. Describe the typologies of private capital flows and the
rationale for the existence of a ‘hierarchy’ of private capital
flows to developing countries.
. Discuss the difference between a bank-based and a market-based
financial system, and state whether the financial systems of
developing countries are generally characterised as bank-based or
market-based. Does the structure of the financial system affect the
nature of financial relationships?
Explain the concept of interest rate parity. Provide the
rationale for its possible existence. Assume that the existing U.S.
one‑year interest rate is 10 percent and the Canadian one‑year
interest rate is 11 percent. Also assume that interest rate parity
exists. Should the forward rate of the Canadian dollar exhibit a
discount or a premium? If U.S. investors attempt covered interest
arbitrage, what will be their return? If Canadian investors attempt
covered interest arbitrage, what will be their return?
Read page 302 (The American Ethnic Hierarchy)
Describe the current ethnic hierarchy in American society.
What are the factors that are used to stratify groups in
American society?
Do you agree with the assertion that our society has an ethnic
hierarchy? Why or why not?
2 full paragraphs
Describe the features of capital flows during the old era of
financial globalization, and during the modern era: which are the
main differences? In an open economy is the investment rate
determined by the domestic savings rate? Does national income
coincide with GDP? What is the distinction between the domestic
capital stock and national wealth?
International Macroeconomic (Reference text book Gobal Market
Capital by Obsfeld Taylor
18. Provide an explanation or the rationale for the cost of
capital (average or overall cost of capital, WACC) to an economic
firm. That is, explain why the WACC should be used as the minimum
required return.