Globalization
Foreign exchange and ____________ sets apart international from domestic finance.
Political risk
The gold standard still has ardent supporters who believe that it provides __________
an effective hedge against price inflation
The current account balance, which is the difference between a country's exports and imports, is a component of the country's GNP. Other components of GNP include _________________
consumption and investment and government expenditure.
_______________________is the economic, legal, and institutional framework in which corporate control and cash flow rights are distributed among shareholders, managers and other stakeholders of the company.
Corporate governance
The capital account may be divided into three categories— ___________, _____________ and_______________
direct investment, portfolio investment, and other investment.
A firm with________ ownership may give rise to conflicts of interest between dominant shareholders and small outside shareholders.
concentrated
The core of the Bretton Woods system was the ___________
International Monetary Fund.
If Japan exports more than it imports, then one can infer that the yen would be likely to _______ against other currencies.
appreciate
A firm's funds in excess of what's needed for undertaking all profitable project is ___________
free cash flow
Currently,_________________ are comprised of gold, foreign exchanges, special drawing rights (SDRs), and reserve positions in the International Monetary Fund (IMF).
international reserve assets
______________, __________ and _________ are barriers still hamper free movements of people, goods, services, and capital across national boundaries.
legal restrictions, excessive transportation costs, information asymmetry
Gresham's Law states that______________
bad money drives good money out of circulation.
When a country's currency depreciates against the currencies of major trading partners, the country's exports tend to ______ and imports_______ .
rise and fall
In the United Kingdom, the majority of public companies voluntarily abide by the ___________ on corporate governance.
Code of Best Practice
The Sarbanes-Oxley Act of 2002 stipulates that ______________(name one provision.)
public accounting oversight board be created.
the company should appoint independent financial experts to its audit committee.
both CEO and CFO sign off on the company's financial statements.
The doctrine of comparative advantage was first put forth by
David Ricardo
Canada, France, Japan, Germany, Italy, the U.K., and the United States are members of what international economic organiztion_____
G7
The vast majority of the foreign-exchange reserves held by central banks are denominated in _________
United States Dollars
Comparing the U.S. with the German and Japanese corporate governance systems, the U.S. system is ___________ and the German and Japanese systems are _____________.
"market centered" and "bank centered."
On January 1, 1999, an epochal event took place in the arena of international finance when __________
eleven of 15 EU countries adopted a common currency called the euro.
A _________ incorporated in one country and has production and sales operations in several other countries.
multinational firm
According to the theory of _________, the relevant criterion for identifying and designing a common currency zone is the degree of factor (i.e., capital and labor) mobility within the zone.
optimum currency areas
The capital account is divided into three subcategories: direct investment, portfolio investment, and other investment. Direct investment involves _____________________________
acquisitions of controlling interests in foreign businesses.
The key requirements of the Cadbury Code of Best Practice state that the positions of_______and _________________ should not reside in the same individual.
CEO and chairman of the board
Underlying the theory of _________________ are assumptions regarding free trade between nations and that the factors of production (land, labor, capital, and entrepreneurial ability) are relatively immobile.
comparative advantage