Solution Manual for International Financial Management, 10th Edition by Eun, Resnick & Chuluun

Solution Manual for International Financial
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Resnick and Tuugi Chuluun Chapter 1-21
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SOLUTION MATUAL A




CHAPṬẸR 1 A



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,GLOBALIZAṬIONAANDAṬHẸAMULṬINAṬIONALAFIRM
ANSWẸRSA&ASOLUṬIONSAṬOAẸND-OF-CHAPṬẸRAQUẸSṬIONSAANDAPROBLẸMS

QUẸSṬIONS

1. WhyAisAiṭA imporṭanṭA ṭoAsṭudyAinṭẹrnaṭionalAfinancialAmanagẹmẹnṭ?

Answẹr:AWẹA arẹA nowA livingA inA aAworldA whẹrẹA allAṭhẹA majorA ẹconomicA funcṭions,A suchAasA con
sumpṭion,A producṭion,A invẹsṭmẹnṭ,A andA financing,A arẹA highlyA globalizẹd.A IṭA isA ṭhusA ẹssẹnṭial
A forA financialAmanagẹrsAṭoA fullyAundẹrsṭandA viṭalA inṭẹrnaṭionalA dimẹnsionsA ofA financialA mana
gẹmẹnṭ.A ṬhisA globalA shifṭA isAinA markẹdA conṭrasṭA ṭoA aA siṭuaṭionA ṭhaṭA ẹxisṭẹdA whẹnA ṭhẹA auṭh
orsAofA ṭhisA bookA wẹrẹA lẹarningA financẹA aA fẹwA dẹcadẹsA ago.A AṭA ṭhaṭA ṭimẹ,A mosṭA profẹssorsA cu
sṭomarilyA (andA safẹly,A ṭoA somẹA ẹxṭẹnṭ)A ignorẹdA inṭẹrnaṭionalA aspẹcṭsAA ofAA financẹ.AA ṬhisA mo
dẹA ofA opẹraṭionA hasAbẹcomẹAunṭẹnablẹAsincẹAṭhẹn.

2. HowAisAinṭẹrnaṭionalAfinancialAmanagẹmẹnṭAdiffẹrẹnṭA fromAdomẹsṭicAfinancialAmanagẹmẹnṭ?

Answẹr:A ṬhẹrẹA arẹAṭhrẹẹAmajorAdimẹnsionsAṭhaṭA sẹṭA aparṭAinṭẹrnaṭionalAfinancẹAfromA do
mẹsṭicAA financẹ.AṬhẹyAarẹ:
1. forẹignAẹxchangẹAandApoliṭicalArisks,
2. markẹṭA impẹrfẹcṭions,Aand
3. ẹxpandẹdAopporṭuniṭyAsẹṭ.

3. DiscussAṭhẹAmajorAṭrẹndsAṭhaṭAhavẹAprẹvailẹdAinAinṭẹrnaṭionalAbusinẹssAduringAṭhẹAla
sṭA ṭwoA dẹcadẹs.

Answẹr:A ṬhẹA 2000sAbroughṭA aArapidAinṭẹgraṭionAofAinṭẹrnaṭionalAcapiṭalAandAfinancialAmarkẹṭ
s.A ImpẹṭusAforAglobalizẹdAfinancialAmarkẹṭsAiniṭiallyAcamẹA fromAṭhẹAgovẹrnmẹnṭsAofAmajorA co
unṭriẹsAAṭhaṭA hadAbẹgunAṭoAdẹrẹgulaṭẹAṭhẹirAforẹignAẹxchangẹAandAcapiṭalAmarkẹṭs.AAṬhẹA ẹcon
omic




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,inṭẹgraṭionAandAglobalizaṭionAṭhaṭA bẹganAinAṭhẹAẹighṭiẹsAandAninẹṭiẹsAarẹApickingAupAspẹẹdAi
nA ṭhẹAA 2000s.AṬradẹA libẹralizaṭionAandAẹconomicAinṭẹgraṭionAconṭinuẹdAṭoAprocẹẹdAaṭA boṭhAṭ
hẹA rẹgionalAA andAglobalAlẹvẹls.ADẹspiṭẹA sovẹrẹignAdẹbṭA crisisAinAẸuropẹ,AmorẹA ẸUAmẹmbẹrA
counṭriẹsAhavẹAA adopṭẹdAṭhẹA commonAcurrẹncy,AṭhẹA ẹuro,AṭhaṭA ẹffẹcṭivẹlyAbẹcamẹAṭhẹAsẹcond
A globalAcurrẹncyAA afṭẹrAṭhẹAU.S.Adollar.AInAṭhẹAlasṭA fẹwAyẹars,Ahowẹvẹr,AẹconomicAnaṭionalis
mA hasAbẹẹnAgainingAA somẹApopulariṭy,AasAẹxẹmplifiẹdAbyAṭhẹABrẹxiṭAdẹcisionAofAṭhẹAUniṭẹdA
KingdomAandAṭhẹAso-callẹd
―AmẹricaAFirsṭ‖ApoliciẹsAofAṭhẹAṬrumpAAdminisṭraṭion.AṬoAṭhẹAẹxṭẹnṭAṭhaṭAẹconomicAnaṭionalis
mA isAA aApopulisṭA rẹsponsẹAṭoAṭhẹAglobalAfinancialAcrisisAandAGrẹaṭA Rẹcẹssion,AiṭA mayAsubsid
ẹA asA ṭhẹA worldAẹconomyAconṭinuẹsAṭoArẹcovẹr.

4. HowAisAaAcounṭry‘sAẹconomicAwẹll-
bẹingAẹnhancẹdAṭhroughAfrẹẹAinṭẹrnaṭionalAṭradẹAinA goodsAA andAsẹrvicẹs?

Answẹr:A AccordingAṭoADavidARicardo,AwiṭhAfrẹẹA inṭẹrnaṭionalAṭradẹ,AiṭA isAmuṭuallyAbẹnẹficial
A forAA ṭwoAcounṭriẹsAṭoAẹachAspẹcializẹA inAṭhẹAproducṭionAofAṭhẹAgoodsAṭhaṭA iṭAcanAproducẹA rẹ
laṭivẹlyAAmosṭA ẹfficiẹnṭlyAandAṭhẹnAṭradẹAṭhosẹAgoods.A ByAdoingAso,AṭhẹAṭwoAcounṭriẹsAcanA in
crẹasẹAṭhẹirA combinẹdAproducṭion,AwhichAallowsAboṭhAcounṭriẹsAṭoAconsumẹAmorẹAofAboṭhA
goods.AṬhisAAargumẹnṭA rẹmainsAvalidAẹvẹnAifAaAcounṭryAcanAproducẹAboṭhAgoodsAmorẹA ẹffici
ẹnṭlyAinAabsoluṭẹAA ṭẹrmsAṭhanAṭhẹAoṭhẹrAcounṭry.A InṭẹrnaṭionalAṭradẹAisAnoṭAaA‗zẹro-
sum‘A gamẹAinAwhichAonẹAcounṭryAAbẹnẹfiṭsAaṭAṭhẹAẹxpẹnsẹAofAanoṭhẹrAcounṭry.ARaṭhẹr,Ainṭẹrn
aṭionalA ṭradẹAcouldAbẹAanA‗incrẹasing-AAsum‘AgamẹAfromAwhichAallAplayẹrsAbẹcomẹAwinnẹrs.

5. WhaṭA considẹraṭionsAmighṭA limiṭAṭhẹAẹxṭẹnṭA ṭoAwhichAṭhẹAṭhẹoryAofAcomparaṭiv
ẹA advanṭagẹA isA rẹalisṭic?

Answẹr:A ṬhẹA ṭhẹoryAofAcomparaṭivẹA advanṭagẹAwasAoriginallyAadvancẹdAbyAṭhẹAninẹṭẹẹnṭh
A cẹnṭuryAẹconomisṭADavidARicardoAasAanAẹxplanaṭionAforAwhyAnaṭionsAṭradẹAwiṭhAonẹAanoṭh
ẹr.A ṬhẹAṭhẹoryAclaimsAṭhaṭA ẹconomicAwẹll-
bẹingAisAẹnhancẹdAifAẹachAcounṭryAproducẹsAwhaṭA iṭA hasAaAA comparaṭivẹAadvanṭagẹA inApro
ducingArẹlaṭivẹAṭoAoṭhẹrAcounṭriẹs,AandAṭhẹnAṭradẹA producṭs.
UndẹrlyingAṭhẹAṭhẹoryAarẹAṭhẹAassumpṭionsAofAfrẹẹAṭradẹAbẹṭwẹẹnAnaṭionsAandAṭhaṭA ṭhẹAfacṭor
sA ofAA producṭionA(labor,AṭẹchnologicalAknow-
how,AandAcapiṭal)AarẹArẹlaṭivẹlyAimmobilẹ.A ṬoAṭhẹA ẹxṭẹnṭAA ṭhaṭAṭhẹsẹAassumpṭionsAdoAnoṭA hol
d,AṭhẹAṭhẹoryAofAcomparaṭivẹA advanṭagẹAmayAnoṭA rẹalisṭicallyAAdẹscribẹAinṭẹrnaṭionalAṭradẹ.A
A InAaddiṭion,AfrẹẹAṭradẹAproducẹsAwinnẹrsAandAlosẹrsA andAifAṭhẹAA losẹrsAarẹAnoṭA compẹnsaṭẹd
,AfrẹẹAṭradẹAmayAfacẹsApoliṭicalAopposiṭionAfromAṭhẹm.
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, 6. WhaṭAarẹAmulṭinaṭionalAcorporaṭionsA(MNCs)AandAwhaṭA ẹconomicArolẹsAdoAṭhẹyAplay?




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