2.2 INTERNATIONAL FINANCE
1. Discuss the foreign exchange market, procedure for quotation and arbitrage.
Narrate current situation of Euro currency and Euro Credit.
3. Critically evaluate the International Financial Market Instruments. Discuss the
internal and external techniques of risk involved in the International Business.
3. “A non- financial firm should always completely hedge all its exposures to
environmental risk factors such as exchange rates and interest rates.” Critically
discuss this recommendation.
4. Real exchange rate changes are measured by adjusting nominal exchange rate
changes by inflation differentials, the latter in turn being measured by some
price index such as WPI or CPI. It is said that a firm faces operating exposure
only if real exchange rates change. Is this strictly true? Why or why not?
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