1. Using the "global capital" diagram presented in class (and in handouts), in which the rate of return (or "marginal-product-of-capital") is shown for both the home country and the rest-of-the-world, explain the effects of free trade on factor incomes when there is zero mobility of both labor and capital, and compare this to the effects of having perfectly free mobility of capital. What are the implications of this, if any, to be drawn from the expanding trend toward multi nationalization?
2. a) Explain the so-called "forward" or "futures" currency markets, and discuss how: a) a US importer faced with making a future payment in say, Euros; and b) a US exporter faced with a future payment made in Euros would use these markets to "hedge" their currency risk.
b) Explain how: a) the so-called "futures options" markets; and b) "currency swaps" can be used to "hedge" a company's financial position, as compared to the straightforward "futures" contract.
c) Discuss the possibilities inherent in using "diversification" of global operations as a risk-reducing strategy
3. There has been a long-running argument between the "developed" and "less-developed" countries regarding the role of "official" government-directed aid vs. reliance of the LDCs upon private foreign capital flows (i.e. MNEs), roughly summarized as the "Washington" vs. the "Beijing" Consensus. Discuss these points of view, particularly concerning the crucial role of (subjectively determined) risk in determining foreign investment.
4. Four companies were discussed in class presentations. Choose any two - or more - of these companies and compare and contrast their growth experiences; in particular: their origins, the causes and strategies underpinning their periods of most rapid expansion, and an assessment of their future abilities to survive and grow given the state of competition in their markets.