CH1

Globalization and the MNE. The term globalization has become widely used in recent years. How would you define it?

Eurocurrencies and LIBOR. Why have eurocurrencies and LIBOR remained the centerpiece of the global financial marketplace for so long?

Limitations of Comparative Advantage. Key to understanding most theories is what they say and what they don’t. Name four or five key limitations to the theory of comparative advantage.

CH2

Causes of Devaluation. If a country follows a fixed exchange rate regime, what macroeconomic variables could cause the fixed exchange rate to be devalued?

Emerging Market Regimes. High capital mobility is forcing emerging market nations to choose between free-floating regimes and currency board or dollarization regimes. What are the main outcomes of each of these regimes from the perspective of emerging market nations?

CH3

Importance of BOP. Business managers and investors need BOP data to anticipate changes in host-country economic policies that might be driven by BOP events. From the perspective of business managers and investors, list three specific signals that a country’s BOP data can provide.

Real versus Financial Assets. What is the difference between a “real” asset and a “financial” asset?

Capital Mobility—Brazil. Brazil has experienced periodic depreciation of its currency over the past 20 years despite occasionally running a current account surplus. Why has this phenomenon occurred?

Reference

Moffett, Michael H., Arthur Stonehill, David Eiteman. Fundamentals of Multinational Finance, 5th Edition. Pearson Learning Solutions, 2016-09-01. VitalBook file.

SAMPLE SOLUTION

Globalization and the MNE

I would define globalization as the opening of domestic and nationalistic views to an extensive image of an interdependent world with unrestricted flow of products, services, as well as capital from one nation to the other. It is a situation in which products, cultural and social influences slowly but surely become alike in different parts of the world (In Christensen & In Kowalczyk, 2017). According to Moffett, Stonehill, and Eiteman (2016), the phenomenon is triggered by increase in international trade especially by leading world organizations. Globalization, however, does not entail the unrestricted movement of human capital, and as affirmed by some financial analysts, the phenomenon my hurt fragile or underdeveloped economies if applied universally (In Byrnes, In Hayashi, & In Michaelsen, 2013).

Eurocurrencies and LIBOR Eurocurrencies and LIBOR represent the most convenient and efficient money market instruments for holding surplus liquidity. They reflect the perfect market-driven instrument rates and currencies. Rao, McGuigan, and Moyer (2014…