《国际财务管理课后习题答案.doc》由会员分享，可在线阅读，更多相关《国际财务管理课后习题答案.doc（213页珍藏版）》请在金锄头文库上搜索。
1、CHAPTER 1 GLOBALIZATION AND THE MULTINATIONAL FIRM ANSWERS (2) any BOP disequilibrium can be corrected automatically through cross-border flows of gold. On the other hand, the main disadvantages of the gold standard are: (I) the world economy can be subject to deflationary pressure due to restricted
2、 supply of gold; (ii) the gold standard itself has no mechanism to enforce the rules of the game, and, as a result, countries may pursue economic policies (like de-monetization of gold) that are incompatible with the gold standard. 5. What were the main objectives of the Bretton Woods system? Answer
3、: The main objectives of the Bretton Woods system are to achieve exchange rate stability and promote international trade and development. 6. Comment on the proposition that the Bretton Woods system was programmed to an eventual demise. Answer: The answer to this question is related to the Triffin pa
4、radox. Under the gold-exchange system, the reserve-currency country should run BOP deficits to supply reserves to the world economy, but if the deficits are large and persistent, they can lead to a crisis of confidence in the reserve currency itself, eventually causing the downfall of the system. 20
5、12 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 7. Explain how special drawin
6、g rights (SDR) are constructed. Also, discuss the circumstances under which the SDR was created. Answer: SDR was created by the IMF in 1970 as a new reserve asset, partially to alleviate the pressure on the U.S. dollar as the key reserve currency. The SDR is a basket currency currently comprised of
7、four major currencies, i.e., U.S. dollar, euro, Japanese yen, and British pound. Currently, the dollar receives a 41.9% weight, euro 37.4%, yen 9.4%, and pound 11.3%. The weights for different currencies tend to change over time, reflecting the relative importance of each currency in international t
8、rade and finance. 8. Explain the arrangements and workings of the European Monetary System (EMS). Answer: EMS was launched in 1979 in order to (i) establish a zone of monetary stability in Europe, (ii) coordinate exchange rate policies against the non-EMS currencies, and (iii) pave the way for the e
9、ventual European monetary union. The main instruments of EMS are the European Currency Unit (ECU) and the Exchange Rate Mechanism (ERM). Like SDR, the ECU is a basket currency constructed as a weighted average of currencies of EU member countries. The ECU works as the accounting unit of EMS and play
10、s an important role in the workings of the ERM. The ERM is the procedure by which EMS member countries manage their exchange rates. The ERM is based on a parity grid system, with parity grids first computed by defining the par values of EMS currencies in terms of the ECU. If a countrys ECU market ex
11、change rate diverges from the central rate by as much as the maximum allowable deviation, the country has to adjust its policies to maintain its par values relative to other currencies. EMS achieved a complete monetary union in 1999 when the common European currency, the euro, was adopted. 9. There
12、are arguments for and against the alternative exchange rate regimes. a. List the advantages of the flexible exchange rate regime. b. Criticize the flexible exchange rate regime from the viewpoint of the proponents of the fixed exchange rate regime. c. Rebut the above criticism from the viewpoint of
13、the proponents of the flexible exchange rate regime. Answer: a. The advantages of the flexible exchange rate system include: (I) automatic achievement of balance of payments equilibrium and (ii) maintenance of national policy autonomy. b. If exchange rates are fluctuating randomly, that may discoura
14、ge international trade and encourage market segmentation. This, in turn, may lead to suboptimal allocation of resources. c. Economic agents can hedge exchange risk by means of forward contracts and other techniques. They dont have to bear it if they choose not to. In addition, under a fixed exchange
15、 rate regime, governments often restrict international trade in order to maintain the exchange rate. This is a self-defeating measure. Whats good about the fixed exchange rate if international trade need to be restricted? 10. In an integrated world financial market, a financial crisis in a country c
16、an be quickly transmitted to other countries, causing a global crisis. What kind of measures would you propose to prevent the recurrence of an Asia-type crisis. Answer: First, there should be a multinational safety net to safeguard the world financial system from the Asia-type crisis. Second, international institutions like IMF and the World Bank should monitor problematic countries more closely and provide timely advice to those countries. Countries should be required to fully disclose e
