International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Assume U.S. interest rates are generally above foreign interest rates. What does this suggest about the future strength or weakness of the dollar based on the IFE? Should U.S. investors invest in foreign securities if they believe in the IFE? Should foreign investors invest in U.S. securities if they believe in the IFE?
What has been the role of IMF loans in international affairs addresing financial crisis? Why are they so controversial?
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.
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- The size of a country’s national debt should not be of much economic concern as long as:a. the debt does not lead to rising inflation.b. the debt is funded from international sourcesc. the general population hoards treasury billsd. it increases at a slower rate than GDP doesarrow_forwardWhich of the following factors will NOT increase the value of a currency in foreign markets? A. High inflation in that country B. High interest rates in that country C. A positive balance of payments with that country D. A strong stock market rally in that countryarrow_forward. Which of the following is incorrect? Country credit risk spread is the difference between yields of international bonds of the country and government bonds of the developed country (generally US. Credit default swap (CDS) is a derivative product which provides the buyer to grantee to be paid back face value of a bond by credit default swap issuer in case the borrower does not pay. In general, a Eurobond of developing country or company interest rate is smaller than sum of same maturity of US bond rate and country of company credit default swap rate point (CDS premium /10000). In general, a company or county Eurobond's primary market sale is done by a syndicated group (banks and other financial intuitions). If the US dollar index (USDX) increases, we expect depreciation of any other currency against the USD.arrow_forward
- What is sovereign risk and what is the difference between rescheduling and repudiation? What is total debt service ratio and how is it calculated? Find the total debt service ratio of a country. See if you can also find an example of a country, or countries, that Western banks currently have exposure to.arrow_forwardIf the treasury bonds in country A consistently yield more returns compared to those in country B, we would see __ . (assuming treasury bonds are risk-free) a. Country A goes bankrupt b. The currency in country A appreciates against the currency in country B over time c. The currency in country A depreciates against the currency in country B over time d. The currency exchange rate is unaffected.arrow_forwardBack in the early 2010s Some EU countries like Greece and Cyprus spent much more money than it can earn from its fiscal revenues, resulting a failure in paying back the principal and interests on the national bonds, thus resulted a sovereign debt risk. 2. The main difference between the Federal Reserve in the US and other central banks is that the Fed is actually a banking system that has several independent banks covering an area of several states instead of one single bank. Please just tell. Statement is true or falsearrow_forward
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