国际金融提要.docxVIP

Case:A Chinese export import Co. exported 6 containers of T-shirts to US in June. It can receive $120,000 in December. In June, RMB to USD is 7.3. In Dec., ￥per $ is 6.8.In June, the Co. can receive $120,000 x 7.3 ￥/$ =876,000 ￥In Dec., the Co. can only receive $120,000 x 6.8￥/$ =816,000 ￥International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, and how these affect international trade.For nations, the main objective is to keep equilibrium (balance) of domestic and international income and payments.For firms, 1. foreign exchange, or foreign currency, must be used to obtain foreign goods, services, or securities; 2. the primary objective of any firm including MNCs is to maximize shareholder wealth. (Baker, 2002, p.9)Functions of financial marketThey make it possible for people corporations and government units to raise capital.They help allocate capital toward productive uses.They provide an opportunity for people to increase their savings by investing.They reveal investors‘ judgments and potential earning capacity of corporations, thus giving guidance to corporate managers.They generate employment and income.They apportion and hedge financial risks.Comparative advantageTheory (p. 7,Moffett et al., 2012) The theory of comparative advantage provides a basis for explaining and justifying international trade in a model world assumed to enjoy free trade, perfect competition, no uncertainty, costless information, and no government interference.Limitations (p. 10,Moffett et al., 2012)Today’s trend (p. 11,Moffett et al., 2012 supply chain outsourcing (to do the same thing with lowest cost)Notice that each price is stated in two ways:1st: in US $, referring to the price of USD in units of the other currency.2nd: per US $, referring to a USD price of the other currency.The pairs of price are just reciprocal of each other. Direct quotation (Giving quotation)Home currency price per unit of a foreign currency.