Second Midterm Review
1) Describe the four
outlined in the text why a firm may want, or need, to exchange
2) Discuss the
Purchasing Power Parity Theory
What are the underlying
of each, and does the empirical evidence support their conclusions?
Rate Parity Theory
Rate as an Unbiased Predictor of Future Spot Rates
3) Discuss the
for forecasting foreign exchange rates in the context of each of the
market and inefficient market perspectives. What are fundamental
4) What is meant by the
of currency? Discuss the differing degrees of convertibility and
a government would prefer each.
5) Describe the
and nature of the “Gold Standard.” What were the historical
that led to the “Bretton Woods” agreement, and what were the outcomes
the meeting in New Hampshire?
6) Describe why the
Woods system collapsed. What took its place, and what were the
that led to our current system?
7) Compare and contrast the various
and floating exchange rate systems. What are the benefits and
8) Describe, compare, contrast, and give an example of each:
a) Free trade area
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?
b) Customs union
c) Common market
d) Economic union
e) Political union
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
strategies discussed in class. What is the strategic intent of
and under which conditions is each most likely to succeed?
13) What is meant by vertical differentiation? What are the
main arguments for centralization? What are the five main
14) What is meant by horizontal differentiation?
15) What is meant by
structure to strategy? Briefly describe the various structures
in the text. Which structures are best suited for which
16) What are “integrating” mechanisms? Describe several of
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
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
the international capital market. What are the factors that are
the growth, and what are the benefits and risks to investors and
21) Describe the
and nature of the Eurocurrency market. What is the attraction to
and borrowers? What are the risks? How has the Eurocurrency
served to accelerate the growth of the international capital market?
22) Compare and contrast Eurobonds and foreign bonds.