国际金融课件教程FinalExam_Answer.doc

PAGE PAGE 9 International Finance Finance Exam Fall 2009 This is a 120-minute closed-book exam. You should try your best to finish as much as you can. No time extension will be given. Read carefully the whole exam before you start in order to assign your time optimally. Try to be precise and concise, and try not to write irrelevant stuff. Good luck! Multiple Choices (Circle the ONE best answer for each question, 2 points each) (1) What major dimension sets apart international finance from domestic finance?a) Foreign exchange and political risksb) Market imperfectionsc) Expanded opportunity setd) All of the above (2) An example of a political risk is:a) Expropriation of assetsb) Adverse change in tax rulesc) The opposition party being electedd) Both answers a) and b) are correct (3) Suppose you start with $100 and buy stock for ￡50 when the exchange rate is ￡1 = $2. One year later, the stock rises to ￡60. You are happy with your 20 percent return on the stock, but when you sell the stock and exchange your ￡60 for dollars, you only get $45 since the pound has fallen to ￡1 = $0.75. This loss of value is an example of:?a) Exchange Rate Risk.b) Political Risk.c) Market imperfections.d) Weakness in the dollar. (4) The international monetary system went through several distinct stages of evolution. These stages are summarized, in alphabetic order, as follows(i) Bimetallism(ii) Bretton Woods system(iii) Classical gold standard(iv) Flexible exchange rate regime(v) Interwar periodThe chronological order that they actually occurred is:a) (iii), (i), (iv), (ii), and (v)b) (i), (iii), (v), (ii), and (iv)c) (vi), (i), (iii), (ii), and (v)d) (v), (ii), (i), (iii), and (iv) (5) Consider the no-trade input/output situation presented in the following table and graph for countries A and B. Assuming that free trade is legal; develop a scenario that will benefit the citizens of both countries.?????a) Country B should make all the textiles and trade with C