Clemson University FIN 4110 Exam 1 with complete solution
1 view 0 purchase
Course
Clemson University
Institution
Clemson University
Clemson University FIN 4110 Exam 1 with complete solution
3 Functions of Money
1. Medium of exchange
2. Unit of account
3. Store of value
Multinational Corporation
a company with production and distribution facilities in more than 1 country
Reasons to globalize
find new markets; lower cos...
Clemson University FIN 4110 Exam 1 with complete
solution
3 Functions of Money
1. Medium of exchange
2. Unit of account
3. Store of value
Multinational Corporation
a company with production and distribution facilities in more than 1 country
Reasons to globalize
find new markets; lower costs; utilize different resources/materials
Raw Material Seekers
the earliest multinationals; exploit markets in other countries
Market Seekers
produce and sell in foreign markets (ex. IBM, McDonald's, Nestle)
Cost Minimizers
seek lower cost production abroad in order to remain cost competitive
2 Types of Cost Minimization
1. Offshoring: production by foreign affiliate
2. Outsourcing: production by foreign 3rd party
Costs of Globalization
1. lost manufacturing jobs in U.S.
2. major plant closings
3. high paying union jobs replaced with low paying service jobs
3 Requirements for Arbitrage
1. no risk
2. can't use any personal money
3. instantaneous return
Market Efficiency
prices reflect all relevant information
Capital Asset Pricing
equates risk and return; investors expect compensation for systematic risk
2 Types of Risk
1. Systematic: undiversifiable (risk premium)
2. Unsystematic: diversifiable (no risk premium)
Exchange Rate
price of one unit of currency expressed as a certain price in local currency
Factors that impact exchange rates
1. Interest Rates
2. Inflation
3. Political Uncertainty
4. GDP Growth
Asset Market Model
the exchange rate between 2 currencies represents the price that just balances the
relative supplies and demands for assets denominated in the 2 currencies
2 Characteristics of Money
1. Store of Value
2. Store of Liquidity
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller missyk2030. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
