Lesson 1: Introduction to Global Finance

Question 1

Sometimes known as International Finance or International macroeconomics. It is the study of monetary interactions between two or more countries.

Answer 1

Global Finance

Question 2

It deals with the economic interactions between multiple countries.

Answer 2

International Finance

Question 3

is conducted by large institutions such as the International Finance Corporation and the National Bureau of Economic Research.

Answer 3

International Finance Research

Question 4

Studies the integration between the goods market and the money market, based in the assumption that price levels of said goods are fixed.

Answer 4

Mundell-fleming model

Question 5

Theory that assumes nominal interest rates mirror fluctuations in the spot exchange rate between nations.

Answer 5

International Fisher Effect

Question 6

States that certain geographical regions would maximize economic efficiency if the entire area adopted a single currency.

Answer 6

The Optimum Currency Area Theory

Question 7

Measurement of prices in different areas using a specific good or a specific set of goods to compare the absolute purchasing power between different countries.

Answer 7

Purchasing Power Parity

Question 8

Describes an equilibrium state in which investors are indifferent to interest rates attached to bank deposits in two separate countries.

Answer 8

Interest Rate Parity

Question 9

An example of International Institution of International finance.

Answer 9

Bretton Woods system

Question 10

The collective goal of this initiative was to standardized international monetary exchanges and policies in a broader effort to create post world war II stability.

Answer 10

Bretton woods system

Question 11

A consortium of 189 countries dedicated to creating global monetary cooperation.

Answer 11

International Monetary Fund

Question 12

Also known as the World Bank

Answer 12

International Bank for Reconstruction and Development

Question 13

is arguably the most important influencer of global prosperity and growth.

Answer 13

International Trade

Question 14

Enumerate the Specific areas of study which International Finance analyzes:

Answer 14

(1) Mundell-fleming Model
(2) International Fisher Effect
(3) The Optimum Currency Area Theory
(4) Purchasing Power Parity
(5) Interest Rate Parity

Question 15

Example of International Institutions of International Finance

Answer 15

(1) International Monetary Fund
(2) International Bank for Reconstruction and Development.

Question 16

issued to investors to raise the necessary fund to finance the companies operation in exchange for capital.

Answer 16

Stocks

Question 17

Debt securities with a fixed interest rate on maturity date.

Answer 17

Bonds

Question 18

Collection of all Finance assets.

Answer 18

Portfolio

Question 19

Examples of financial assets

Answer 19

(1) Stocks
(2) Bonds
(3) Cash
(4) Cash Equivalents
(5) Bank Deposits
(6) Loans

Question 20

Purpose of Portfolio

Answer 20

Diversification

Question 21

is a strategy that mixes a wide variety of investments within a portfolio in an attempt to reduce portfolio risk. Diversification is most often done by investing in different asset classes such as stocks, bonds, real estate, or cryptocurrency.

Answer 21

Diversification