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Chapter 02
International Monetary System
1. The international monetary system can be defined as the institutional framework within
which
A. international payments are made.
B. movement of capital is accommodated.
C. exchange rates among currencies are determined.
D. all of the above
2. Corporations today are operating in an environment in which exchange rate changes may
adversely affect their competitive positions in the marketplace. This situation, in turn, makes
it necessary for many firms to
A. carefully manage their exchange risk exposure.
B. carefully measure their exchange risk exposure.
C. both a) and b)
3. The international monetary system went through several distinct stages of evolution. These
stages are summarized, in alphabetic order, as follows:
(i)- Bimetallism
(ii)- Bretton Woods system
(iii)- Classical gold standard
(iv)- Flexible exchange rate regime
(v)- Interwar period
2-1
4. In the United States, bimetallism was adopted by the Coinage Act of 1792 and remained a
legal standard until 1873,
A. when Congress dropped the silver dollar from the list of coins to be minted.
B. when Congress dropped the twenty-dollar gold piece from the list of coins to be minted.
C. when gold from the California gold rush drove silver out of circulation.
D. when gold from the California gold rush drove gold out of circulation.
5. The monetary system of bimetallism is unstable. Due to the fluctuation of the commercial
value of the metals,
A. the metal with a commercial value lower than the currency value tends to be used as metal
and is withdrawn from circulation as money (Gresham's Law).
B. the metal with a commercial value higher than the currency value tends to be used as
money (Gresham's Law).
C. the metal with a commercial value higher than the currency value tends to be used as metal
and is withdrawn from circulation as money (Gresham's Law).
D. none of the above
6. In the 1850s the French franc was valued by both gold and silver, under the official French
ratio which equated a gold franc to a silver franc 15½ times as heavy. At the same time, the
gold from newly discovered mines in California poured into the market, depressing the value
of gold. As a result,
A. the franc effectively became a silver currency.
B. the franc effectively became a gold currency.
C. silver became overvalued under the French official ratio.
D. answers a) and c) are correct
2-2
Chapter 02 - International Monetary System
8. Suppose that the pound is pegged to gold at £20 per ounce and the dollar is pegged to gold
at $35 per ounce. This implies an exchange rate of $1.75 per pound. If the current market
exchange rate is $1.80 per pound, how would you take advantage of this situation? Hint:
assume that you have $350 available for investment.
A. Start with $350. Buy 10 ounces of gold with dollars at $35 per ounce. Convert the gold to
£200 at £20 per ounce. Exchange the £200 for dollars at the current rate of $1.80 per pound to
get $360.
B. Start with $350. Exchange the dollars for pounds at the current rate of $1.80 per pound.
Buy gold with pounds at £20 per ounce. Convert the gold to dollars at $35 per ounce.
C. a) and b) both work
D. None of the above
9. Suppose that the pound is pegged to gold at £20 per ounce and the dollar is pegged to gold
at $35 per ounce. This implies an exchange rate of $1.75 per pound. If the current market
exchange rate is $1.60 per pound, how would you take advantage of this situation? Hint:
assume that you have $350 available for investment.
A. Start with $350. Buy 10 ounces of gold with dollars at $35 per ounce. Convert the gold to
£200 at £20 per ounce. Exchange the £200 for dollars at the current rate of $1.80 per pound to
get $360.
B. Start with $350. Exchange the dollars for pounds at the current rate of $1.60 per pound.
Buy gold with pounds at £20 per ounce. Convert the gold to dollars at $35 per ounce.
C. a) and b) both work
D. None of the above
10. Suppose that the United States is on a bimetallic standard at $30 to one ounce of gold and
$2 for one ounce of silver. If new silver mines open and flood the market with silver,
A. only the silver currency will circulate.
B. only the gold currency will circulate.
C. no change will take place since citizens could exchange their gold currency for silver
currency at any time.
D. none of the above
2-3
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The Project Gutenberg eBook of Christopher
Columbus (1440-1506)
This ebook is for the use of anyone anywhere in the United
States and most other parts of the world at no cost and with
almost no restrictions whatsoever. You may copy it, give it away
or re-use it under the terms of the Project Gutenberg License
included with this ebook or online at www.gutenberg.org. If you
are not located in the United States, you will have to check the
laws of the country where you are located before using this
eBook.
Author: W. L. Alden
Language: English
BY
W. L. ALDEN
NEW YORK
HENRY HOLT AND COMPANY
1881
Copyright, 1881,
BY
HENRY HOLT & CO.
Electrotyped and Printed by
S. W. GREEN’S SON,
74 and 76 Beekman Street,
NEW YORK.
CONTENTS
CHAPTER I.
Early Years.
CHAPTER II.
First Plans of Exploration.
CHAPTER III.
In Search of a Patron.
CHAPTER IV.
He Receives His Commission.
CHAPTER V.
He Is Commissioned, and Sets Sail.
CHAPTER VI.
The Voyage.
CHAPTER VII.
The Discovery.
CHAPTER VIII.
Adventures on Land.
CHAPTER IX.
The Homeward Voyage.
CHAPTER X.
His Reception, and Preparation For a Second Expedition.
CHAPTER XI.
Explorations in the West Indies.
CHAPTER XII.
Attempts at Colonization.
CHAPTER XIII.
Search For China.—subjugation of Hispaniola.
CHAPTER XIV.
Difficulties and Discouragements.
CHAPTER XV.
His Third Expedition.
CHAPTER XVI.
His Return in Disgrace.
CHAPTER XVII.
His Fourth Expedition.
CHAPTER XVIII.
His Last Years.
CHAPTER XIX.
His Character and Achievements.
CHAPTER I.
EARLY YEARS.
[Æt. 0; 1436]
still believes that it was the birthplace of the great Admiral. But this
fact simply shows that Mr. Tennyson drank out of his own flask. Few
people who visit Cogoletto take this wise precaution, and the result is
that, after drinking to the memory of Columbus, they go on their way
firmly convinced that wherever else he was born, he certainly was
not born at Cogoletto.
It was the opinion of the late Washington Irving that Genoa was
the real birthplace of Columbus. This opinion was what might have
been expected from a man of such unfailing good taste.
The production of infants is to this day one of the leading
industries of Genoa, and as it is a large and beautiful city, we cannot
do better than to adopt Mr. Irving’s opinion that it was Columbus’s
favorite birthplace. At the same time we might as well select the year
1436 as the year of his birth, with the determination of adhering to it,
for it adds much to the symmetry of a biography if the subject thereof
is given a definite and fixed birthday.
At his birth Christopher Columbus was simply Cristoforo
Colombo, and it was not until he arrived at manhood that he was
translated into Latin, in which tongue he has been handed down to
the present generation. At a still later period he translated himself
into Spanish, becoming thereby Christoval Colon. We can not be too
thankful that he was never translated into German, for we could
scarcely take pride in a country discovered by one Kolompo.
[Æt. 1; 1442]
There is not a word of truth in these two anecdotes, but they are
introduced in order to afford the reader a slight glimpse of the
boyhood of Columbus. They probably compare favorably, in point of
veracity, with the average anecdotes of the boyhood of great men,
and they show us that even while Columbus was only six and eight
years old he was interested in scientific pursuits, and already gave
promise of great tediousness. Still, it would be unwise for any one to
believe them, and we will pass on to the more prosaic but truthful
facts of Columbus’s life.
Young Christopher early conceived a prejudice against wool-
combing, although it was his father’s earnest desire that he should
adopt that profession. Fernando Columbus, the son of the admiral,
evidently felt ashamed of his noble father’s early wool-combing
exploits, and says that Domenico Colombo, so far from desiring his
son to comb wool, sent him at the age of thirteen to the University of
Pavia to study navigation, with a view of ultimately sending him to
sea. Now, although the United States Government does undertake to
teach seamanship with the aid of textbooks to young men at the
Annapolis Naval Academy, the idea that a young man could become
a sailor without going to sea had never occurred to the Genoese,
and old Domenico never could have been stupid enough to send his
son to the Pavia University with the expectation that he would
graduate with the marine degree of “A. B.” Undoubtedly Christopher
went to Pavia, but it is conceded that he remained there a very short
time. If we suppose that, instead of studying his Livy, his Anabasis,
and his Loomis’s Algebra, he spent his time in reading Marryat’s sea
stories, and dime novels illustrative of piracy, we can understand
why his university course came to a sudden end, and why Domenico
remarked to his friends that Christopher studied navigation while at
Pavia.
[Æt. 14; 1459]
IT is at Lisbon that we are able for the first time to put our finger
decisively upon Columbus. The stray glimpses which we catch of
him before that time, whether at Genoa, Pavia, Naples, or Cape
Carthagena, are fleeting and unsatisfactory; his trustworthy
biography begins with his residence at Lisbon. He reached there, we
do not know by what route, in the year 1470, having no money and
no visible means of support. Instead of borrowing money and buying
an organ, or calling on the leader of one of the Lisbon political “halls”
and obtaining through his influence permission to set up a peanut
stand, he took a far bolder course—he married. Let it not be
supposed that he represented himself to be an Italian count, and
thereby won the hand of an ambitious Portuguese girl. The fact that
he married the daughter of a deceased Italian navigator proves that
he did not resort to the commonplace devices of the modern Italian
exile. Doña Felipa di Perestrello was not only an Italian, and as such
could tell a real count from a Genoese sailor without the use of
litmus paper or any other chemical test, but she was entirely without
money and, viewed as a bride, was complicated with a mother-in-
law. Thus it is evident that Columbus did not engage in matrimony as
a fortune-hunter, and that he must have married Doña Felipa purely
because he loved her. We may explain in the same way her
acceptance of the penniless Genoese; and the fact that they lived
happily together—if Fernando Columbus is to be believed—makes it
clear that neither expected anything from the other, and hence
neither was disappointed.
The departed navigator, Di Perestrello, had been in the service
of the Portuguese king, and had accumulated a large quantity of
maps and charts, which his widow inherited. She does not appear to
have objected to her daughter’s marriage, but the depressed state of
Columbus’s fortunes at this period is shown by the fact that he and
his wife went to reside with his mother-in-law, where he doubtless
learned that fortitude and dignity when exposed to violence and
strong language for which he afterwards became renowned. Old
Madame Perestrello did him one really good turn by presenting him
with the maps, charts, and log-books of her departed husband, and
this probably suggested to him the idea which he proceeded to put
into practice, of making and selling maps.
Map-making at that time offered a fine field to an imaginative
man, and Columbus was not slow to cultivate it. He made beautiful
charts of the Atlantic Ocean, putting Japan, India, and other
desirable Asiatic countries on its western shore, and placing
quantities of useful islands where he considered that they would do
the most good. These maps may possibly have been somewhat
inferior in breadth of imagination to an average Herald map, but they
were far superior in beauty; and the array of novel animals with
which the various continents and large islands were sprinkled made
them extremely attractive. The man who bought one of Columbus’s
maps received his full money’s worth, and what with map-selling,
and occasional sea voyages to and from Guinea at times when
Madame Perestrello became rather too free in the use of the stove-
lid, Columbus managed to make a tolerably comfortable living.
The island of Porto Santo, then recently discovered, lay in the
track of vessels sailing between Portugal and Guinea, and must
have attracted the attention of Columbus while engaged in the
several voyages which he made early in his married life.
It so happened that Doña Felipa came into possession, by
inheritance, of a small property in Porto Santo, and Columbus
thereupon abandoned Lisbon and with his family took up his
residence on that island. Here he met one Pedro Correo, a bold
sailor and a former governor of Porto Santo, who was married to
Doña Felipa’s sister. Columbus and Correo soon became warm
friends, and would sit up together half the night, talking about the
progress of geographical discovery and the advantages of finding
some nice continent full of gold and at a great distance from the
widow Perestrello.
At that time there were certain unprincipled mariners who
professed to have discovered meritorious islands a few hundred
miles west of Portugal; and though we know that these imaginative
men told what was not true, Columbus may have supposed that their
stories were not entirely without a basis of truth. King Henry of
Portugal, who died three years after Columbus arrived at Lisbon, had
a passion for new countries, and the fashion which he set of fitting
out exploring expeditions continued to prevail after his death.
There is no doubt that there was a general feeling, at the period
when Columbus and Correo lived at Porto Santo, that the discovery
of either a continent on the western shore of the Atlantic, or a new
route to China, would meet a great popular want. Although the
Portuguese had sailed as far south as Cape Bojador, they believed
that no vessel could sail any further in that direction without meeting
with a temperature so great as to raise the water of the ocean to the
boiling-point, and it was thus assumed that all future navigators
desirous of new islands and continents must search for them in the
west. The more Columbus thought of the matter, the more firmly he
became convinced that he could either discover valuable islands by
sailing due west, or that at all events he could reach the coast of
Japan, China, or India; and that it was clearly the duty of somebody
to supply him with ships and money and put him in command of an
exploring expedition. With this view Correo fully coincided, and
Columbus made up his mind that he would call on a few respectable
kings and ask them to fit out such an expedition.
[Æt. 34; 1474]