1) How is international financial management different from domestic financial management? 2

1) How is international financial management different from domestic financial management?

2. How is a country’s economic well-being enhanced through free international trade in goods and services?

3. Explain Gresham’s Law.

4. Suppose that the pound is pegged to gold at 6 pounds per ounce, whereas the franc is pegged to gold at 12 francs per ounce. This, of course, implies that the equilibrium exchange rate should be two francs per pound. If the current market exchange rate is 2.2 francs per pound, how would you take advantage of this situation? What would be the effect of shipping costs?

5. Discuss the advantages and disadvantages of the gold standard.

6. What were the main objectives of the Bretton Woods system?

7. Define balance of payments.

8. Explain official reserve assets and its major components.

9. Explain how to compute the overall balance and discuss its significance.

10. Explain how each of the following transactions will be classified and recorded in the debit and credit of the U.S. balance of payments:(1) A Japanese insurance company purchases U.S. Treasury bonds and pays out of its bank account kept in New York City.(2) A U.S. citizen consumes a meal at a restaurant in Paris and pays with her American Express card.(3) A Indian immigrant living in Los Angeles sends a check drawn on his L.A. bank account as a gift to his parents living in Mumbai.(4) A U.S. computer programmer is hired by a British company for consulting and gets paid from the U.S. bank account maintained by the British company.