11)Answer based on the following: Interest rate on U.S. assets =5%, interest rate on European assets = 12%, the spot rate ofexchange = 0.90 Euros/$, the one year forward rate of exchange =0.95 EUROS/$. The European citizen should hold which asset?
12)If real interest rates in Canada are above those in the Euroarea,
| 1) | The Euro area is likely to see an appreciation of itscurrency. |
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| 2) | There will be more demand for Canadian goods resulting from thechange in exchange rates. |
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| 3) | There will be more demand for European goods resulting from thechange in exchange rates. |
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| 4) | Exchange rates will not be affected. |
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13)If there is more demand for U.S. stocks relative to stocksissued elsewhere,
| 1) | The Dollar may depreciate |
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| 2) | The Dollar may appreciate |
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14)Horizontal FDI involves
| 1) | Doing some part of the production process abroad |
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| 2) | Duplicating a firm’s plant abroad |
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| 3) | Accessing cheap labor abroad |
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15)Based on the offshoring articles that you read for thisclass
| 1) | The center of gravity of much of the world production has notchanged |
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| 2) | The center of gravity of much of the world production haschanged from advanced countries to developing countries |
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| 3) | The center of gravity of much of the world production remains inadvanced countries |
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