MGMT 4670
Second Midterm Review
1) Describe the four
reasons
outlined in the text why a firm may want, or need, to exchange
currency.
2) Discuss the
following:
a)
The
Purchasing Power Parity Theory
b) The
Fisher
Effect
c) The
International
Fisher Effect
d) The
Interest
Rate Parity Theory
e) The
Forward
Rate as an Unbiased Predictor of Future Spot Rates
What are the underlying
assumptions
of each, and does the empirical evidence support their conclusions?
3) Discuss the
implications
for forecasting foreign exchange rates in the context of each of the
efficient
market and inefficient market perspectives. What are fundamental
and
technological analyses?
4) What is meant by the
“convertibility”
of currency? Discuss the differing degrees of convertibility and
why
a government would prefer each.
5) Describe the
evolution
and nature of the “Gold Standard.” What were the historical
imperatives
that led to the “Bretton Woods” agreement, and what were the outcomes
of
the meeting in New Hampshire?
6) Describe why the
Bretton
Woods system collapsed. What took its place, and what were the
steps
that led to our current system?
7) Compare and contrast the various
fixed
and floating exchange rate systems. What are the benefits and
drawbacks
of each?
8) Describe, compare, contrast, and give an example of each:
a) Free trade area
b) Customs union
c) Common market
d) Economic union
e) Political union
9) What are the
political and economic justifications for regional economic
integration? What are the impediments to such integration?
What are the opportunities and threats to managers?
10) What are trade creation and trade diversion? Explain using examples of each.
11) What are the
various forms of foreign exchange risk exposure? Describe the
various forms of "hedging" firms might employ to mitigate each.
12) Describe the four
multinational
strategies discussed in class. What is the strategic intent of
each,
and under which conditions is each most likely to succeed?
13) What is meant by vertical differentiation? What are the
four
main arguments for centralization? What are the five main
arguments
for decentralization?
14) What is meant by horizontal differentiation?
15) What is meant by
matching
structure to strategy? Briefly describe the various structures
outlined
in the text. Which structures are best suited for which
strategies?
16) What are “integrating” mechanisms? Describe several of
the
various formal and informal mechanisms used in business.
17) What are the IMF and the World Bank? How have they
evolved over the years, and what are the implications of their policies
and missions?
18) Describe interdependence, control systems and performance
ambiguity. What are their effects on the four multi-country
strategies described in the text? What are the effects of the
various aspects of strategy and architecture on those same strategies?
19) What are the various entry modes into international markets
available to a firm? What are the costs and benefits of each, and
when is each most appropriate?
20) Describe the growth
of
the international capital market. What are the factors that are
driving
the growth, and what are the benefits and risks to investors and
borrowers?
21) Describe the
evolution
and nature of the Eurocurrency market. What is the attraction to
investors
and borrowers? What are the risks? How has the Eurocurrency
market
served to accelerate the growth of the international capital market?
22) Compare and contrast Eurobonds and foreign bonds.
