There are two companies, A (US) and B (Germany). Company A is looking to hedge some of its Euro exposure by borrowing Euros. And company B is seeking dollars to finance some projects in the US. Both companies want the equivalent of 100$ millions. In order to improve their borrowing conditions they decide to borrow in their own currencies and then swap the debt-service obligations. Current spot rate of $1.4/€, and both companies want to borrow at fixed rate. Assume next figures: - Company A is paying 6 million $/year of interest rate. - Company A can issue euro-denominated debt at 7.5%. - Company B is paying 4.71 Million €/year of interest rate. - Company B can issue dollar-denominated debt at 7.3%. a) Which is the net profit of SWAP for each company?

Consider a two-firm industry. firm 1 (the incumbent) chooses a level of output q1. firm 2 (the potential entrant) observes q1 and then chooses its level of output q2. the demand for the product is p = 100 - q, where q is the total output sold by the two firms which equals q1 +q2. assume that the marginal cost of each firm is zero. a) find the subgame perfect equilibrium levels of q1 and q2 keeping in mind that firm 1 chooses q1 first and firm 2 observes q1 and chooses its q2. find the profits of the two firms-? 1 and ? 2- in the subgame perfect equilibrium. how do these numbers differ from the cournot equilibrium? b) for what level of q1 would firm 2 be deterred from entering? would a rational firm 1 have an incentive to choose this level of q1? which entry condition does this market have: blockaded, deterred, or accommodated? now suppose that firm 2 has to incur a fixed cost of entry, f > 0. c) for what values of f will entry be blockaded? d) find out the entry deterring level of q1, denoted by q1b, as a function of f. next, derive the expression for firm 1

Which result is a positive aspect of globalization?

Which of the following is an example of a positive externality? a. promoting generic drugs would benefit people. b. a lower inflation rate would benefit most consumers. c. compulsory flu shots for all students prevents the spread of illness in the general public. d. singapore has adopted a comprehensive savings plan for all workers known as the central provident fund.