International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Why might a foreign government’s policies be closely monitored by investors in other countries, even if the investors plan no investments in that country? Explain how monetary policy in one country can affect interest rates in other countries.
If US dollars gets lower interest rates in the United States. How would this affect a fundamental forecast of foreign currencies? How would this affect the forward rate forecast of foreign currencies?
What does it mean when it is said that the United States is running a trade deficit? Whatimpact will a trade deficit have on interest rates?
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- Which of the following is the most likely if the interest rate of the U.S. is lower relative to the United Kingdom, and the forward rate of the British pound is same as its spot rate? A. British investors could possibly benefit from covered interest arbitrage. B. None C. U.S. investors could possibly benefit from covered interest arbitrage. D. Neither U.S. nor British investors could benefit from covered interest arbitrage.arrow_forwardIf a country’s par exchange rate is overvalued, what kind of intervention would that country’s central bank be forced to undertake, and what kind of effect would it have on its international reserves? What must happen if this country’s central bank decides not to intervene anymore?arrow_forward
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