Financial Innovation and the "Invisible Hand" 11. Do you agree with Adam Smith's view that society can rely more on the hand" than on government to promote economic prosperity? 12. Why is it that a country's postage stamps are not as good a medium of exchange 13. Who is hurt if I issue counterfeit U.S. dollars and use them to purchase valuable 14. Some say the only criterion to use in predicting what will serve as money in the futume its paper currency? goods and services? the real resource cost of producing it, including the transaction costs of verifying its authenticity. According to this criterion what do you think will be the money of the Financial Markets 15, Challenge Question: Suppose Delta Airlines signs a contract to purchase 50 new Boeing 787 planes at fixed negotiated prices and with fixed delivery dates over the next five years. In addition the contract has a special clause stating that an addition The c s Delta the anes may be purchased at th ability to buy four more planes each year for a 5 percent premium to the prices set for the original 50 planes. What sort of derivative security does this special clause represent? What is the primary factor that will determine the value of this clause ov the life of the contract? What value does this clause have in terms of Delta's risk management? Financial Market Rates 16. Should all governments issue debt that is indexed to their domestic price level? Is lam that citizens face with regard to their public officials