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International Investment

International investment strategy

What is a good direction/approach to this assignment? Your proposal to expand into three countries was approved by the CEO. Now you have to decide on a strategy - will PM Company simply sell its products (trade) or expand its markets via investment? Choose one international trade and one international investment strategy to r


Our economy thrives on competition. Market forces will lead firms to produce the mix of goods most desired. Unforeseen events can be responded to in a rational manner. The constant struggle for profits will stimulate firms to cut costs. Note that technical efficiency results from attention to self-interest, not the public intere

Trade Deficit

I need help on just getting started with each question as to which angle to take and what resources to use. 1. What has caused the U.S. run a merchandise trade deficit year after year since the early 1980s? 2. Is the current account a deficit problem? Explain. 3. Is the trend of the international investment position

Domestic Saving and International Capital Flows

Questions Martin Feldstein and Charles Horioka of Harvard University argues that in a world of perfect capital market integration, there should be little long term correlation between domestic saving and investment. Explain. What factors might explain closer than expected correlation observed?


You are a fixed income fund manager based in euroland. Expected return of the EUR bond market is 4.4% and risk 5%, expected hedged return of the UK bond market 5.5% and risk 5.5%. Correlation of the two markets is 0.7. Demonstrate the benefits of international diversification by investing 70% of your portfolio in EUR bonds, 30%

Measuring unemployment, Balance of payments, GDP

Table 2-5 presents the price of and units of aggregate output for 199x and 199y. (a) Present in Table 2-6, nominal GDP for 199x and 199y. (b) Also calculate in Table 2-6 real output for 199y by measuring l99y output in l99x prices. What is the purpose of such a calculation? (c) What is the GDP deflator in l99y?

Assess questions and explain briefly for each if they are true or false and why?

1.An increase in Canada's exports will always lead to an improvement in our current account. (true/false) 2.If a Canadian purchases shares in Microsoft, this shows up in the Balance of Payments Financial Account as a debit item only. (true/false) 3.Purchasing power parity cannot hold if the law of one price does not hold. (tru

10 TRUE or FALSE questions on National Income Accounting, Current Accounts, Financial Account, Balance of Payments, Exchange rate overshooting, inflation, vehicle currencies, Covered Interest Parity, Purchasing Power Parity

1. In National Income Accounting, foreign savings play no role. 2. Current account deficits are always worse than current account surpluses. 3. An import of U.S. treasury bills shows up only in the financial account. 4. Canada's net balance of payment position with the U.S. will always fall if the volume of our imports from