1.Based on political changes and improving market conditions there appears to be opportunities to expand in Eastern Europe. Aloyol Industries is currently evaluating their strategy related to these opportunities in Eastern Europe and considering what the competition might do. Aloyol is evaluating expansion in Eastern Europe or maintaining current operations in Eastern Europe and focusing on growing in the United States.During deliberations, it appears the decision will be to focus on expanding market share in the U.S. and maintain operations in Eastern Europe at the current levels.The forecasts presented to you and the rest of the management team is based on the firm maintaining a 15 percent market share the firm currently has in Eastern Europe.Do you think this is an appropriate estimate for the firm's?If not, does it likely overestimate of underestimate next year's actual Eastern Europe market share?

2.Free trade has generally been seen as a positive for firms, consumers etc. Over the past several decades, efforts for the most part have been taken around the globe to remove trade barriers to achieve "free trade".Some high level executives have made statements implying free trade is not conceivable due to exchange rates.It is often claimed that despite treaties removing trade barriers any country can use the exchange rate mechanism to impose trade barriers.Briefly explain what is meant by that statement and provide a two country fictional example of how this would work.

3.There have been international financial crisis that have started in a given region, for example, the Asian contagion in 1997 caused unrest throughout the world's financial markets and more recently the credit crisis in 2007 and 2008 started with the subprime mortgage market in the United States. Financial markets have become more integrated.How does this integration of financial markets cause the crises to spread across many countries? Use the 2008 subprime crisis to explain your response and provide examples.

4.In the news, you will often see the media discuss strong versus weak currency. From a U.S. perspective, what is the impact of a weak U.S. dollar?What is the impact of a strong U.S. dollar?

5.The International Fischer effect (IFE) considers nominal interest rates. When considering the U.S. relative to other countries assume the U.S. interest rates are generally above foreign interest rates. Applying IFE, what would the conclusion be regarding future strength or weakness of the dollar? Where should foreign (non- U.S.) investors invest if they believe IFE? Should U.S. investors invest in U.S. securities or foreign securities if they believe IFE?