Individual a ssignment 1 – ( 5 %)) From the textbook:: Page 59 , Question number
ID: 1107396 • Letter: I
Question
Individual a ssignment 1 – ( 5 %))
From the textbook:: Page 59 , Question number 12 ; a,, b,, and c..
Requirements::
1.. Please answer each question with only on e paragraph (ii..ee total of three paragraphs))..
2.. Please do the work on your own
3.. Assignment is due on S unday (110//88//117))
Chapter 2: International , the U.S. that are sign difference ed coun- ng trade, progress rn more port? rate. Any country can use this mechanism to impose trade barriers." What does this statement mean? 12. International investments U.S.-based MNCS commonly invest in foreign securities. a. Assume that the dollar is presently weak and is expected to strengthen over time. How will these expectations affect the tendency of U.S. investors to invest in foreign securities? b. Explain how low U.S. interest rates can affect the tendency of U. S.-based MNCs to invest abroad. C. In general terms, what is the attraction of foreign investments to U.S. investors? 13. Exchange Rate Effects on Trade a. Explain why a stronger dollar could enlarge the U.S. balance-of-trade deficit. Explain why a weaker dollar sould affect the U.S. balance-of-trade deficit. have an competitive advantage in trade arena? C. If a country imposes lower rates, does that provide an unfai 15. China-U.S. Balance of Tr ongoing debate between the Ur China regarding whether the C should be revalued upward. TE China is substantially lower tr United States. a. Would the U.S. balance- be eliminated if the yuan was. percent? Or by 40 percent? C b. If the yuan was revalued stantially reduced the U.S. d. ducts, would this shift the t United States or toward oth - reduceExplanation / Answer
1)If dollar is presently week and then it expects to be strengthen in future , demand for foreign securities will rise .
Reason- Presently , an investor can invest in less amount in foreign securities but in near future, he will receive more when he will sale an investment .
E.g. presently Rs. 50 of India = $1 of USA , an invetor invests in securities of India worth Rs 10,000 . An investor can purchase security for $200 .
In future dollar appreciates and $1- Rs 75 of India , investor has security which is for $ 200 . Now if he will sell it , he will get $200*75 which is rs.15,000
Profit is 5,000 in Indian rupee .
Therefore, investor would like to invest in foreign security.
2. Low US interest rates means less rate of return on investment in USA as compared to others. If an investor is getting more interest in other country with same amount of investment, he will invest in country with high interest .
3. Attraction of foreign investments to US investors is High interest rate and future expectations of appreciating dollar. Every investor invests in securities which provides them higher return . Both above factors provide them greater benefits , therefore, they attract to outside USA investment.