAnswer: aUSE THE FOLLOWING INFORMA TION TO ANSWER THE NEXT TWO QUESTIONS10 The entries in the “current account” and the “capital account”, combined together, can be outlined (in alphabetic order) as:(i)- direct investment (ii)- factor income (iii)- merchandise (iv)- official transfer (v)- other capital(vi)- portfolio investment (vii)- private transfer (viii)- services11Current account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi) Answer: b12Capital account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: d13The difference between Foreign Direct Investment and Portfolio Investment is that:a)Portfolio Investment mostly represents the sale and purchase of foreign financialassets such as stocks and bonds that do not involve a transfer of control.b)Foreign Direct Investment mostly represents the sale and purchase of foreignfinancial assets such as stocks whereas Portfolio Investment mostly involves thesales and purchase of foreign bonds.c)Foreign direct investment is about buying land and building factories, whereasportfolio investment is about buying stocks and bonds.d)All of the aboveAnswer: a14In the latter half of the 1980s, with a strong yen, Japanese firmsa)Faced difficulty exportingb)Could better afford to acquire U.S. assets that had become less expensive interms of yen.c)Financed a sharp increase in Japanese FDI in the United Statesd)All of the aboveAnswer: d15International portfolio investments have boomed in recent years, as a result ofa) A depreciating U.S. dollarb)Increased gasoline and other commodity prices.c)The general relaxation of capital controls and regulation in many countriesd)None of the aboveAnswer: cAnswer: c)16The capital account measuresa)The sum of U.S. sales of assets to foreigners and U.S. purchases of foreignassets.b)The difference between U.S. sales of assets to foreigners and U.S. purchases offoreign assets.c)The difference between U.S. sales of manufactured goods to foreigners and U.S.purchases of foreign products.d)None of the aboveAnswer: b) page 6417When Honda, a Japanese auto maker, built a factory in Ohio,a)It was engaged in foreign direct investmentb)It was engaged in portfolio investmentc)It was engaged in a cross-border acquisitiond)None of the above.Answer: a) page 64.18The capital account may be divided into three categories:a)Cross-border mergers and acquisitions, portfolio investment, and otherinvestmentb)Direct investment, portfolio investment, and Cross-border mergers andacquisitionsc)Direct investment, mergers and acquisitions, and other investmentd)Direct investment, portfolio investment, and other investmentAnswer: d)19When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only bought a non-controlling number ofshares of the firma)Nestlé would have been engaged in portfolio investmentb)Nestlé would have been engaged in a cross-border acquisitionc)It would depend if they bought the shares from an American or a Canadiand)None of the above.Answer: a)20Foreign direct investment (FDI) occursa)when an investor acquires a measure of control of a foreign businessb)when there is an acquisition, by a foreign entity in the U.S., of 10 percent ormore of the voting shares of a businessc)with sales and purchases of foreign stocks and bonds that do not involve atransfer of controld) a and bAnswer: d21Statistical discrepancy, which by definition represents errors and omissionsa)Cannot be calculated directlyb)Is calculated by taking into account the balance-of-payments identityc)Probably has some elements that are honest mistakes, it can’t all be moneylaundering and drugs.d)All of the aboveAnswer: d)22The statistical discrepancy in the balance-of-payments accountsa)Arise since recordings of payments and receipts are done at different times, indifferent places, possibly using different methods.b)Arise since some transactions (illegal transactions?) occur “off the books”.c)Represents omitted and misrecorded transactions.d)All of the aboveAnswer: d)23Regarding the statistical discrepancy in the balance-of-payments accountsa)There is some evidence that financial transactions may be mainly responsible forthe discrepancy.b)The sum of the balance on the capital account and the statistical discrepancy isvery close to the balance of the current account in magnitude.c)It tends to be positive one year and negative in others, so it’s safe to ignore itd)a) and b)Answer: d)24When a country must make a net payment to foreigners because of a balance-of-payments deficit, the central bank of the countrya)Should do nothingb)Should run down its official reserve assets (e.g. gold, foreign exchanges, andSDRs)c)Should borrow anew from foreign central banks.d)b) or c) will workAnswer: d)25Continued U.S. trade deficits coupled with foreigners’ desire to diversify their currency holdings away from U.S. dollarsa)could further diminish the position of the dollar as the dominant reserve currencyb)could affect the value of U.S. dollar (e.g. through the currency diversificationdecisions of Asian central banks)c)Could lend steam to the emergence of the euro as a credible reserve currencyd)All of the aboveAnswer: d26Currently, international reserve assets are comprised ofa)gold, platinum, foreign exchanges, and special drawing rights (SDRs)b)gold, foreign exchanges, special drawing rights (SDRs), and reserve positions inthe International Monetary Fund (IMF)c)gold, diamonds, foreign exchanges, and special drawing rights (SDRs)d)reserve positions in the International Monetary Fund (IMF), onlyAnswer: b27International reserve assets include “foreign exchanges”. These area)Special Drawing Rights (SDRs) at the IMFb)reserve positions in the International Monetary Fund (IMF)c)Foreign currency held by a country’s central bankd)None of the aboveAnswer: c28The most important international reserve asset, comprising 94 percent of the total reserve assets held by IMF member countries isa)Goldb)Foreign exchangesc)Special Drawing Rights (SDRs)d)Reserve positions in the International Monetary Fund (IMF)Answer: b29The vast majority of the foreign-exchange reserves held by central banks are denominated ina)Local currenciesb)U.S. dollarsc)Yend)EuroAnswer: b30The U.S. Trade Deficita)Is a capital account surplusb)Is a current account deficitc)Is both a capital account surplus and a current account deficitd)None of the aboveAnswer: c31Over the last several years the U.S. has run persistenta)Balance-of-payments deficitsb)Balance-of-payments surplusesc)Current Account deficitsd)Capital Account deficitsAnswer: c32More important than he absolute size of a country’s balance-of-payments disequilibriuma)is the nature and cause of the disequilibriumb)is whether it is a trade surplus or deficitc)is whether the local government is mercantilist or notd)Nothing is more important than he absolute size of a country’sbalance-of-payments disequilibriumAnswer: aThe Relationship between Balance of Payments and National Income AccountingFor questions in this section, the notation isY = GNP = national incomeC = consumptionI = private investmentG = government spendingX = exportsM = imports33National income, or Gross National Product is given by:a)GNP = Y = C + I + G + X + Mb)GNP = Y = C + I + G + X – Mc)GNP = I = C + Y + G + X – Md)GNP = Y = C + I + X + M – GAnswer: b)34Which of the following is a true statement?a)BCA ≡ X – Mb)BKA ≡ X – Mc)BKA –BCA ≡ X – Md)BKA ≡ X – MAnswer a)35There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of thefollowing is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savings is insufficient tofinance domestic investment.b)If (T –G) < 0, it implies that a country’s tax reven ue is insufficient to financegovernment spendingc)both a) and b) are trued)none of the aboveAnswer c)36There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of thefollowing is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savings is insufficient tofinance domestic investment.b)If (T – G) < 0, it implies that a country’s tax revenue is insufficient to financegovernment spendingc)when BCA is negative, it implies that government budget deficits an/or part ofdomestic investment are being finance with foreign-controlled capitald)all of the above are trueAnswer d)37There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, in order for acountry to reduce a BCA deficit, which of the following must occur?a)For a given level of S and I, the government budget deficit (T – G) must bereducedb)For a given level of I and (T – G), S must be increasedc)For a given level of S and (T – G), I must falld)All of the above would work to reduce a BCA deficitAnswer d)Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds and pays out of itsbank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and pays with her AmericanExpress card.(3) A Indian immigrant living in Los Angeles sends a check drawn on his L.A. bankaccount as a gift to his parents living in Bombay.(4) A U.S. computer programmer is hired by a British company for consultingand gets paid from the U.S. bank account maintained by the British company.In contrast to the U.S., Japan has realized continuous current account surpluses. Whatcould be the main causes for these surpluses? Is it desirable to have continuous current account surpluses?。
国际金融英文版习题
Chapter1 balance of paymentsBalance of Payments Accounting1Balance of paymentsa)is defined as the statistical record of a country’sinternational transactions over a certain period of timepresented in the form of a double-entry bookkeepingb)provides detailed information concerning the demand and supplyof a country’s currencyc)can be used to evaluate the performance of a country ininternational economic competitiond)all of the aboveAnswer: d2Generally speaking, any transaction that results in a receipt from foreignersa)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsb)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsc)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsd)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer d3 Generally speaking, any transaction that results in a payment to foreignerse)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsf)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsg)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsh)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer a)4 Suppose the McDonalds Corporation imports 100 tons of Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef Conglomerate.i)Payment by McDonalds will be recorded as a debitj)The deposit of the funds by the seller will be recorded as a debitk)Payment by McDonalds will be recorded as a creditl)The deposit of the funds by the buyer will be credit Answer: a5Since the balance of payments is presented as a system of double-entry bookkeeping,a)Every credit in the account is balanced by a matching debitb)Every debit in the account is balanced by a matching creditc)a) and b) are both trued)None of the aboveAnswer c)6 A country’s international transactions can be grouped into thefollowing three main types:a)current account, medium term account, and long term capitalaccountb)current account, long term capital account, and officialreserve accountc)current account, capital account, and official reserveaccountd)capital account, official reserve account, trade account Answer: c7Invisible trade refers to:a)services that avoid tax paymentsb)underground economyc)legal, consulting, and engineering servicesd)tourist expenditures, onlyAnswer: c8The current account is divided into four finer categories:a)Merchandise trade, services, income, and statisticaldiscrepancy.b)Merchandise trade, services, income, and unilateraltransfersc)Merchandise trade, services, portfolio investment, andunilateral transfersd)Merchandise trade, services, factor income, and directinvestmentAnswer: b9Factor incomea)Consists largely of interest, dividends, and other incomeon foreign investments.b)Is a theoretical construct of the factors of production,land, labor, capital, and entrepreneurial ability.c)Is generally a very minor part of national income accounting,smaller than the statistical discrepancy.d)None of the aboveAnswer: aUSE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS10 The entries in the “current account” and the “capital account”, combined together, can be outlined (in alphabetic order) as:(i)- direct investment(ii)- factor income (iii)- merchandise (iv)- official transfer (v)- other capital (vi)- portfolio investment(vii)- private transfer(viii)- services11Current account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi) Answer: b12Capital account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi) Answer: d13The difference between Foreign Direct Investment and Portfolio Investment is that:a)Portfolio Investment mostly represents the sale and purchaseof foreign financial assets such as stocks and bonds that do not involve a transfer of control.b)Foreign Direct Investment mostly represents the sale andpurchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds.c)Foreign direct investment is about buying land and buildingfactories, whereas portfolio investment is about buying stocks and bonds.d)All of the aboveAnswer: a14In the latter half of the 1980s, with a strong yen, Japanese firmsa)Faced difficulty exportingb)Could better afford to acquire U.S. assets that had become lessexpensive in terms of yen.c)Financed a sharp increase in Japanese FDI in the United Statesd)All of the aboveAnswer: d15International portfolio investments have boomed in recent years, as a result ofa)A depreciating U.S. dollarb)Increased gasoline and other commodity prices.c)The general relaxation of capital controls and regulation inmany countriesd)None of the aboveAnswer: cAnswer: c)16The capital account measuresa)The sum of U.S. sales of assets to foreigners and U.S. purchasesof foreign assets.b)The difference between U.S. sales of assets to foreigners andU.S. purchases of foreign assets.c)The difference between U.S. sales of manufactured goods toforeigners and U.S. purchases of foreign products.d)None of the aboveAnswer: b) page 6417When Honda, a Japanese auto maker, built a factory in Ohio,a)It was engaged in foreign direct investmentb)It was engaged in portfolio investmentc)It was engaged in a cross-border acquisitiond)None of the above.Answer: a) page 64.18The capital account may be divided into three categories:a)Cross-border mergers and acquisitions, portfolio investment,and other investmentb)Direct investment, portfolio investment, and Cross-bordermergers and acquisitionsc)Direct investment, mergers and acquisitions, and otherinvestmentd)Direct investment, portfolio investment, and other investment Answer: d)19When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only boughta non-controlling number of shares of the firma)Nestlé would have been engaged in portfolio investm entb)Nestlé would have been engaged in a cross-border acquisitionc)It would depend if they bought the shares from an American ora Canadiand)None of the above.Answer: a)20Foreign direct investment (FDI) occursa)when an investor acquires a measure of control of a foreignbusinessb)when there is an acquisition, by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a businessc)with sales and purchases of foreign stocks and bonds that donot involve a transfer of controld)a and bAnswer: d21Statistical discrepancy, which by definition represents errors and omissionsa)Cannot be calculated directlyb)Is calculated by taking into account the balance-of-paymentsidentityc)Probably has some elements that are honest mistakes, it can’tall be money laundering and drugs.d)All of the aboveAnswer: d)22The statistical discrepancy in the balance-of-payments accountsa)Arise since recordings of payments and receipts are done atdifferent times, in different places, possibly using different methods.b)Arise since some transactions (illegal transactions?) occur“off the books”.c)Represents omitted and misrecorded transactions.d)All of the aboveAnswer: d)23Regarding the statistical discrepancy in the balance-of-payments accountsa)There is some evidence that financial transactions may be mainlyresponsible for the discrepancy.b)The sum of the balance on the capital account and the statisticaldiscrepancy is very close to the balance of the current account in magnitude.c)It tends to be positive one year and negative in oth ers, so it’ssafe to ignore itd)a) and b)Answer: d)24When a country must make a net payment to foreigners because ofa balance-of-payments deficit, the central bank of the countrya)Should do nothingb)Should run down its official reserve assets (e.g. gold, foreignexchanges, and SDRs)c)Should borrow anew from foreign central banks.d)b) or c) will workAnswer: d)25Continued U.S. trade deficits coupled with foreigners’ desire to diversify their currency holdings away from U.S. dollarsa)could further diminish the position of the dollar as thedominant reserve currencyb)could affect the value of U.S. dollar (e.g. through the currencydiversification decisions of Asian central banks)c)Could lend steam to the emergence of the euro as a crediblereserve currencyd)All of the aboveAnswer: d26Currently, international reserve assets are comprised ofa)gold, platinum, foreign exchanges, and special drawing rights(SDRs)b)gold, foreign exchanges, special drawing rights (SDRs), andreserve positions in the International Monetary Fund (IMF)c)gold, diamonds, foreign exchanges, and special drawing rights(SDRs)d)reserve positions in the International Monetary Fund (IMF),onlyAnswer: b27International reserve assets include “foreign exchanges”. These area)Special Drawing Rights (SDRs) at the IMFb)reserve positions in the International Monetary Fund (IMF)c)Foreign currency held by a country’s central bankd)None of the aboveAnswer: c28The most important international reserve asset, comprising 94 percent of the total reserve assets held by IMF member countries isa)Goldb)Foreign exchangesc)Special Drawing Rights (SDRs)d)Reserve positions in the International Monetary Fund (IMF) Answer: b29The vast majority of the foreign-exchange reserves held by central banks are denominated ina)Local currenciesb)U.S. dollarsc)Yend)EuroAnswer: b30The U.S. Trade Deficita)Is a capital account surplusb)Is a current account deficitc)Is both a capital account surplus and a current account deficitd)None of the aboveAnswer: c31Over the last several years the U.S. has run persistenta)Balance-of-payments deficitsb)Balance-of-payments surplusesc)Current Account deficitsd)Capital Account deficitsAnswer: c32More important than he absolute size of a country’sbalance-of-payments disequilibriuma)is the nature and cause of the disequilibriumb)is whether it is a trade surplus or deficitc)is whether the local government is mercantilist or notd)Nothing is more important than he absolute size of a country’sbalance-of-payments disequilibriumAnswer: aThe Relationship between Balance of Payments and National Income Accounting For questions in this section, the notation isY = GNP = national incomeC = consumptionI = private investmentG = government spendingX = exportsM = imports33National income, or Gross National Product is given by:a)GNP = Y = C + I + G + X + Mb)GNP = Y = C + I + G + X – Mc)GNP = I = C + Y + G + X – Md)GNP = Y = C + I + X + M – GAnswer: b)34Which of the following is a true statement?a)BCA ≡ X – Mb)BKA ≡ X – Mc)BKA –BCA ≡ X – Md)BKA ≡ X – MAnswer a)35There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X–M ≡ (S – I) + (T – G). Given this, which of the following is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)both a) and b) are trued)none of the aboveAnswer c)36There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of the following is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)when BCA is negative, it implies that government budget deficitsan/or part of domestic investment are being finance withforeign-controlled capitald)all of the above are trueAnswer d)37There is an intimate relationship between a country’s B CA and how the country finances its domestic investment and pays forgovernment expenditures. This relationship is given by BCA ≡ X–M ≡ (S – I) + (T – G). Given this, in order for a countryto reduce a BCA deficit, which of the following must occur?a)For a given level of S and I, the government budget deficit (T– G) must be reducedb)For a given level of I and (T – G), S must be increasedc)For a given level of S and (T – G), I must falld)All of the above would work to reduce a BCA deficitAnswer d)Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds andpays out of its bank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and payswith her American Express card.(3) A Indian immigrant living in Los Angeles sends a check drawn onhis L.A. bank account as a gift to his parents living in Bombay.(4) A U.S. computer programmer is hired by a British company forconsulting and gets paid from the U.S. bank account maintained by the British company.In contrast to the U.S., Japan has realized continuous current account surpluses. What could be the main causes for these surpluses? Is it desirable to have continuous current account surpluses?。
国际金融FinanceTestBank2
Chapter 2—International Flow of Funds1. Recently, the U.S. experienced an annual balance of trade representing a ____.large surplus (exceeding $100 billion)a.small surplusb.clevel of zero.deficitd.ANS: D PTS: 12. A high home inflation rate relative to other countries would ____ the home country'scurrent account balance, other things equal. A high growth in the home income levelrelative to other countries would ____ the home country's current account balance, other things equal.aincrease; increase.increase; decreaseb.cdecrease; decrease.decrease; increased.ANS: C PTS: 13. If a country's government imposes a tariff on imported goods, that country's currentaccount balance will likely ____ (assuming no retaliation by other governments).decreasea.bincrease.cremain unaffected.deither A or C are possible.ANS: B PTS: 14. ____ purchases more U.S. exports than the other countries listed here.aItaly.Spainb.cMexico.Canadad.ANS: D PTS: 15. An increase in the current account deficit will place ____ pressure on the home currencyvalue, other things equal.upwarda.bdownward.noc.upward or downward (depending on the size of the deficit)d.ANS: B PTS: 16. If the home currency begins to appreciate against other currencies, this should ____ thecurrent account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same).increasea.bhave no impact on.reducec.dall of the above are equally possible.ANS: C PTS: 17. The International Financial Corporation was established to:a.enhance development solely in Asia through grants.b . enhance economic development through non-subsidized loans (at market interest rates).c . enhance economic development through low-interest rate loans (below-market rates).d . enhance economic development of the private sector through investment in stock of corporations.ANS: D PTS: 18. The World Bank was established to:a.enhance development solely in Asia through grants.b . enhance economic development through non-subsidized loans (at market interest rates).c . enhance economic development through low-interest rate loans (below-market rates).d . enhance economic development of the private sector through investment in stock of corporations.ANS: B PTS: 19. The International Development Association was established to:a.enhance development solely in Asia through grants.b . enhance economic development through non-subsidized loans (at market interest rates).c . enhance economic development through low-interest rate loans (below-market rates).d . enhance economic development of the private sector through investment in stock of corporations.ANS: C PTS: 110. Which of the following would likely have the least direct influence on a country's currentaccount?a.inflation.b.national income.c.exchange rates.d.tariffs.e.a tax on income earned from foreign stocks.ANS: E PTS: 111. The "J curve" effect describes:a . the continuous long-term inverse relationship between a country's current account balance and the country's growth in gross national product.b . the short-run tendency for a country's balance of trade to deteriorate even while its currency is depreciating.c . the tendency for exporters to initially reduce the price of goods when their own currency appreciates.d . the reaction of a country's currency to initially depreciate after the country's inflation rate declines.ANS: B PTS: 112. An increase in the use of quotas is expected to:a . reduce the country's current account balance, if other governments do not retaliate.b . increase the country's current account balance, if other governments do not retaliate.c . have no impact on the country's current account balance unless other governments retaliate.d.increase the volume of a country's trade with other countries.ANS: B PTS: 113. The U.S. typically has a balance-of-trade surplus in its trade with ____.a.Chinab.Japanc.A and Bd none of the aboveANS: D PTS: 114. The North American Free Trade Agreement (NAFTA) increased restrictions on:a.trade between Canada and Mexico.b.trade between Canada and the U.S.c.direct foreign investment in Mexico by U.S. firms.d.none of the above.ANS: D PTS: 115. According to the text, international trade (exports plus imports combined) as a percentageof GDP is:a.higher in the U.S. than in European countries.b.lower in the U.S. than in European countries.c . higher in the U.S. than in about half the European countries, and lower in the U.S. than the others.d.about the same in the U.S. as in European countries.ANS: B PTS: 116. The direct foreign investment positions by U.S. firms have generally ____ over time; thedirect foreign investment positions in the U.S. by non-U.S. firms have generally ____ over time.a.increased; increasedb.increased; decreasedc.decreased; decreasedd.decreased; increasedANS: A PTS: 117. Which of the following is the biggest target of direct foreign investment by U.S. firms?Mexico.a.Japan.b.cUnited Kingdom..Germany.d.ANS: C PTS: 118. The primary component of the current account is the:balance of trade.a.bbalance of money market flows..balance of capital market flows.c.dunilateral transfers..ANS: A PTS: 119. As a result of the European Union, restrictions on exports between ____ were reduced oreliminated.amember countries and the U.S..member countriesb.cmember countries and European non-members.none of the aboved.ANS: B PTS: 120. Over the last several years, international trade (exports plus imports) as a percentage ofGDP has generally:aincreased for most major countries..decreased for most major countries.b.cstayed about constant for most major countries..increased for about half the major countries and decreased for the others.d.ANS: A PTS: 121. Which is not a concern about the North American Free Trade Agreement (NAFTA)?its impact on U.S. inflation.a.bits impact on U.S. unemployment..lower environmental standards in Mexico.c.different health laws for workers in Mexico.d.ANS: A PTS: 122. A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:aincreased trade restrictions outside of North America..lower trade restrictions around the world.b.uniform environmental standards around the world.c.uniform worker health laws.d.ANS: B PTS: 123. Which of the following is mentioned in the text as a possible means by which thegovernment may attempt to improve its balance of trade position (increase its exports or reduce its imports).It could attempt to strengthen its local currency value.a.b . Firms based in a country receive subsidies from their government, produce products, and then export those products at a cheap price.c . Firms based in one country are allowed by their government to offer bribes to large customers when pursuing business deals in a particular industry.d.All of the above are mentioned.ANS: A PTS: 124. The demand for U.S. exports tends to increase when:a.economic growth in foreign countries decreases.b.the currencies of foreign countries strengthen against the dollar.c.U.S. inflation rises.d.none of the above.ANS: B PTS: 125. "Dumping" is used in the text to represent the:a.exporting of goods that do not meet quality standards.b.sales of junk bonds to foreign countries.c.removal of foreign subsidiaries by the host government.d.exporting of goods at prices below cost.ANS: D PTS: 126. ____ is (are) income received by investors on foreign investments in financial assets(securities).a.Portfolio incomeb.Direct foreign incomec.Unilateral transfersd.Factor incomeANS: D PTS: 127. A weak home currency may not be a perfect solution to correct a balance of trade deficitbecause:a.it reduces the prices of imports paid by local companies.b.it increases the prices of exports by local companies.c.it prevents international trade transactions from being prearranged.d . foreign companies may reduce the prices of their products to stay competitive.ANS: D PTS: 128. Intracompany trade makes up approximately ____ percent of all international trade.a.50b.70c.25d.13e.5ANS: A PTS: 129. Like the International Monetary Fund (IMF), the ____ is composed of a collection ofnations as members. However, unlike the IMF, it uses the private rather than thegovernment sector to achieve its objectives.a.World Bankb.International Financial Corporation (IFC)c.World Trade Organization (WTO)dInternational Development Association (IDA).Bank for International Settlements (BIS)e.ANS: B PTS: 130. The World Bank's Multilateral Investment Guarantee Agency (MIGA):aoffers various forms of export insurance..offers various forms of import insurance.b.coffers various forms of exchange rate risk insurance..provides loans to developing countries.d.offers various forms of political risk insurance.e.ANS: E PTS: 131. Also known as the "central banks' central bank," the ____ attempts to facilitatecooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.World Banka.bInternational Financial Corporation (IFC).World Trade Organizationc.dInternational Development Association (IDA).Bank for International Settlements (BIS)e.ANS: E PTS: 132. Direct foreign investment into the U.S. represents a ____.capital inflowa.b trade inflow.ccapital outflow.trade outflowd.ANS: A PTS: 147. A country's net outflow of funds ____ affect its interest rates, and ____ affect itseconomic conditions.does; doesa.bdoes; does not.does not; does notc.does not; doesd.ANS: A PTS: 151. In recent years, the U.S. has had a relatively (compared to other countries) ____ balanceof trade ____ with China.small; surplusa.blarge; surplus.small; deficitc.large; deficitd.ANS: D PTS: 155. Assume the U.S. has a balance of trade surplus with the Country of Thor. Whenindividuals in Thor manufacture CDs and DVDs that look almost exactly like the original product produced in the U.S. and other countries, they ____ the U.S. balance of trade surplus with Thor. This activity is called ____.areduce; flipping.breduce; pirating.increase; piratingc.dincrease; flipping.ANS: B PTS: 156. Japan's annual interest rate has been relatively ____ compared to other countries forseveral years, because the supply of funds in its credit market has been very ____.alow; small.high; smallb.clow; large.high; larged.ANS: C PTS: 157. Without the international capital flows, there would be ____ funding available in the U.S.across all risk levels, and the cost of funding would be ____ regardless of the firm's risk level.more; lowera.bmore; higher.less; lowerc.less; higherd.ANS: D PTS: 166. The ____ is the difference between exports and imports.abalance of trade.b balance on goods and services.cbalance of payments.current accountd.ecapital account.ANS: A PTS: 167. Which of the following will probably not result in an increase in a country's currentaccount balance (assuming everything else constant)?aA decrease in the country's rate of inflation.A decrease in the country's national income levelb.cAn increase in government restrictions in the form of tariffs or quotas .An appreciation of the country's currencyd.eAll of the above will result in an increased current account balance..ANS: D PTS: 168. Which of the following factors probably does not directly affect a country's capitalaccount and its components?Inflationa.Interest ratesb.cWithholding taxes on foreign income.Exchange rate movementsd.eAll of the above will directly affect a country's capital account..ANS: A PTS: 169. The ____, an accord among 117 nations, called for lower tariffs around the world.a.General Agreement on Tariffs and Trade (GATT)b.North American Free Trade Agreement (NAFTA)c.Single European Act of 1987d.European Union Accorde.None of the aboveANS: A PTS: 170. Which of the following is not a "subtle" trade restriction Country X may use againstCountry Y?a.The government of Country X eliminates environmental restrictions.b . The government of Country X subsidizes firms in its country to facilitate dumping.c . The government of Country X provides tax breaks to firms in specific industries.d . The government of Country X imposes a tariff on goods imported from Country Y.e . The government of Country X allows its firms to offer bribes to large customers when pursuing business deals.ANS: D PTS: 171. Which of the following statements is not true?a . Exporters may complain that they are being mistreated because the currency of their country is too weak.b . Outsourcing affects the balance of trade because it means that a service is purchased in another country.c.Sometimes, trade policies are used to punish countries for various actions.d . Tariffs imposed by the EU have caused some friction between EU countries that commonly import products and other EU countries.e.All of the above are true. ANS: A PTS: 172. Which of the following would increase the current account of Country X? Country Y isCountry X's sole trading partner.a.Inflation increases in countries X and Y by comparable amounts.b.Country X's and Country Y's currencies depreciate by the same amount.c . Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports.d . The central banks of Country X and Country Y reduce the money supply to increase interest rates.e . Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports.ANS: D PTS: 173. ____ represent aid, grants, and gifts from one country to another.a.Transfer paymentsb.Factor incomec.The balance of traded.The balance of paymentse.The capital accountANS: A PTS: 174. Which of the following is not a goal of the International Monetary Fund (IMF)?a.To promote cooperation among countries on international monetary issuesb.To promote stability in exchange ratesc . To enhance a country's long-term economic growth via the extension of structural adjustment loansd.To promote free tradee.To promote free mobility of capital funds across countriesANS: C PTS: 175. According to the "J curve effect," a weakening of the U.S. dollar relative to its tradingpartners' currencies would result in an initial ____ in the current account balance,followed by a subsequent ____ in the current account balance.decrease; increasea.increase; decreaseb.cdecrease; decrease.increase; increased.ANS: A PTS: 1。
国际金融英文版习题
Chapter1 balance of paymentsBalance of Payments Accounting1Balance of paymentsa)is defined as the statistical record of a country’s international transactions over acertain period of time presented in the form of a double-entry bookkeepingb)provides detailed information concerning the demand and supply of a country’scurrencyc)can be used to evaluate the performance of a country in international economiccompetitiond)all of the aboveAnswer: d2Generally speaking, any transaction that results in a receipt from foreignersa)Will be recorded as a debit, with a negative sign, in the U.S. balance ofpaymentsb)Will be recorded as a debit, with a positive sign, in the U.S. balance ofpaymentsc)Will be recorded as a credit, with a negative sign, in the U.S. balance ofpaymentsd)Will be recorded as a credit, with a positive sign, in the U.S. balance ofpaymentsAnswer d3 Generally speaking, any transaction that results in a payment to foreignerse)Will be recorded as a debit, with a negative sign, in the U.S. balance ofpaymentsf)Will be recorded as a debit, with a positive sign, in the U.S. balance ofpaymentsg)Will be recorded as a credit, with a negative sign, in the U.S. balance ofpaymentsh)Will be recorded as a credit, with a positive sign, in the U.S. balance ofpaymentsAnswer a)4 Suppose the McDonalds Corporation imports 100 tons of Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef Conglomerate.i)Payment by McDonalds will be recorded as a debitj)The deposit of the funds by the seller will be recorded as a debitk)Payment by McDonalds will be recorded as a creditl)The deposit of the funds by the buyer will be creditAnswer: a5Since the balance of payments is presented as a system of double-entry bookkeeping,a)Every credit in the account is balanced by a matching debitb)Every debit in the account is balanced by a matching creditc)a) and b) are both trued)None of the aboveAnswer c)6 A country’s international transactions can be grouped into the following threemain types:a)current account, medium term account, and long term capital accountb)current account, long term capital account, and official reserve accountc)current account, capital account, and official reserve accountd)capital account, official reserve account, trade accountAnswer: c7Invisible trade refers to:a)services that avoid tax paymentsb)underground economyc)legal, consulting, and engineering servicesd)tourist expenditures, onlyAnswer: c8The current account is divided into four finer categories:a)Merchandise trade, services, income, and statistical discrepancy.b)Merchandise trade, services, income, and unilateral transfersc)Merchandise trade, services, portfolio investment, and unilateral transfersd)Merchandise trade, services, factor income, and direct investment Answer: b9Factor incomea)Consists largely of interest, dividends, and other income on foreigninvestments.b)Is a theoretical construct of the factors of production, land, labor, capital,and entrepreneurial ability.c)Is generally a very minor part of national income accounting, smaller thanthe statistical discrepancy.d)None of the aboveAnswer: aUSE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS10 The entries in the “current account” and the “capital account”, combined together, can be outlined (in alphabetic order) as:(i)- direct investment(ii)- factor income (iii)- merchandise (iv)- official (v)- other capital (vi)- portfolio investment(vii)- private transfertransfer (viii)- services11Current account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: b12Capital account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: d13The difference between Foreign Direct Investment and Portfolio Investment is that:a)Portfolio Investment mostly represents the sale and purchase of foreignfinancial assets such as stocks and bonds that do not involve a transfer ofcontrol.b)Foreign Direct Investment mostly represents the sale and purchase of foreignfinancial assets such as stocks whereas Portfolio Investment mostly involvesthe sales and purchase of foreign bonds.c)Foreign direct investment is about buying land and building factories, whereasportfolio investment is about buying stocks and bonds.d)All of the aboveAnswer: a14In the latter half of the 1980s, with a strong yen, Japanese firmsa)Faced difficulty exportingb)Could better afford to acquire U.S. assets that had become less expensive interms of yen.c)Financed a sharp increase in Japanese FDI in the United Statesd)All of the aboveAnswer: d15International portfolio investments have boomed in recent years, as a result ofa)A depreciating U.S. dollarb)Increased gasoline and other commodity prices.c)The general relaxation of capital controls and regulation in many countriesd)None of the aboveAnswer: cAnswer: c)16The capital account measuresa)The sum of U.S. sales of assets to foreigners and U.S. purchases of foreignassets.b)The difference between U.S. sales of assets to foreigners and U.S. purchases offoreign assets.c)The difference between U.S. sales of manufactured goods to foreigners and U.S.purchases of foreign products.d)None of the aboveAnswer: b) page 6417When Honda, a Japanese auto maker, built a factory in Ohio,a)It was engaged in foreign direct investmentb)It was engaged in portfolio investmentc)It was engaged in a cross-border acquisitiond)None of the above.Answer: a) page 64.18The capital account may be divided into three categories:a)Cross-border mergers and acquisitions, portfolio investment, and otherinvestmentb)Direct investment, portfolio investment, and Cross-border mergers andacquisitionsc)Direct investment, mergers and acquisitions, and other investmentd)Direct investment, portfolio investment, and other investmentAnswer: d)19When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only bought a non-controlling number of shares of the firma)Nestlé would have been engaged in portfolio investmentb)Nestlé would have been engaged in a cross-border acquisitionc)It would depend if they bought the shares from an American or a Canadiand)None of the above.Answer: a)20Foreign direct investment (FDI) occursa)when an investor acquires a measure of control of a foreign businessb)when there is an acquisition, by a foreign entity in the U.S., of 10 percent ormore of the voting shares of a businessc)with sales and purchases of foreign stocks and bonds that do not involve atransfer of controld)a and bAnswer: d21Statistical discrepancy, which by definition represents errors and omissionsa)Cannot be calculated directlyb)Is calculated by taking into account the balance-of-payments identityc)Probably has some elements that are honest mistakes, it can’t all be moneylaundering and drugs.d)All of the aboveAnswer: d)22The statistical discrepancy in the balance-of-payments accountsa)Arise since recordings of payments and receipts are done at different times, indifferent places, possibly using different methods.b)Arise since some transactions (illegal transactions?) occur “off the books”.c)Represents omitted and misrecorded transactions.d)All of the aboveAnswer: d)23Regarding the statistical discrepancy in the balance-of-payments accountsa)There is some evidence that financial transactions may be mainly responsiblefor the discrepancy.b)The sum of the balance on the capital account and the statistical discrepancy isvery close to the balance of the current account in magnitude.c)It tends to be positive one year and negative in oth ers, so it’s safe to ignore itd)a) and b)Answer: d)24When a country must make a net payment to foreigners because of a balance-of-payments deficit, the central bank of the countrya)Should do nothingb)Should run down its official reserve assets (e.g. gold, foreign exchanges, andSDRs)c)Should borrow anew from foreign central banks.d)b) or c) will workAnswer: d)25Continued U.S. trade deficits coupled with foreigners’ desire to diversify their currency holdings away from U.S. dollarsa)could further diminish the position of the dollar as the dominant reservecurrencyb)could affect the value of U.S. dollar (e.g. through the currency diversificationdecisions of Asian central banks)c)Could lend steam to the emergence of the euro as a credible reserve currencyd)All of the aboveAnswer: d26Currently, international reserve assets are comprised ofa)gold, platinum, foreign exchanges, and special drawing rights (SDRs)b)gold, foreign exchanges, special drawing rights (SDRs), and reserve positions inthe International Monetary Fund (IMF)c)gold, diamonds, foreign exchanges, and special drawing rights (SDRs)d)reserve positions in the International Monetary Fund (IMF), onlyAnswer: b27International reserve assets include “foreign exchanges”. These area)Special Drawing Rights (SDRs) at the IMFb)reserve positions in the International Monetary Fund (IMF)c)Foreign currency held by a country’s central bankd)None of the aboveAnswer: c28The most important international reserve asset, comprising 94 percent of the total reserve assets held by IMF member countries isa)Goldb)Foreign exchangesc)Special Drawing Rights (SDRs)d)Reserve positions in the International Monetary Fund (IMF)Answer: b29The vast majority of the foreign-exchange reserves held by central banks are denominated ina)Local currenciesb)U.S. dollarsc)Yend)EuroAnswer: b30The U.S. Trade Deficita)Is a capital account surplusb)Is a current account deficitc)Is both a capital account surplus and a current account deficitd)None of the aboveAnswer: c31Over the last several years the U.S. has run persistenta)Balance-of-payments deficitsb)Balance-of-payments surplusesc)Current Account deficitsd)Capital Account deficitsAnswer: c32More important than he absolute size of a country’s balance-of-payments disequilibriuma)is the nature and cause of the disequilibriumb)is whether it is a trade surplus or deficitc)is whether the local government is mercantilist or notd)Nothing is more important than he absolute size of a country’sbalance-of-payments disequilibriumAnswer: aThe Relationship between Balance of Payments and National Income Accounting For questions in this section, the notation isY = GNP = national incomeC = consumptionI = private investmentG = government spendingX = exportsM = imports33National income, or Gross National Product is given by:a)GNP = Y = C + I + G + X + Mb)GNP = Y = C + I + G + X – Mc)GNP = I = C + Y + G + X – Md)GNP = Y = C + I + X + M – GAnswer: b)34Which of the following is a true statement?a)BCA ≡ X – Mb)BKA ≡ X – Mc)BKA –BCA ≡ X – Md)BKA ≡ X – MAnswer a)35There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of thefollowing is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savings is insufficient tofinance domestic investment.b)If (T –G) < 0, it implies that a country’s tax revenue is insufficient to financegovernment spendingc)both a) and b) are trued)none of the aboveAnswer c)36There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, which of thefollowing is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savings is insufficient tofinance domestic investment.b)If (T – G) < 0, it implies that a country’s tax revenue is insufficient to financegovernment spendingc)when BCA is negative, it implies that government budget deficits an/or part ofdomestic investment are being finance with foreign-controlled capitald)all of the above are trueAnswer d)37There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. Thisrelationship is given by BCA ≡ X –M ≡ (S – I) + (T – G). Given this, in order for acountry to reduce a BCA deficit, which of the following must occur?a)For a given level of S and I, the government budget deficit (T – G) must bereducedb)For a given level of I and (T – G), S must be increasedc)For a given level of S and (T – G), I must falld)All of the above would work to reduce a BCA deficitAnswer d)Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds and pays out of itsbank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and pays with her AmericanExpress card.(3) A Indian immigrant living in Los Angeles sends a check drawn on his L.A. bankaccount as a gift to his parents living in Bombay.(4) A U.S. computer programmer is hired by a British company for consulting and gets paid fromthe U.S. bank account maintained by the British company.In contrast to the U.S., Japan has realized continuous current account surpluses. Whatcould be the main causes for these surpluses? Is it desirable to have continuous current account surpluses?。
国际金融(英文版第二版)Chapter 2 Theories of Balance of Payment
Transforming equation (2.2) into difference form yields:
dCA=dY-dA (2.3)
Thus the change in total absorption, dA, is given by:
dA=adY+dAd (2.4)
Chapter 2 Theories of bala
2.1 The elasticity approach to the balance of payments
This
approach provides an analysis of what happens to the current account balance when the country devalues its currency. The central message of the elasticity approach is that there are two direct effects of a devaluation on the current balance.
Taking the equation for national income:
Y=C+I+G+X-M (2.1)
2.2 The absorption approach to the balance of payments And defining domestic absorption as A=C+I+G, then we can get:
Figure 2.2 The money supply and reserves
Monetarists observe that the overall balance of payments can be thought of as consisting of the current account balance, the capital account balance, and change in the authorities’ reserves. That is: BP=CA+K=dR=0 So that:
国际金融英文版习题
Chapter1 balance of paymentsBalance of Payments Accounting1Balance of paymentsa)is defined as the statistical record of a country’sinternational transactions over a certain period of timepresented in the form of a double-entry bookkeepingb)provides detailed information concerning the demand and supplyof a country’s currencyc)can be used to evaluate the performance of a country ininternational economic competitiond)all of the aboveAnswer: d2Generally speaking, any transaction that results in a receipt from foreignersa)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsb)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsc)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsd)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer d3 Generally speaking, any transaction that results in a payment to foreignerse)Will be recorded as a debit, with a negative sign, in the U.S.balance of paymentsf)Will be recorded as a debit, with a positive sign, in the U.S.balance of paymentsg)Will be recorded as a credit, with a negative sign, in the U.S.balance of paymentsh)Will be recorded as a credit, with a positive sign, in the U.S.balance of paymentsAnswer a)4 Suppose the McDonalds Corporation imports 100 tons of Canadian beef, paying for it by transferring the funds to a New York bank account kept by the Canadian Beef Conglomerate.i)Payment by McDonalds will be recorded as a debitj)The deposit of the funds by the seller will be recorded as a debit k)Payment by McDonalds will be recorded as a creditl)The deposit of the funds by the buyer will be creditAnswer: a5Since the balance of payments is presented as a system of double-entry bookkeeping,a)Every credit in the account is balanced by a matching debitb)Every debit in the account is balanced by a matching creditc)a) and b) are both trued)None of the aboveAnswer c)6 A country’s international transactions can be grouped into thefollowing three main types:a)current account, medium term account, and long term capitalaccountb)current account, long term capital account, and officialreserve accountc)current account, capital account, and official reserveaccountd)capital account, official reserve account, trade account Answer: c7Invisible trade refers to:a)services that avoid tax paymentsb)underground economyc)legal, consulting, and engineering servicesd)tourist expenditures, onlyAnswer: c8The current account is divided into four finer categories:a)Merchandise trade, services, income, and statisticaldiscrepancy.b)Merchandise trade, services, income, and unilateraltransfersc)Merchandise trade, services, portfolio investment, andunilateral transfersd)Merchandise trade, services, factor income, and directinvestmentAnswer: b9Factor incomea)Consists largely of interest, dividends, and other income onforeign investments.b)Is a theoretical construct of the factors of production, land,labor, capital, and entrepreneurial ability.c)Is generally a very minor part of national income accounting,smaller than the statistical discrepancy.d)None of the aboveAnswer: aUSE THE FOLLOWING INFORMATION TO ANSWER THE NEXT TWO QUESTIONS10 The entries in the “current account” and the “capital account”, combined together, can be outlined (in alphabetic order) as:(i)- direct investment(ii)- factor income (v)- other capital (vi)- portfolio investment(iii)- merchandise (iv)- official transfer (vii)- private transfer(viii)- services11Current account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: b12Capital account includesa)(i), (ii), and (iii)b)(ii), (iii), and (vii)c)(iv), (v), and (vii)d)(i), (v), and (vi)Answer: d13The difference between Foreign Direct Investment and Portfolio Investment is that:a)Portfolio Investment mostly represents the sale and purchase offoreign financial assets such as stocks and bonds that do not involve a transfer of control.b)Foreign Direct Investment mostly represents the sale and purchaseof foreign financial assets such as stocks whereas PortfolioInvestment mostly involves the sales and purchase of foreignbonds.c)Foreign direct investment is about buying land and buildingfactories, whereas portfolio investment is about buying stocks and bonds.d)All of the aboveAnswer: a14In the latter half of the 1980s, with a strong yen, Japanese firmsa)Faced difficulty exportingb)Could better afford to acquire U.S. assets that had become lessexpensive in terms of yen.c)Financed a sharp increase in Japanese FDI in the United Statesd)All of the aboveAnswer: d15International portfolio investments have boomed in recent years, asa result ofa)A depreciating U.S. dollarb)Increased gasoline and other commodity prices.c)The general relaxation of capital controls and regulation in manycountriesd)None of the aboveAnswer: cAnswer: c)16The capital account measuresa)The sum of U.S. sales of assets to foreigners and U.S. purchasesof foreign assets.b)The difference between U.S. sales of assets to foreigners and U.S.purchases of foreign assets.c)The difference between U.S. sales of manufactured goods toforeigners and U.S. purchases of foreign products.d)None of the aboveAnswer: b) page 6417When Honda, a Japanese auto maker, built a factory in Ohio,a)It was engaged in foreign direct investmentb)It was engaged in portfolio investmentc)It was engaged in a cross-border acquisitiond)None of the above.Answer: a) page 64.18The capital account may be divided into three categories:a)Cross-border mergers and acquisitions, portfolio investment, andother investmentb)Direct investment, portfolio investment, and Cross-bordermergers and acquisitionsc)Direct investment, mergers and acquisitions, and otherinvestmentd)Direct investment, portfolio investment, and other investment Answer: d)19When Nestlé, a Swiss firm, bought the American firm Carnation, it was engaged in foreign direct investment. If Nestlé had only boughta non-controlling number of shares of the firma)Nestlé would have been engaged in portfolio investmentb)Nestlé wo uld have been engaged in a cross-border acquisitionc)It would depend if they bought the shares from an American or aCanadiand)None of the above.Answer: a)20Foreign direct investment (FDI) occursa)when an investor acquires a measure of control of a foreignbusinessb)when there is an acquisition, by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a businessc)with sales and purchases of foreign stocks and bonds that do notinvolve a transfer of controld)a and bAnswer: d21Statistical discrepancy, which by definition represents errors and omissionsa)Cannot be calculated directlyb)Is calculated by taking into account the balance-of-paymentsidentityc)Probably has some elements that are honest mistakes, it can’tall be money laundering and drugs.d)All of the aboveAnswer: d)22The statistical discrepancy in the balance-of-payments accountsa)Arise since recordings of payments and receipts are done atdifferent times, in different places, possibly using different methods.b)Arise since some transactions (illegal transactions?) occur“off the books”.c)Represents omitted and misrecorded transactions.d)All of the aboveAnswer: d)23Regarding the statistical discrepancy in the balance-of-payments accountsa)There is some evidence that financial transactions may be mainlyresponsible for the discrepancy.b)The sum of the balance on the capital account and the statisticaldiscrepancy is very close to the balance of the current account in magnitude.c)It tends to be positive one year and negative in others, so it’ssafe to ignore itd)a) and b)Answer: d)24When a country must make a net payment to foreigners because of a balance-of-payments deficit, the central bank of the countrya)Should do nothingb)Should run down its official reserve assets (e.g. gold, foreignexchanges, and SDRs)c)Should borrow anew from foreign central banks.d)b) or c) will workAnswer: d)25Continued U.S. trade deficits coupled with foreigners’ desire to diversify their currency holdings away from U.S. dollarsa)could further diminish the position of the dollar as the dominantreserve currencyb)could affect the value of U.S. dollar (e.g. through the currencydiversification decisions of Asian central banks)c)Could lend steam to the emergence of the euro as a credible reservecurrencyd)All of the aboveAnswer: d26Currently, international reserve assets are comprised ofa)gold, platinum, foreign exchanges, and special drawing rights(SDRs)b)gold, foreign exchanges, special drawing rights (SDRs), andreserve positions in the International Monetary Fund (IMF)c)gold, diamonds, foreign exchanges, and special drawing rights(SDRs)d)reserve positions in the International Monetary Fund (IMF), only Answer: b27International reserve assets include “foreign exchanges”. These area)Special Drawing Rights (SDRs) at the IMFb)reserve positions in the International Monetary Fund (IMF)c)Foreign currency held by a country’s central bankd)None of the aboveAnswer: c28The most important international reserve asset, comprising 94 percent of the total reserve assets held by IMF member countries isa)Goldb)Foreign exchangesc)Special Drawing Rights (SDRs)d)Reserve positions in the International Monetary Fund (IMF) Answer: b29The vast majority of the foreign-exchange reserves held by central banks are denominated ina)Local currenciesb)U.S. dollarsc)Yend)EuroAnswer: b30The U.S. Trade Deficita)Is a capital account surplusb)Is a current account deficitc)Is both a capital account surplus and a current account deficitd)None of the aboveAnswer: c31Over the last several years the U.S. has run persistenta)Balance-of-payments deficitsb)Balance-of-payments surplusesc)Current Account deficitsd)Capital Account deficitsAnswer: c32More important than he absolute size of a country’s balance-of-payments disequilibriuma)is the nature and cause of the disequilibriumb)is whether it is a trade surplus or deficitc)is whether the local government is mercantilist or notd)Nothing is more important than he absolute size of a country’sbalance-of-payments disequilibriumAnswer: aThe Relationship between Balance of Payments and National Income Accounting For questions in this section, the notation isY = GNP = national incomeC = consumptionI = private investmentG = government spendingX = exportsM = imports33National income, or Gross National Product is given by:a)GNP = Y = C + I + G + X + Mb)GNP = Y = C + I + G + X – Mc)GNP = I = C + Y + G + X – Md)GNP = Y = C + I + X + M – GAnswer: b)34Which of the following is a true statement?a)BCA ≡ X – Mb)BKA ≡ X – Mc)BKA –BCA ≡ X – Md)BKA ≡ X – MAnswer a)35There is an intimate relationship betwe en a country’s BCA and how the country finances its domestic investment and pays for governmentexpenditures. This relationship is given by BCA ≡ X –M ≡ (S –I) + (T –G). Given this, which of the following is a true statement?a)If (S – I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)both a) and b) are trued)none of the aboveAnswer c)36There is an intim ate relationship between a country’s BCA and how the country finances its domestic investment and pays for government expenditures. This relationship is given by BCA ≡ X –M ≡ (S –I) + (T –G). Given this, which of the following is a true statement?a)If (S –I) < 0, it implies that a country’s domestic savingsis insufficient to finance domestic investment.b) If (T –G) < 0, it implies that a country’s tax revenue isinsufficient to finance government spendingc)when BCA is negative, it implies that government budget deficitsan/or part of domestic investment are being finance withforeign-controlled capitald)all of the above are trueAnswer d)37There is an intimate relationship between a country’s BCA and how the country finances its domestic investment and pays for governmentexpenditures. This relationship is given by BCA ≡ X –M ≡ (S –I) + (T – G). Given this, in order for a country to reduce a BCAdeficit, which of the following must occur?a)For a given level of S and I, the government budget deficit (T– G) must be reducedb)For a given level of I and (T – G), S must be increasedc)For a given level of S and (T – G), I must falld)All of the above would work to reduce a BCA deficitAnswer d)Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds and paysout of its bank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and payswith her American Express card.(3) A Indian immigrant living in Los Angeles sends a check drawn onhis L.A. bank account as a gift to his parents living in Bombay.(4) A U.S. computer programmer is hired by a British company for consulting andgets paid from the U.S. bank account maintained by the British company.In contrast to the U.S., Japan has realized continuous current account surpluses. What could be the main causes for these surpluses? Is it desirable to have continuous current account surpluses?。
国际金融英文版ChapterTwo
PPT文档演模板
国际金融英文版ChapterTwo
重要说明
偏差
PPT文档演模板
国际金融英文版ChapterTwo
此研究方法给我们的启发
³ 我国能源的短缺
PPT文档演模板
国际金融英文版ChapterTwo
结束句
谢谢
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国际金融英文版ChapterTwo
Fundamentals of BOP Accounting
New York bank deposits.
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国际金融英文版ChapterTwo
Fundamentals of BOP Accounting
3. How do we record transactions between residents and nonresidents
A set of accounts(p14-18)
³ Each transaction, involves two opposite flows of equal value. ³ For example: ³ The U.S. government sells $29 million worth of wheat to Russia, being paid
Debit: unilateral transfer $8 million
Credit: goods
$8 million
PPT文档演模板
国际金融英文版ChapterTwo
Account name
Debit
Current account
67
Goods
34(2)
Services
Income
25(4)
•Financia l account
国际金融Chapter Two
• A debit (-) is a flow for which the country must pay. Such as : • The country’s imports of goods; • Purchases by firms in this country of consulting services from providers located in foreign countries; • Purchases by investors in this country of the equity shares of a foreign company from the foreigner that previously owned the shares. • In each of these cases is obligated to make a payment to a foreigner.
The U.S. government simply gives $8 million in foreign aid to the government of Egypt in the form of wheat from U.S. government stockpiles.
• Credit(+) Debit(-) • Merchandise export $8 • Unilateral transfer to Egypt $8
• The $ 8 million credit is straightforward since this is just another merchandise export, for which the United States must be paid. • The accountants get around the fact that the United States was not paid by Egypt by inventing a debit item for the unilateral transfer (gift) to Egypt. They invent the fiction that the United States received $ 8 million in goodwill- or gratitude- from Egypt for its gift of wheat.
国际金融(并不是考试题)
Chapter 2 Payments among Nations1）What is the current account balance of a nation with a government budget deficit of ＄128 billion, private saving of ＄806 billion, and domestic capital formation of ＄777 billion?2) “A country is better off running a curr ent account surplus rather than a current account deficit.” Do you agree or disagree? Explain.3). An annual statement of all the transactions between one country and the rest of the world, is called that country's:a. dollar outpayments.b. international transactions statement.c. current capital campaign.d. all of the above4). In the international transactions statement, merchandise trade, exchange of services and transfers of capital are divided into those giving rise to__________________ (plus or credit items) and those resulting in__________ (negative or debit items).a. credit accounts and credit debitsb. dollars and capitalc. currents and accountsd. dollar inpayments and dollar outpayments5). The current account component of the statement includes transactionsin goods and services; while purchases and sales of assets make up the:a. capital account.b. current capital.c. current purchases.d. none of the above6). In terms of the current account, if US merchandise exports total 900 million dollars and US merchandise imports total 1500 million dollars, then the balance of trade on US merchandise trade would be:a. a 2100 million dollar credit.b. 2100 million dollars.c. a 600 million dollar deficit.d. a 900 million dollar deficit.Chapter 3 The Foreign Exchange Market1）What are the major types of transactions or activities that result in demand for foreign currency in the spot foreign exchange market?2）You have access to the following three spot exchange rates:$0.01/Yen$0.20/krone25Yen/kroneYou start with dollars and want to end up with dollars.A）How would you engage in arbitrage to profit form these three rates? What is the profit for each dollar use initially?B）As a result of this arbitrage, What is the pressure on the cross-rate between Yen and krone? What must the value of the cross-rate be to eliminate the opportunity for triangular arbitrage?3). If the dollar-euro exchange rate moved from $1=0.5€ to $1=1€, then the dollar would have ___________ and the euro would have ______________.a. depreciated; decreasedb. appreciated; depreciatedc. fluctuated; improvedd. supplied; demanded4). Increases in U.S. interest rates raise the exchange value of the dollar by:a. forcing other countries to get rid of dollars.b. lowering demand for the dollar.c. raising demand for the dollar.d. none of the above5). Increasing the money supply through monetary expansion causes inflation and price increases which, in turn, causes _________________ in interest rates, the exchange rate and demand for the dollar.a. increasesb. decreasesc. triangular floatsd. long positionsChapter 4 Forward Exchange and International Financial Investment1）The following rates are available in the markets:Current spot exchange rate : ＄0.500/SFrCurrent 30-day forward exchange rate: ＄0.505/SFrAnnualized interest rate on 30-day dollar-denominated bonds:12%(1% for 30 days)Annualized interest rate on 30-day Swiss franc-denominated bonds:6%(0.5% for 30 days)A）Is the Swiss franc at a forward premium or discount?B）Should a U.S.-based investor make a covered investment in Swissfranc-denominated 30-day bonds, rather than investing in 30-daydollar-denominated bonds? Explain.C）Because of covered interest arbitrage, what pressures are placed on the various rates? If the only rate that actually changes is the forward exchange rate, to what value will it be driven?Chapter 5 What Determines Exchange Rates?1）According to PPP and the monetary approach, why did the nominal exchange rate value of the DM ( relative to the dollar) rise between the early 1970s and the late 1990s?Why did the nominal exchange rate value of the pound decline? 2）Will the law of one price apply better to gold or to Big Macs? Why?Chapter 6 Government Policies toward the Foreign Exchange Market1）What is the difference between a clean float and a managed float?2）Why did the Britton Woods system of fixed exchange rates collapse? 3). During the period known as the gold standard (1870-1914), gold was the official reserve asset and the common denominator in terms of which all currencies as well as the exchange ratios between these currencies were:a. unsterilized.b. divided.c. floated.d. fixed.4). After WWII, during the Bretton Woods period of 1944-1973 gold was replaced by ____________ as the common denominator fixing all currencies.a. silverb. the euroc. the U.S. dollard. none of the aboveChapter 7 International Lending and Financial Crises1）“It is best for a country never to borrow from foreign lenders.” Do you agree or disagree? Why?2）How could each of the following cause or contribute to a financial crisis in a developing country?A）A large amount of short-term debt denominated in dollars.B）A financial crisis in another developing country in the region.Chapter 8 How Does the Open Macro-economy Work?1）How does the intersection of the IS and LM curves relate to the concept of internal balance?2). Monetary policies influence the economy through control of__________________, while fiscal policies affect _____________.a. the money supply and government revenues/expendituresb. wages and the printing of new moneyc. the removal of useless coins and the interest rated. none of the above3). In 1996, when the IMF loaned Russia $10 billion, the IMF required Russia to tighten its fiscal policy. This type of demand is called the IMF's:a. investment guides.b. loan rules.c. price rate positionings.d. conditionality policies.4). To reinforce automatic adjustment mechanisms, countries pursue specific fiscal (raising/lowering taxes on governmental expenditures) and monetary (contracting/expanding the money supply) policies called________________.a. conditionalityb. expenditure-changing policiesc. inflation reduction notesd. deficit or surplus bustingChapter 9 Internal and External Balance with Fixed Exchange Rates1）A country with a fixed exchange rate has achieved external balance. Government spending then increases in an effort to reduce unemployment. What is the effect of this policy change on the country’s official settlements balance? If the central bank uses unspecialized intervention to defend the fixed rate, will intervention tend to reduce the expansionary effect of the fiscal policy?Chapter 10 Floating Exchange Rates and Internal Balance1）“A drop in the foreign demand for our exports has a larger effect on our domestic product and income under floating exchange rates than it would under fixed exchange rates.” Do you agree or disagree? Why?Chapter 11 National and Global Choices: Floating Rates and the Alternatives 1）What is a good choice: Fixed exchange rate or Floating exchange rate?。
(新英文)“国际金融”课后计算题答案
Chapter 1：9. Net debtor nation of the amount $25 billion.10. a. Merchandise trade balance, $75 billion deficit. Services balance, $60 billion surplus. Goods and services balance, $15 billion deficit. Investment income balance, $5 billion surplus. Unilateral transfers balance, $20 billion deficit. Current account balance, $30 billion deficit.b. Current account. The current account deficit implies that the United States is anet-demander of funds from the rest of the world.11. a-debit; b-credit; c-credit; d-debit; e-debit; f-debit; g-credit; h-debit; i-debit.Chapter 2：1. An arbitrager could purchase 3 francs with $1, purchase 6 schilling with 3 francs, and sell 6schilling for $1.50. Ignoring transaction costs, the arbitrager realizes a $0.50 profit on the transactions.2. a. The U.S. speculator should sell francs today for delivery in 3 months at today'sforward rate of the franc, which equals $0.50.b. After 3 months, if the franc's spot rate is $0.40, the speculator can purchase francsat the price of $0.40 each and deliver them for the previously contracted rate of$0.50 per franc; the speculator realizes a profit of $0.10 on each franc which theforward contract specifies. If the franc's spot rate after 3 months is $0.60, thespeculator must purchase francs at a price of $0.60 per franc and resell them at aprice of $0.50 per franc; the speculator would suffer losses of $0.10 on each francspecified in the forward contract. If the franc's spot rate after 3 months is $0.50,the speculator realizes neither a profit nor a loss on the transaction.3. a. The U.S. importer can cover her foreign exchange risk by purchasing 20,000 poundsfor three-month delivery at today's three-month forward rate of $1.75 per pound.The importer is willing to pay 5 cents more per pound than today's spot rate toguard against the possibility that the spot rate in three months will exceed $1.70 perpound. In three months, when her payments are due, the importer will pay$35,000 and get the 20,000 pounds needed for payment, irrespective of what thepound's spot rate is at that time.b. If the spot rate of the pound in three months is $1.80 per pound, and the U.S.importer does not obtain forward cover, she must pay $36,000 for the 20,000pounds; this amount exceeds by $1000 the cost of the pounds she incurs byhedging.4. a. 1.7090, 1.7105, 1.7084, 1.7099, 1.7081, 1.7096, 1.7090, 1.7103.b. $0.5851 per franc, $1.7090 francs per dollar.c. Depreciated, appreciated.d. $58.51, 170.9 francs.e. The 30-day forward franc was at a premium of $.0002 which equals 0.4 percent onan annual basis. The 90-day forward franc was at a premium of $.0003 whichequals 0.2 percent on an annual basis.5. Arbitragers will buy pounds in New York, at $1.69 per pound, and sell pounds in London, at$1.71 per pound, thus making a profit of 2 cents on each pound. As pounds are bought in New York, their prices rises; as pounds are sold in London, their price falls. When the dollar price of the pound equalizes in the financial centers, the profitability of arbitrage ceases and the practice stops.6. a. The U.S. investor would purchase pounds on the spot market at $2 per pound, anduse the pounds to buy U.K. treasury bills in London; he would earn 4 percentannually more than he would if he had purchased U.S. treasury bills in New York.b. Yes, by 0.5 percent.7. a. $1.50 per pound. 30 pounds are purchased at a cost of $45.b. Excess supply, 20 pounds. Dollar price of the pound decreases, decrease, increase.c. E xcess demand, 20 pounds. Dollar price of the pound increases, increase, decrease.Chapter 3：1. a. - 2 percent in the U.S., 2 percent in the U.K.b. Investment would flow from the U.S. to the U.K.c. T he dollar would depreciate against the pound.2. The dollar's exchange rate will:a. Depreciateb. Appreciatec. Appreciated. Appreciatee. Depreciatef. Depreciateg. Appreciate3. a. Dollar depreciates by 10 percent, to approximately $0.55 per franc.b. Dollar appreciates by 10 percent, to approximately $0.45 per franc.c. Dollar appreciates by 15 percent, to approximately $0.43 per franc.d. Dollar depreciates by 5 percent, to approximately $0.53 per franc.4. In the short run, changes in exchange rates are caused by relative interest rates and expectedchanges in exchange rates.5.More expensive, less expensive, increased, decreased7. a. Falseb. Truec. TrueChapter 5：1. a. Export quantity 1000Export price $3000Export receipts $3 millionImport quantity 150Import price $20,000Import payments $3 millionTrade balance $0b. The dollar depreciation improves (worsens) the U.S. trade balance when the sum ofthe export-demand elasticity and the import-demand elasticity are greater (less)than 1.0.c. Because the sum of the export-demand elasticity and the import-demand elasticityare less than 1.0, the U.S. trade balance will worsen.3. The 50 percent dollar appreciation results in a less-than 50 percent increase in the firm'sproduction cost in terms of the peso.7. The 50 percent dollar appreciation results in a 50 percent increase in the firm's production costin terms of the peso.。
国际金融英文版课后答案
国际⾦融英⽂版课后答案International Finance 国际⾦融Notes to the answers: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 stock or stock indexes.There are mainly three types of derivatives: futures, options and swaps, each of which involves a mix of financial contracts. /doc/c3db77c2f68a6529647d27284b73f242336c31b8.html 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 mechanism. Areliable clearing mechanism which can settle inter-bank transaction with high efficiency is crucial to a well-operated financial system.Chapter 4 Answers: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 ofthe 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 to money denomi nated in the currency of anothernation 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“set tlement” is the final and unconditional 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 transactionand 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 subsequent 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 sell the 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 underlyingspot 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 the settlement, 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 macroeconomic strategy 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 by telephone.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 onewishes 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 earnings multiplier, 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)。
国际金融英文版习题chapter2
1International FinanceAssignment Problems (2) Name: Student No.:I. Choose the correct answer for the following questions (only ONE correct answer)(5 credits for each question, total credits 4 x 15 = 60)1. According to the principle of the balanced balance of payments, if a country reduces its foreign exchange reserves by $20 million and the statistical discrepancy is in the credit entry of $5 million in a given period of time, the country runs __________ of its balance of payments during that period of time.A. $15 million deficitsB. $25 million deficitsC. $20 million deficitsD. $5 million deficits2. If a country’s domestic saving is greater than domestic investment, the country probably has __________.A. a current account surplusB. a net capital outflowC. a current account deficitD. Both A and B are possible.3. A debit entry in the balance-of-payments account represents a transaction that __________.A. a domestic resident receives a payment from abroadB. a domestic resident makes a payment to a foreign residentC. will improve the current account statusD. will have no affects on the nation’s foreign exchange reserves4. In terms of balance-of-payments account, which of the following would be recorded as a debit entry in the U.S. BOP?A. exports of merchandiseB. exports of servicesC. purchase of the U.S. Treasury bonds by non-residentsD. an increase of the deposit in a U.S. resident's account at a foreign bank5. A balance-of-payments deficit is defined as a situation in which __________.A. the value of payments made to the foreigners exceeds the value of receipts received from the foreigners in a given period of timeB. the government must borrow in order to meet its budget obligationsC. the value of manufactured good exports is less than the value of imported goodsD. a nation earns much in extra assets or reduced liabilities in its dealings with the rest of the world6. Which of the following would NOT be considered as a typical BOP transaction?A. Toyota USA is a US distributor of automobiles manufactured in Japan by its parent company.B. A U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.C. A US tourist purchases gifts at a museum in London.D. All are example of BOP transactions.7. The balance of payments is a statistical record which measures the total value of __________.A. a country’s foreign exchange reserves in a certain period of timeB. a country’s foreign trades between the residents of a country and its non-residents for a given period of timeC. all economic and financial transactions between the residents of a country and its non-residents for a given period of timeD. a country’s capital inflows and outflows at a particular date in a given year8. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. This transaction will affect __________.A. the U.S. international investment positionB. the British international investment positionC. both countries’ international investment positionD. None of the above. This is because both countries’ international investment position unchanged, only the composition of foreign investments in both U.S. and U.K. changes.9. Which of the following transactions is included in China’s balance-of-payments account?A. A U.S. embassy in Beijing pays salaries to its American staffs.B. The World Bank furnishes the Chinese government with a loan.C. A U.S. student pays tuition fees for his 4 year-study in Beijing University.D. The Chinese embassy in Washington buys telecommunication equipments from a Chinese company in Shanghai.10. If the U.S. runs current account deficits, we can expect that __________.A. it may act as a net debtor in the rest of the worldB. its domestic saving may less than its domestic investmentC. its domestic production is less than its domestic consumptionD. all of the above11. The trade deficit means that __________.A. residents are importing more goods than they are exportingB. residents are borrowing more funds than they are lendingC. residents are receiving more payments than they are makingD. residents are producing more goods than they are consuming12. Which of the following is an example of an exchange of financial assets?A. the exchange of butter for wheatB. the exchange of information technologyC. the exchange of a fixed-rate loan for a floating-rate loanD. the exchange of gold for jewelry13. For most countries, the subcategory that typically dominates the current account is __________.A. unilateral transfersB. goods tradeC. income tradeD. services trade14. When categorizing investments for the financial account component of the balance of payments the __________ is an investment where the investor has no incentive to control whereas the __________ is an investment where the investor wants to control over the assets.A. direct investment, portfolio investmentB. direct investment, indirect investmentC. portfolio investment, indirect investmentD. portfolio investment, direct investment15. If a country’s merchandise exports exceed its imports by $50 million, services trade balance is net $30 million and unilateral transfers made in excess of those received by $5 million, what is the country’s current account balance?A. $85 millionB. $75 millionC. $15 millionD. $25 million1. Country A’s BOT is __________.2. Country A’s current account balance is __________.3. Suppose the changes in country A’s official reserves are zero in 2010, its capital and financial account balance MUST be __________.4. If country A’s official reserves are recorded on the credit side by $10 million in 2010, its capital and financial account balance should be __________.5. Based on the assumption of question 4, country A has BOP deficit or surplus in 2010? Explain.6. What is the current account balance of a nation with a government budget deficit of $128 billion, private saving of $806 billion, and domestic capital formation of $777 billion?III. Express the following operations in the Dutch balance of payments in T-accounts:(5 credits for each question, total credits 3 x 5 = 15)a. A Dutch company exports €100,000 goods to a London company for €100,000 in bank deposits.b. An import billed for €150,000 paid with a check drawn on a London bank.c. A Dutch company based in Rotterdam uses €1 million that it was holding in a short-term deposit with its Rotterdam bank to purchase 10-year bonds issued by German government.IV. True or false: (7 credits)A credit entry in the balance of payments represents a demand for local currency whereas a debit entry represents a supply of local currency. You MUST explain your answer.Part IVTrue. Because the credit entry in BOP means domestic residents receiving foreigncurrencies. When they sell those foreign payments, they demand the local currency. The debit entry in BOP implies domestic residents need to buy foreign currencies with the local currency. Therefore, it represents a supply of local currency.。
国际金融英文版习题chapter2
1International FinanceAssignment Problems (2) Name: Student No.:I. Choose the correct answer for the following questions (only ONE correct answer)(5 credits for each question, total credits 4 x 15 = 60)1. According to the principle of the balanced balance of payments, if a country reduces its foreign exchange reserves by $20 million and the statistical discrepancy is in the credit entry of $5 million in a given period of time, the country runs __________ of its balance of payments during that period of time.A. $15 million deficitsB. $25 million deficitsC. $20 million deficitsD. $5 million deficits2. If a country’s domestic saving is greater than domestic investment, the country probably has __________.A. a current account surplusB. a net capital outflowC. a current account deficitD. Both A and B are possible.3. A debit entry in the balance-of-payments account represents a transaction that __________.A. a domestic resident receives a payment from abroadB. a domestic resident makes a payment to a foreign residentC. will improve the current account statusD. will have no affects on the nation’s foreign exchange reserves4. In terms of balance-of-payments account, which of the following would be recorded as a debit entry in the U.S. BOP?A. exports of merchandiseB. exports of servicesC. purchase of the U.S. Treasury bonds by non-residentsD. an increase of the deposit in a U.S. resident's account at a foreign bank5. A balance-of-payments deficit is defined as a situation in which __________.A. the value of payments made to the foreigners exceeds the value of receipts received from the foreigners in a given period of timeB. the government must borrow in order to meet its budget obligationsC. the value of manufactured good exports is less than the value of imported goodsD. a nation earns much in extra assets or reduced liabilities in its dealings with the rest of the world6. Which of the following would NOT be considered as a typical BOP transaction?A. Toyota USA is a US distributor of automobiles manufactured in Japan by its parent company.B. A U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.C. A US tourist purchases gifts at a museum in London.D. All are example of BOP transactions.7. The balance of payments is a statistical record which measures the total value of __________.A. a country’s foreign exchange reserves in a certain period of timeB. a country’s foreign trades between the residents of a country and its non-residents for a given period of timeC. all economic and financial transactions between the residents of a country and its non-residents for a given period of timeD. a country’s capital inflows and outflows at a particular date in a given year8. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. This transaction will affect __________.A. the U.S. international investment positionB. the British international investment positionC. both countries’ international investment positionD. None of the above. This is because both countries’ international investment position unchanged, only the composition of foreign investments in both U.S. and U.K. changes.9. Which of the following transactions is included in China’s balance-of-payments account?A. A U.S. embassy in Beijing pays salaries to its American staffs.B. The World Bank furnishes the Chinese government with a loan.C. A U.S. student pays tuition fees for his 4 year-study in Beijing University.D. The Chinese embassy in Washington buys telecommunication equipments from a Chinese company in Shanghai.10. If the U.S. runs current account deficits, we can expect that __________.A. it may act as a net debtor in the rest of the worldB. its domestic saving may less than its domestic investmentC. its domestic production is less than its domestic consumptionD. all of the above11. The trade deficit means that __________.A. residents are importing more goods than they are exportingB. residents are borrowing more funds than they are lendingC. residents are receiving more payments than they are makingD. residents are producing more goods than they are consuming12. Which of the following is an example of an exchange of financial assets?A. the exchange of butter for wheatB. the exchange of information technologyC. the exchange of a fixed-rate loan for a floating-rate loanD. the exchange of gold for jewelry13. For most countries, the subcategory that typically dominates the current account is __________.A. unilateral transfersB. goods tradeC. income tradeD. services trade14. When categorizing investments for the financial account component of the balance of payments the __________ is an investment where the investor has no incentive to control whereas the __________ is an investment where the investor wants to control over the assets.A. direct investment, portfolio investmentB. direct investment, indirect investmentC. portfolio investment, indirect investmentD. portfolio investment, direct investment15. If a country’s merchan dise exports exceed its imports by $50 million, services trade balance is net $30 million and unilateral transfers made in excess of those received by $5 million, what is the country’s current account balance?A. $85 millionB. $75 millionC. $15 millionD. $25 million1. Country A’s BOT is __________.2. Country A’s current account balance is __________.3. Suppose the changes in country A’s official reserves are zero in 2010, its capital and financial account balance MUST be __________.4. If country A’s official reserves are recorded on the credit side by $10 million in 2010, its capital and financial account balance should be __________.5. Based on the assumption of question 4, country A has BOP deficit or surplus in 2010? Explain.6. What is the current account balance of a nation with a government budget deficit of $128 billion, private saving of $806 billion, and domestic capital formation of $777 billion?III. Express the following operations in the Dutch balance of payments in T-accounts:(5 credits for each question, total credits 3 x 5 = 15)a. A Dutch company exports €100,000 goods to a London company for €100,000 in bank deposits.b. An import billed for €150,000 paid with a check drawn on a L ondon bank.c. A Dutch company based in Rotterdam uses €1 million that it was holding in a short-term deposit with its Rotterdam bank to purchase 10-year bonds issued by German government.IV. True or false: (7 credits)A credit entry in the balance of payments represents a demand for local currency whereas a debit entry represents a supply of local currency. You MUST explain your answer.Part IVTrue. Because the credit entry in BOP means domestic residents receiving foreign currencies. When they sell those foreign payments, they demand the local currency. The debit entry in BOP implies domestic residents need to buy foreign currencies with the local currency. Therefore, it represents a supply of local currency.。
国际金融(英文版)Chapter 2 Theories of Balance of Payment
That is:
BP=CA+K=dR=0
So that:
CA+K=-dR
(2.8)
Where CA is the current account balance, K is the capital account balance, and dR is the change in the authorities’ reserves.
Chapter 2 Theories of balance of payments
2.1 The elasticity approach to the balance of payments
This approach provides an analysis of what happens to the current account
Its fundamental basis is that the balance of payments is
essentially a monetary phenomenon.
Three assumptions:
a stable money demand gate schedule
There are three possible scenarios following a devaluation, and two effects
in play once a currency is devalued:
1. The price effect – exports become cheaper measured in foreign currency.
expensive should lead to a decreased volume of imports.
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1International FinanceAssignment Problems (2) Name: Student No.:I. Choose the correct answer for the following questions (only ONE correct answer)(5 credits for each question, total credits 4 x 15 = 60)1. According to the principle of the balanced balance of payments, if a country reduces its foreign exchange reserves by $20 million and the statistical discrepancy is in the credit entry of $5 million in a given period of time, the country runs __________ of its balance of payments during that period of time.A. $15 million deficitsB. $25 million deficitsC. $20 million deficitsD. $5 million deficits2. If a country’s domestic saving is greater than domestic investment, the country probably has __________.A. a current account surplusB. a net capital outflowC. a current account deficitD. Both A and B are possible.3. A debit entry in the balance-of-payments account represents a transaction that __________.A. a domestic resident receives a payment from abroadB. a domestic resident makes a payment to a foreign residentC. will improve the current account statusD. will have no affects on the nation’s foreign exchange reserves4. In terms of balance-of-payments account, which of the following would be recorded as a debit entry in the U.S. BOP?A. exports of merchandiseB. exports of servicesC. purchase of the U.S. Treasury bonds by non-residentsD. an increase of the deposit in a U.S. resident's account at a foreign bank5. A balance-of-payments deficit is defined as a situation in which __________.A. the value of payments made to the foreigners exceeds the value of receipts received from the foreigners in a given period of timeB. the government must borrow in order to meet its budget obligationsC. the value of manufactured good exports is less than the value of imported goodsD. a nation earns much in extra assets or reduced liabilities in its dealings with the rest of the world6. Which of the following would NOT be considered as a typical BOP transaction?A. Toyota USA is a US distributor of automobiles manufactured in Japan by its parent company.B. A U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.C. A US tourist purchases gifts at a museum in London.D. All are example of BOP transactions.7. The balance of payments is a statistical record which measures the total value of __________.A. a country’s foreign exchange re serves in a certain period of timeB. a country’s foreign trades between the residents of a country and its non-residents for a given period of timeC. all economic and financial transactions between the residents of a country and its non-residents for a given period of timeD. a country’s capital inflows and outflows at a particular date in a given year8. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. This transaction will affect __________.A. the U.S. international investment positionB. the British international investment positionC. both countries’ international investment positionD. None of the above. This is because both countries’ international inv estment position unchanged, only the composition of foreign investments in both U.S. and U.K. changes.9. Which of the following transactions is included in China’s balance-of-payments account?A. A U.S. embassy in Beijing pays salaries to its American staffs.B. The World Bank furnishes the Chinese government with a loan.C. A U.S. student pays tuition fees for his 4 year-study in Beijing University.D. The Chinese embassy in Washington buys telecommunication equipments from a Chinese company in Shanghai.10. If the U.S. runs current account deficits, we can expect that __________.A. it may act as a net debtor in the rest of the worldB. its domestic saving may less than its domestic investmentC. its domestic production is less than its domestic consumptionD. all of the above11. The trade deficit means that __________.A. residents are importing more goods than they are exportingB. residents are borrowing more funds than they are lendingC. residents are receiving more payments than they are makingD. residents are producing more goods than they are consuming12. Which of the following is an example of an exchange of financial assets?A. the exchange of butter for wheatB. the exchange of information technologyC. the exchange of a fixed-rate loan for a floating-rate loanD. the exchange of gold for jewelry13. For most countries, the subcategory that typically dominates the current account is __________.A. unilateral transfersB. goods tradeC. income tradeD. services trade14. When categorizing investments for the financial account component of the balance of payments the __________ is an investment where the investor has no incentive to control whereas the __________ is an investment where the investor wants to control over the assets.A. direct investment, portfolio investmentB. direct investment, indirect investmentC. portfolio investment, indirect investmentD. portfolio investment, direct investment15. If a country’s merchandise exports exceed its imports by $50 million, services trade balance is net $30 million and unilateral transfers made in excess of those received by $5 million, what is the country’s current account balance?A. $85 millionB. $75 millionC. $15 millionD. $25 million1. Country A’s BOT is __________.2. Country A’s current account balance is __________.3. Suppose the changes in country A’s official reserves are zero in 2010, its capital and financial account balance MUST be __________.4. If country A’s official reserves are recorded on the credit side by $10 million in 2010, its capital and financial account balance should be __________.5. Based on the assumption of question 4, country A has BOP deficit or surplus in 2010? Explain.6. What is the current account balance of a nation with a government budget deficit of $128 billion, private saving of $806 billion, and domestic capital formation of $777 billion?III. Express the following operations in the Dutch balance of payments in T-accounts:(5 credits for each question, total credits 3 x 5 = 15)a. A Dutch company exports €100,000 goods to a London company for €100,000 in bank deposits.b. An import billed for €150,000 paid with a check drawn on a London bank.c. A Dutch company based in Rotterdam uses €1 million that it was holding in a short-term deposit with its Rotterdam bank to purchase 10-year bonds issued by German government.IV. True or false: (7 credits)A credit entry in the balance of payments represents a demand for local currency whereas a debit entry represents a supply of local currency. You MUST explain your answer.Part IV。