Introduction to International Trade (GSDR2117)
Higher Institute of Transport and Logistics (HITL)
Semester: First Semester
Level: 200
Year: 2018
Question One: Explain the following concepts as applied to introduction to
international trade briefly.
a) Absolute purchasing power
b) Exchange rate
c) Balance of payment
d) Devaluation and Depreciation
e) Comparative Advantages
f) Custom Union and Economic Union (3x6 Marks)
Question Two: Suppose that the current spot exchanged rate is €1.50/₤ and the one
year forward exchange rate is €1.60/₤. The one year interest rate is 5.4 percent in
Europe and 5.2 percent in the UK. You can borrow at most 1000,000 (one million
euros) or the equivalent pound amount, that is ₤666,667, at the current spot
exchange rate.
a. Show how you can realize a guaranteed profit from covered interest arbitrage.
Assume that you are a euro-based investor. Show all the steps involved.
b. Determine the size of the arbitrage profit (12 marks)
Question Three
a) Who gains from international trade when the country is importing? Exporting?
b) What are the procedures of customs clearance? (5 marks)
GOOD LUCK!!!!
FIRST SEMESTER EXAMINATIONS
School/Faculty: HITL Department: General Studies Lecture(s): Mr. Nashipu Thalut
Level: 200 Semester: First Academic Year: 2017/2018
Course Code: TLGS 1117 Course Title: Introduction to International Trade Hall: HITL 01 & 02
Date: 21/03/2018 Duration: 2 Hours Time: 12:00 – 2:00
Instruction(s): Answer all Questions
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