The Theory of Comparative Advantage Essay Dissertation 

The Theory of Comparative Advantage Essay Dissertation

Order ID	53003233773
Type	Essay
Writer Level	Masters
Style	APA
Sources/References	4
Perfect Number of Pages to Order	5-10 Pages

Description/Paper Instructions

The Theory of Comparative Advantage Essay Dissertation

1. The theory of comparative advantage
   (Points: 5)
   A. claims that economic well-being is enhanced if each country’s citizens produce only a single product.
2. claims that economic well-being is enhanced when all countries compare commodity prices after adjusting for exchange rate differences in order to standardize the prices charged all countries.
3. claims that economic well-being is enhanced if each country’s citizens produce that which they have a comparative advantage in producing relative to the citizens of other countries, and then trade production.
4. claims that no country has an absolute advantage over another country in the production of any good or service.

 

2. We are now living in a world where all the major economic functions—consumption, production, and investment (Points: 5)
   A. are still inherently local.
   B. are still regional in nature.
   C. are slowly becoming globalized.
   D. are highly globalized.
3. Suppose that the current exchange rate is €0.80 = $1.00. The direct quote, from the U.S. perspective is (Points: 5)
   A. €1.00 = $1.25.
   B. €0.80 = $1.00.
   C. £1.00 = $1.80.
   D. None of the above
4. Most foreign exchange transactions are for (Points: 5)
   A. intervention by central banks.
   B. interbank trades between international banks or nonbank dealers.
   C. retail trade.
   D. purchase of hard currencies.
5. An investor believes that the price of a stock, say IBM’s shares, will increase in the next 60 days. If the investor is correct, which combination of the following investment strategies will show a profit in all the choices?

(i) – buy the stock and hold it for 60 days
(ii) – buy a put option
(iii) – sell (write) a call option
(iv) – buy a call option
(v) – sell (write) a put option
(Points: 5)
A. (i), (ii), and (iii)
B. (i), (ii), and (iv)
C. (i), (iv), and (v)
D. (ii) and (iii)

6. The source of translation exposure
   (Points: 5)
   A. is a mismatch of net assets and net liabilities denominated in the same currency.
   B. is a mismatch of net assets and net liabilities denominated in different currencies.
   C. is a mismatch of current assets and current liabilities denominated in different currencies.
   D. none of the above
7. Merchant banks are different from traditional commercial banks in what way(s)?
   (Points: 5)
   A. Merchant banks can engage in investment banking activities.
   B. Merchant banks can arrange for foreign exchange transactions.
   C. Merchant banks can assist their clients in hedging exchange rate risk.
   D. All of the above.
8. In terms of the types of instruments offered,
   (Points: 5)
   A. the Yankee bond market has been more innovative than the international bond market.
   B. the international bond market has been much more innovative than the U.S. market.
   C. the most innovations have come from Milan, just like any other fashion.
   D. none of the above.
9. The sale of new common stock by corporations to initial investors occurs in (Points: 5)
   A. the primary market.
   B. the secondary market.
   C. the OTC market.
   D. the dealer market.
10. Stock in Daimler AG, the famous German automobile manufacturer trades on both the Frankfurt Stock Exchange in Germany and on the New York Stock Exchange. On the Frankfurt bourse, Daimler closed at a price of €54.34 on Wednesday, March 5, 2008. On the same day, Daimler closed in New York at $83.55 per share. To prevent arbitrage trading between the two exchanges, the shares should trade at the same price when adjusted for the exchange rate. The $/€ exchange rate on March 5 was $1.5203/€1.00. Thus, €54.34 ´ $1.5203/€ = $82.61, while the closing price in New York was $83.55. The difference is easily explainable by the fact that: (Points: 5)
    A. transactions costs exceeded the price difference, so no arbitrage was possible even for market makers.
    B. no one noticed the arbitrage that day, but in a day or so the opening price will adjust.
    C. the New York market closes several hours after the Frankfurt exchange, and thus market prices or exchange rates had changed slightly.
    D. none of the above.
11. When firms undertake foreign direct investment, (Points: 5)
    A. they become multinational corporations (MNCs).
    B. they reduce their tax rate since they can tell each country that they do business in that they paid their taxes in other countries.
    C. they can exploit workers by paying them below-market wages in depreciating currencies.
    D. all of the above
12. Systematic risk: (Points: 5)
    A. is the opposite of market risk.
    B. is also known as non-diversifiable risk.
    C. is completely eliminated after investors fully diversify their portfolio holdings.
    D. all of the above
13. North Korea, Iran, and Cuba are examples of (Points: 5)
    A. countries with low levels of political risk.
    B. countries with high levels of political risk.
    C. countries that are politically and economically isolated from the rest of the world.
    D. both b) and c)
14. Corporations are becoming multinational not only in the scope of their business activities but also in their capital structure (Points : 5)
    A. by raising funds from domestic as well as government sources.
    B. by raising funds from foreign as well as domestic sources.
    C. this trend reflects not only a conscious effort on the part of firms to raise the cost of capital by international sourcing of funds but also the ongoing liberalization and deregulation of international financial markets that make them accessible for many firms.
    D. both b) and c)
15. The cost of capital is (Points : 5)
    A. the minimum rate of return an investment project must generate in order to pay its financing costs.
    B. the minimum rate of return an investment project must generate in order to pay its financing costs plus a reasonable profit.
    C. the maximum rate of return an investment project must generate in order to pay its financing costs.
    D. the maximum rate of return an investment project must generate in order to pay its financing costs plus a reasonable profit.
16. The cost of equity capital is (Points: 5)
    A. the expected return on the firm’s stock that investors require.
    B. difficult to estimate by using the Capital Asset Pricing Model (CAPM).
    C. a nonlinear function of the political risk inherent in the security.
    D. none of the above
17. Perhaps the most important decisions that confront the financial manager are (Points: 5)
    A. which capital projects to select.
    B. the correct capital structure for the firm.
    C. the correct capital structure for projects.
    D. none of the above
18. Capital budgeting analysis is very important, because it (Points: 5)
    A. involves relatively inexpensive, noncritical investments in consumables.
    B. has to do with the firm’s reputation among the public.
    C. will determine how competitive and profitable a firm will be.
    D. all of the above
19. Efficient cash management techniques can (Points: 5)
    A. reduce the investment in cash balances and foreign exchange transaction expenses.
    B. provide for minimum return from the investment of excess cash.
    C. result in borrowing at highest rates when a temporary cash shortage exists.
    D. all of the above
20. The idea that an ideal tax should be effective in raising revenue for the government but not have any negative effects on the economic decision-making process of the taxpayer is referred to as
    (Points: 5)
    A. capital-export neutrality.
    B. capital-import neutrality.
    C. national neutrality.
    D. none of the above.
21. The Theory of Comparative Advantage Essay Dissertation

RUBRIC QUALITY OF RESPONSE NO RESPONSE POOR / UNSATISFACTORY SATISFACTORY GOOD EXCELLENT Content (worth a maximum of 50% of the total points) Zero points:  Student failed to submit the final paper. 20 points out of 50:  The essay illustrates poor understanding of the relevant material by failing to address or incorrectly addressing the relevant content; failing to identify or inaccurately explaining/defining key concepts/ideas; ignoring or incorrectly explaining key points/claims and the reasoning behind them; and/or incorrectly or inappropriately using terminology; and elements of the response are lacking. 30 points out of 50:  The essay illustrates a rudimentary understanding of the relevant material by mentioning but not full explaining the relevant content; identifying some of the key concepts/ideas though failing to fully or accurately explain many of them; using terminology, though sometimes inaccurately or inappropriately; and/or incorporating some key claims/points but failing to explain the reasoning behind them or doing so inaccurately.  Elements of the required response may also be lacking. 40 points out of 50:  The essay illustrates solid understanding of the relevant material by correctly addressing most of the relevant content; identifying and explaining most of the key concepts/ideas; using correct terminology; explaining the reasoning behind most of the key points/claims; and/or where necessary or useful, substantiating some points with accurate examples.  The answer is complete. 50 points:  The essay illustrates exemplary understanding of the relevant material by thoroughly and correctly addressing the relevant content; identifying and explaining all of the key concepts/ideas; using correct terminology explaining the reasoning behind key points/claims and substantiating, as necessary/useful, points with several accurate and illuminating examples.  No aspects of the required answer are missing. Use of Sources (worth a maximum of 20% of the total points). Zero points:  Student failed to include citations and/or references. Or the student failed to submit a final paper. 5 out 20 points:  Sources are seldom cited to support statements and/or format of citations are not recognizable as APA 6th Edition format. There are major errors in the formation of the references and citations. And/or there is a major reliance on highly questionable. The Student fails to provide an adequate synthesis of research collected for the paper. 10 out 20 points:  References to scholarly sources are occasionally given; many statements seem unsubstantiated.  Frequent errors in APA 6th Edition format, leaving the reader confused about the source of the information. There are significant errors of the formation in the references and citations. And/or there is a significant use of highly questionable sources. 15 out 20 points:  Credible Scholarly sources are used effectively support claims and are, for the most part, clear and fairly represented.  APA 6th Edition is used with only a few minor errors.  There are minor errors in reference and/or citations. And/or there is some use of questionable sources. 20 points:  Credible scholarly sources are used to give compelling evidence to support claims and are clearly and fairly represented.  APA 6th Edition format is used accurately and consistently. The student uses above the maximum required references in the development of the assignment. Grammar (worth maximum of 20% of total points) Zero points:  Student failed to submit the final paper. 5 points out of 20:  The paper does not communicate ideas/points clearly due to inappropriate use of terminology and vague language; thoughts and sentences are disjointed or incomprehensible; organization lacking; and/or numerous grammatical, spelling/punctuation errors  10 points out 20:  The paper is often unclear and difficult to follow due to some inappropriate terminology and/or vague language; ideas may be fragmented, wandering and/or repetitive; poor organization; and/or some grammatical, spelling, punctuation errors 15 points out of 20:  The paper is mostly clear as a result of appropriate use of terminology and minimal vagueness; no tangents and no repetition; fairly good organization; almost perfect grammar, spelling, punctuation, and word usage. 20 points:  The paper is clear, concise, and a pleasure to read as a result of appropriate and precise use of terminology; total coherence of thoughts and presentation and logical organization; and the essay is error free. Structure of the Paper (worth 10% of total points) Zero points:  Student failed to submit the final paper. 3 points out of 10: Student needs to develop better formatting skills. The paper omits significant structural elements required for and APA 6th edition paper. Formatting of the paper has major flaws. The paper does not conform to APA 6th edition requirements whatsoever. 5 points out of 10: Appearance of final paper demonstrates the student’s limited ability to format the paper. There are significant errors in formatting and/or the total omission of major components of an APA 6th edition paper. They can include the omission of the cover page, abstract, and page numbers. Additionally the page has major formatting issues with spacing or paragraph formation. Font size might not conform to size requirements.  The student also significantly writes too large or too short of and paper 7 points out of 10: Research paper presents an above-average use of formatting skills. The paper has slight errors within the paper. This can include small errors or omissions with the cover page, abstract, page number, and headers. There could be also slight formatting issues with the document spacing or the font Additionally the paper might slightly exceed or undershoot the specific number of required written pages for the assignment. 10 points: Student provides a high-caliber, formatted paper. This includes an APA 6th edition cover page, abstract, page number, headers and is double spaced in 12’ Times Roman Font. Additionally, the paper conforms to the specific number of required written pages and neither goes over or under the specified length of the paper.
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