Question 1 ACF1260 International Finance (Non-specialist) A. Define and explain the theory of comparative advantage (use an example if necessary). (15 marks) B. Discuss limitations of comparative advantage (Include in your answer at least five key limitations to this theory). (20 marks) C. Spencer Grant is a New York-based investor. He has been closely following his investment in 100 shares of Vaniteux, a French firm that went public in February of 2010. When he purchased his 100 shares at 17.25 per share, the euro was trading at $1.360/. Currently, the share is trading at 28.33 per share, and the dollar has fallen to $1.4170/. a. If Spencer sells his shares today, what percentage change in the share price would he receive? b. What is the percentage change in the value of euro versus the dollar over this same period? c. What would be the total return Spencer would earn on his shares if he sold them at these rates? (15 marks: 5 marks each) [Total 50 marks]