Finc415 Exam 1 Essays - 1186 Words

Finance 415 Exam I Review Questions Suggestions 1) Read chapters 1 – 5 and review the PPTs we covered in class. 2) Expect 5 or 7 short-answer questions General Questions – 1. In class we reviewed three firms in three different countries. The M/S Milad Nor Company in Afghanistan, Caritex in Bulgaria, and Obod in Montenegro. Each company was faced with different problems and issues. Please briefly summarize the similarities between the firms and their individual issues. How do the problems faced by these firms compare to problems faced by similar firms in more developed countries? 2. Your stock market simulation calls for you to invest in securities with a significant presence outside the US – debt, equity,†¦show more content†¦What are some of the typical causes of these failures in corporate governance?p34 10. Do markets appear to be willing to pay for good governance?p36 Chapter 3 1. Under the gold standard all national governments promised to follow the â€Å"rules of the game.† This meant defending a fixed exchange rate. What did this promise imply about a country’s money supply? 2. If a country follows a fixed exchange rate regime, what macroeconomic variables could cause the fixed exchange rate to be devalued? 3. What are the advantages and disadvantages of fixed exchange rates? 4. Explain what is meant by the term impossible trinity and why it is true. 5. Fixed exchange rate regimes are sometimes implemented through a currency board (Hong Kong) or dollarization (Ecuador). What is the difference between the two approaches? 6. High capital mobility is forcing emerging market nations to choose between free-floating regimes and currency board or dollarization regimes. What are the main outcomes of each of these regimes from the perspective of emerging market nations? 7. On January 4, 1999, eleven member states of the European Union initiated the European Monetary Union (EMU) and established a single currency, the euro, which replaced the individual currencies of participating member states. Describe three of the main ways that the euro affects the members of the EMU. 8. Why did the fixed exchange rate regime of 1945–1973 eventually fail? 9. How