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Week 02 Tutorial Mishal Manzoor Fins3616 PDF
Week 02 Tutorial Mishal Manzoor Fins3616 PDF
Week 02 Tutorial Mishal Manzoor Fins3616 PDF
BUSINESS FINANCE
FINS3616
Assessment Structure
ANSWER:
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COUNTRY A COUNTRY B
Steel (tons) Corn Steel (tons) Corn
(bushels) (bushels)
36 0 54 0
30 3 45 9
24 6 36 18
18 9 27 27
15 12 18 36
6 15 9 45
0 18 0 54
3(a): Do you expect trade to take place between countries A and
B? Why?
ANSWER: YES.
3(b): Which country will export steel? Which will export corn?
ANSWER:
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❑ free float
❑ managed float
❑ target-zone arrangement
❑ fixed-rate system
❑ current hybrid system
Q1(B): How does each work?
ANSWER:
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(A): What is the cross-exchange rate between the franc and the
mark?
ANSWER:
❑ Since things equal to the same thing are equal to each other,
we have FF 6.90403 = DM 2.05853.
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❑ Exports
❑ Licensing local firms abroad to manufacture the company’s
product
❑ Setting up a joint venture with a foreign company
❑ Or by foreign direct investment
Q3: What is the IMF? What is its role in the world economy?
ANSWER:
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