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How can a person speculate in the forward market? How much will the speculator earn if he or she is correct?
Assume that SR = $2/£1 and the three-month FR = $1.96/£1. How can an importer who will have to pay £10,000 in three months hedge the foreign exchange risk?
What is the difference between Eurocurrencies on the one hand and Eurobonds and Euronotes on the other?
(a) Are Eurocurrencies money? (b) Do Euro banks create money? (c) What are the most serious problems created by the existence of Eurocurrencies?
Why is the spread between lending and borrowing rates lower on Eurocurrencies than on commercial bank dollar deposits in the United States?
What is meant by the foreign currency being at covered interest arbitrage parity (CIAP)? What are some of the forces that can prevent the achievement of CIAP?
How is interest arbitrage covered in forward market? Why does net gain from covered interest arbitrage tend to diminish as covered interest arbitrage continues?
Why does speculation not usually take place in the spot market? What is stabilizing speculation? destabilizing speculation?
How can foreign exchange risks be covered in the spot, forward, futures, or options markets? Why does hedging not usually take place in the spot market?
What is meant by a forward discount? forward premium? What is a currency swap? What is a foreign exchange futures? a foreign exchange option?
Why is the measure of the balance-of-payments deficit or surplus not strictly appropriate under a flexible exchange rate?
What is meant by a depreciation of the domestic currency? an appreciation? What is the cross exchange rate? What is the effective exchange rate?
What is meant by the international investment position of a nation, or its balance of international indebtedness?
What are the most serious pitfalls to avoid in analyzing a nation's balance of payments or statements of international transactions?
How is an official settlements deficit or surplus measured? What was the size of the U.S. balance of payments in 2011?
What is meant by the autonomous transactions? Accommodating transactions? Which items does the official reserve account include?
By how much did U.S. official reserve assets change in 2011? By how much did foreign official reserve assets change in 2011?
Why is the classification of international financial flows into short term and long term not stressed anymore today as it was in the past?
What was the size of the net financial outflows (including U.S. official reserve assets) in 2011? What was the size of the net financial inflows to the United S
What is meant by the current account? Did the United States have a deficit or a surplus in the current account in 2011? What was its size?
What is double-entry bookkeeping? Why does double-entry bookkeeping usually involve an entry called statistical discrepancy?
What is a credit transaction? a debit transaction? Which are the broad categories of international transactions classified as credits? as debits?
What is meant by the balance of payments? In what way is the balance of payments a summary statement? What is meant by an international transaction?
why the rate of return on U.S. direct investment in developing nations often exceeds rate of return on investment on US direct investments in developed nations.