国际投资第三章(改).doc

Chapter 3 Under a system of exchange rates pegged around official parities, each of the following is a possible remedy for a county facing a balance of payments deficit except: Using its international reserves of gold and convertible currencies. Adopting tariffs on imports and introducing capital control. Applying expansionary macroeconomic policy that drives prices up and interest rates down. Letting its exchange rate drop within the allowable band around the central parity. In the European Monetary System, a member county was allowed to fluctuate its exchange rates within a band around the fixed parities with other members.In 1993, this system came under severe speculative pressure. Several currencies were pushed down to the limit of their allowed fluctuation margin against the DM; for example, the French franc could not stay within 2.25 percent of its central parity with the DM. One solution would have been to keep the same fluctuation band around the central parity but devalue the parity of the franc against the DM. Instead, the European Union decided to keep the same bilateral parities but widen the allowed fluctuation band to 15 percent on each side of parity. What do you think are the advantages of each solution? Which solution is more likely to percent currency speculation? 3.which of the following statements about the euro is fault? I.the euro is the sole currency of the Eurozone countries. II.the countries in the Eurozone have been limited to the ones that are already in it,and no more countries would be allowed to join it in the future. III.the euro has a floating rate against other currencies,such as the U.S. dollar and the Japanese yen. Interest rate parity between two currencies is more likely to be violated when one of the currencies is from a developing market than when both the currencies are from developed markets.Discuss whether or not you agree with this statement. A U.S institutional investor has invested in a portfolio of stocks in Indi