Question 1

Complete the following table with the formula (P1) * (payoff if state 1) + (P2)* (payoff if state 2), where P1 and P2 are the probabilities of state 1 and 2, respectively.

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Question 2

Explain Tobin's idea of "Don't put all your eggs in one basket."

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Question 3

Define risk aversion and give an example of a risk-averse person?

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Question 4

Calculate the expected payoff for the following cases, where q1 and q2 are the probabilities of state 1 and 2, respectively.

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Question 5

Why is the foreign exchange market so vital?

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Question 6

Suppose you are offered a gamble in which you win $1,000 half the time but lose $1,000 half the time. If you are risk averter will you take the gamble?

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Question 7

How can international trade in assets make both countries better off?

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Question 8

Why is it useful to make a distinction between debt and equity instruments?

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Question 9

Suppose you are offered a gamble in which you win $1,000 1/3 of the time but lose $800 2/3 of the time. If you are risk lover will you take the gamble? What will your expected payoff be?

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Question 10

Suppose that trade in asset is not allowed but the two countries sign a treaty that guarantees the sending of 25 tons of kiwi in good time by the high output country in that season. What will the outcome be of such a treaty? Explain why.

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Question 11

Suppose the two countries can trade shares in the ownership of their perspective assets. Further, assume that a Home owner owns a 10 percent share in Foreign land. He will receive 10 percent share in Foreign land, and thus receives 10 percent of the annual Foreign kiwi fruit harvest. Further assume that a Foreign owner of a 10 percent share in Home land is permitted. In this case, a Foreigner is entitled to 10 percent of the Home harvest. Calculate the expected value of kiwi fruit for each investor. Is the investor better off?

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Question 12

Calculate the expected payoff for the following cases with the formula: (P1) * (payoff if state 1) + (P2) * (payoff if state 2), where P1 and P2 are the probabilities of state 1 and 2, respectively.

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The answer of Calculate the expected payoff for the following...

Question 13

Suppose the two countries can trade shares in the ownership of their perspective assets. Further assume that a Home owner owns a 25 percent share in Foreign land. He will receive 25 percent share in Foreign land and thus receives 25 percent of the annual Foreign kiwi fruit harvest. Further assume also that a Foreign owner of a 25 percent share in Home land is permitted. In this case, a Foreigner is entitled to 25 percent of the Home harvest. Calculate the expected value of kiwi fruit for each investor.

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Question 14

Complete the following table.

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Question 15

Calculate the expected payoff for the following cases, where q1 and q2 are the probabilities of state 1 and 2, respectively.

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Question 16

Calculate the average, for each country of kiwi harvest.

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Question 17

Suppose the two countries can trade shares in the ownership of their perspective assets without any restrictions. Assume that the consumers in both countries would like to totally smooth their consumption. Describe the outcomes.

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Question 18

Why is portfolio diversification so important in international trade?

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Question 19

Complete the following table.

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Question 20

What is the difference between equity instruments and debt instruments?

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Quiz 20: Financial Globalization: Opportunity and Crisis

Complete the following table with the formula (P1) * (payoff if state 1) + (P2)* (payoff if state 2), where P1 and P2 are the probabilities of state 1 and 2, respectively.

Explain Tobin's idea of "Don't put all your eggs in one basket."

Define risk aversion and give an example of a risk-averse person?

Calculate the expected payoff for the following cases, where q1 and q2 are the probabilities of state 1 and 2, respectively.

Why is the foreign exchange market so vital?

Suppose you are offered a gamble in which you win $1,000 half the time but lose $1,000 half the time. If you are risk averter will you take the gamble?

How can international trade in assets make both countries better off?

Why is it useful to make a distinction between debt and equity instruments?

Suppose you are offered a gamble in which you win $1,000 1/3 of the time but lose $800 2/3 of the time. If you are risk lover will you take the gamble? What will your expected payoff be?

Suppose that trade in asset is not allowed but the two countries sign a treaty that guarantees the sending of 25 tons of kiwi in good time by the high output country in that season. What will the outcome be of such a treaty? Explain why.

Calculate the expected payoff for the following cases with the formula: (P1) * (payoff if state 1) + (P2) * (payoff if state 2), where P1 and P2 are the probabilities of state 1 and 2, respectively.

Complete the following table.

Calculate the expected payoff for the following cases, where q1 and q2 are the probabilities of state 1 and 2, respectively.

Calculate the average, for each country of kiwi harvest.

Suppose the two countries can trade shares in the ownership of their perspective assets without any restrictions. Assume that the consumers in both countries would like to totally smooth their consumption. Describe the outcomes.

Why is portfolio diversification so important in international trade?

Complete the following table.

What is the difference between equity instruments and debt instruments?