Finance short essay questions
- Suppose the current trade imbalances disappear in the next decade. Explain what will happen to capital flows if that occurs. Identify and explain the factors that will contribute to the end of the trade imbalances and corresponding change in capital flows.
- Identify and explain the indicators of a country's economic and political risks.
- Explain why a multinational company may have a lower cost of capital than a purely domestic company.
- Some forecasters believe that the foreign exchange market is efficient and forward exchange rates are unbiased predictors of future spot exchange rates. Explain what is meant by unbiased predictor in terms of how the forward rate performs in estimating the future spot rate.