Introduction to Finance: Markets, Investments, and Financial Management, 15th Edition

CHAPTER 6

International Finance and Trade

Chapter Learning Objectives...

AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO DO THE FOLLOWING:

• Explain how the international monetary system evolved and how it operates today.
• Describe the efforts undertaken to achieve economic unification of Europe.
• Describe how currency or foreign exchange markets are organized and operate.
• Explain how currency exchange rates are quoted.
• Describe the factors that affect currency exchange rates.
• Describe how the world banking systems facilitate financing of sales by exporters and purchases by importers.
• Identify recent developments in the U.S. balance of payments.

Where We Have Been...

In Chapter 5, you learned how the Federal Reserve System (Fed) operates in conjunction with governmental policy makers (the president, Congress, and the U.S. Treasury) in the common effort of achieving the goals of economic growth, high and stable employment levels, price stability, and a balance in international transactions. You now understand policy instruments of the Treasury and how the national debt is managed. You learned how the money supply is expanded and contracted and the importance of the monetary base and ...