国际财务管理课后习题答案chapter6

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1、CHAPTER6INTERNATIONALPARITYRELATIONSHIPSSUGGESTEDANSWERSANDSOLUTIONSTOEND-OF-CHAPTERQUESTIONSANDPROBLEMSQUESTIONS1.Giveafulldefinitionofarbitrage.Answer:Arbitragecanbedefinedastheactofsimultaneouslybuyingandsellingthesameorequivalentassetsorcommoditiesforthepurposeofmakingcertain,guarantee

2、dprofits.2.Discusstheimplicationsoftheinterestrateparityfortheexchangeratedetermination.Answer:Assumingthattheforwardexchangerateisroughlyanunbiasedpredictorofthefuturespotrate,IRPcanbewrittenas:S=[(1+I£)/(1+I$)]E[St+1

3、It].Theexchangerateisthusdeterminedbytherelativeinterestrates,andtheexp

4、ectedfuturespotrate,conditionalonalltheavailableinformation,It,asofthepresenttime.Onethuscansaythatexpectationisself-fulfilling.Sincetheinformationsetwillbecontinuouslyupdatedasnewshitthemarket,theexchangeratewillexhibitahighlydynamic,randombehavior.3.Explaintheconditionsunderwhichtheforwa

5、rdexchangeratewillbeanunbiasedpredictorofthefuturespotexchangerate.Answer:Theforwardexchangeratewillbeanunbiasedpredictorofthefuturespotrateif(I)theriskpremiumisinsignificantand(ii)foreignexchangemarketsareinformationallyefficient.4.Explainthepurchasingpowerparity,boththeabsoluteandrelativ

6、eversions.Whatcausesthedeviationsfromthepurchasingpowerparity?IM-12Answer:Theabsoluteversionofpurchasingpowerparity(PPP):S=P$/P£.Therelativeversionis:e=p$-p£.PPPcanbeviolatediftherearebarrierstointernationaltradeorifpeopleindifferentcountrieshavedifferentconsumptiontaste.PPPisthelawofonepr

7、iceappliedtoastandardconsumptionbasket.5.Discusstheimplicationsofthedeviationsfromthepurchasingpowerparityforcountries’competitivepositionsintheworldmarket.Answer:IfexchangeratechangessatisfyPPP,competitivepositionsofcountrieswillremainunaffectedfollowingexchangeratechanges.Otherwise,excha

8、ngeratechangeswillaffectrelativecompetitivenessofcountries.Ifacountry’scurrencyappreciates(depreciates)bymorethaniswarrantedbyPPP,thatwillhurt(strengthen)thecountry’scompetitivepositionintheworldmarket.6.ExplainandderivetheinternationalFishereffect.Answer:Thei