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Chapter 18The International Monetary System, 1870–1973Chapter OrganizationMacroeconomic Policy Goals in an Open EconomyInternal Balance: Full Employment and Price-Level StabilityExternal Balance: The Optimal Level of the Current Account International Macroeconomic Policy under the Gold Standard, 1870–1914 Origins of the Gold StandardExternal Balance under the Gold StandardThe Price-Specie-Flow MechanismThe Gold Standard “Rules of the Game”: Myth and RealityBox: Hume v. the MercantilistsInternal Balance under the Gold StandardCase Study: The Political Economy of Exchange Rate Regimes:Conflict over America’s Monetary Standard During the 1890s The Interwar Years, 1918–1939The Fleeting Return to GoldInternational Economic DisintegrationCase Study: The International Gold Standard and the Great DepressionThe Bretton Woods System and the International Monetary Fund Goals and Structure of the IMFConvertibility and the Expansion of Private Capital FlowsSpeculative Capital Flows and CrisesAnalyzing Policy Options under the Bretton Woods System Maintaining Internal BalanceMaintaining External BalanceExpenditure-Changing and Expenditure-Switching PoliciesThe External-Balance Problem of the United StatesCase Study: The Decline and Fall of the Bretton Woods System Worldwide Inflation and the Transition to Floating Rates SummaryChapter OverviewThis is the first of five international monetary policy chapters. These chapters complement the preceding theory chapters in several ways. They provide the historical and institutional background students require to place their theoretical knowledge in a useful context. The chapters also allow students, through study of historical and current events, to sharpen their grasp of the theoretical models and to develop the intuition those models can provide. (Application of the theory to events of current interest will hopefully motivate students to return to earlier chapters and master points that may have been missed on the first pass.)Chapter 18 chronicles the evolution of the international monetary system from the gold standard of1870–1914, through the interwar years, and up to and including the post-World War II Bretton Woods regime that ended in March 1973. The central focus of the chapter is the manner in which each system addressed, or failed to address, the requirements of internal and external balance for its participants.A country is in internal balance when its resources are fully employed and there is price level stability. External balance implies an optimal time path of the current account subject to its being balanced over the long run. Other factors have been important in the definition of external balance at various times, and these are discussed in the text. The basic definition of external balance as an appropriate current-account level, however, seems to capture a goal that most policy-makers share regardless of the particular circumstances.The price-specie-flow mechanism described by David Hume shows how the gold standard could ensure convergence to external balance. You may want to present the following model of the price-specie-flow mechanism. This model is based upon three equations: 1. The balance sheet of the central bank. At the most simple level, this is justgold holdings equals the money supply: G M.2. The quantity theory. With velocity and output assumed constant and bothnormalized to 1, this yields the simple equation M P.3. A balance of payments equation where the current account is a function of thereal exchange rate and there are no private capital flows: CA f(E P*/P)These equations can be combined in a figure like the one below. The 45 line represents the quantity theory, and the vertical line is the price level where the real exchange rate results in a balanced current account. The economy moves along the 45 line back towards the equilibrium Point 0 whenever it is out of equilibrium. For example, the loss of four-fifths of a country’s gold would put that country at Point a with lower prices and a lower money supply. The resulting real exchange rate depreciation causes a current account surplus which restores money balances as the country proceeds up the 45 line froma to 0.FigureThe automatic adjustment process described by the price-specie-flow mechanism is expedited by following “rules of the game” under which governments contract the domestic source components oftheir monetary bases when gold reserves are falling (corresponding to a current-account deficit) and expand when gold reserves are rising (the surplus case).In practice, there was little incentive for countries with expanding gold reserves to follow the “rules of the game.” This increased the contractionary burden shouldered by countries with persistent current account deficits. The gold standard also subjugated internal balance to the demands of external balance. Research suggests price-level stability and high employment were attained less consistently under the gold standard than in the post-1945 period.The interwar years were marked by severe economic instability. The monetization of war debt and of reparation payments led to episodes of hyperinflation in Europe. Anill-fated attempt to return to thepre-war gold parity for the pound led to stagnation in Britain. Competitive devaluations and protectionism were pursued in a futile effort to stimulate domestic economic growth during the Great Depression.These beggar-thy-neighbor policies provoked foreign retaliation and led to the disintegration of the world economy. As one of the case studies shows, strict adherence to the Gold Standard appears to have hurt many countries during the Great Depression.Determined to avoid repeating the mistakes of the interwar years, Allied economic policy-makers metat Bretton Woods in 1944 to forge a new international monetary system for the postwar world. The exchange-rate regime that emerged from this conference had at its center the . dollar. All other currencies had fixed exchange rates against the dollar, which itself had a fixed value in terms of gold.An International Monetary Fund was set up to oversee the system and facilitate its functioning by lending to countries with temporary balance of payments problems.A formal discussion of internal and external balance introduces the concepts of expenditure-switching and expenditure-changing policies. The Bretton Woods system, with its emphasis on infrequent adjustmentof fixed parities, restricted the use of expenditure-switching policies. Increases in U.S. monetary growth to finance fiscal expenditures after the mid-1960s led to a loss of confidence in the dollar and the termination of the dollar’s convertibility into gold. The analysis presented in the text demonstrateshow the Bretton Woods system forced countries to “import” inflation from the United States and shows that the breakdown of the system occurred when countries were no longer willing to accept this burden.Answers to Textbook Problems1. a. Since it takes considerable investment to develop uranium mines, you wouldwant a larger current account deficit to allow your country to finance some of the investment with foreign savings.b. A permanent increase in the world price of copper would cause a short-termcurrent account deficit if the price rise leads you to invest more in coppermining. If there are no investment effects, you would not change yourexternal balance target because it would be optimal simply to spend youradditional income.c. A temporary increase in the world price of copper would cause a currentaccount surplus. You would want to smooth out your country’s consumption bysaving some of its temporarily higher income.d. A temporary rise in the world price of oil would cause a current accountdeficit if you were an importer of oil, but a surplus if you were an exporter of oil.2. Because the marginal propensity to consume out of income is less than 1, atransfer of income from B to A increases savings in A and decreases savings in B.Therefore, A has a current account surplus and B has a corresponding deficit.This corresponds to a balance of payments disequilibrium in Hume’s world, which must be financed by gold flows from B to A. These gold flows increase A’s money supply and decrease B’s money supply, pushing up prices in A and depressingprices in B. These price changes cease once balance of payments equilibrium has been restored.3. Changes in parities reflected both initial misalignments and balance of paymentscrises. Attempts to return to the parities of the prewar period after the war ignored the changes in underlying economic fundamentals that the war caused. This made some exchange rates less than fully credible and encouraged balance ofpayments crises. Central bank commitments to the gold parities were also less than credible after the wartime suspension of the gold standard, and as a result of the increasing concern of governments with internal economic conditions.4. A monetary contraction, under the gold standard, will lead to an increase in thegold holdings of the contracting country’s central bank if other countries do not pursue a similar policy. All countries cannot succeed in doing thissimultaneously since the total stock of gold reserves is fixed in the short run.Under a reserve currency system, however, a monetary contraction causes anincipient rise in the domestic interest rate, which attracts foreign capital. The central bank must accommodate the inflow of foreign capital to preserve theexchange rate parity. There is thus an increase in the central bank’s holdings of foreign reserves equal to the fall in its holdings of domestic assets. There is no obstacle to a simultaneous increase in reserves by all central banksbecause central banks acquire more claims on the reserve currency country while their citizens end up with correspondingly greater liabilities.5. The increase in domestic prices makes home exports less attractive and causes acurrent account deficit. This diminishes the money supply and causescontractionary pressures in the economywhich serve to mitigate and ultimately reverse wage demands and price increases.6. A “demand determined” increase in dollar reserve holdings would not affect theworld supply of money as central banks merely attempt to trade their holdings of domestic assets for dollar rese rves. A “supply determined” increase in reserve holdings, however, would result from expansionary monetary policy in the United States (the reserve center). At least at the end of the Bretton Woods era the increase in world dollar reserves arose in part because of an expansionarymonetary policyin the United States rather than a desire by other central banks to increasetheir holdings of dollar assets. Only the “supply determined” increase indollar reserves is relevant for analyzing the relationship between world holdings of dollar reserves by central banks and inflation.7. An increase in the world interest rate leads to a fall in a central bank’sholdings of foreign reserves as domestic residents trade in their cash forforeign bonds. This leads to a d ecline in the home country’s money supply. The central bank of a “small” country cannot offset these effects sinceit cannot alter the world interest rate. An attempt to sterilize the reserve loss through open market purchases would fail unless bonds are imperfect substitutes.8. Capital account restrictions insulate the domestic interest rate from the worldinterest rate. Monetary policy, as well as fiscal policy, can be used to achieve internal balance. Because there are no offsetting capital flows, monetary policy, as well as fiscal policy, can be used to achieve internal balance. The costs of capital controls include the inefficiency which is introduced when the domestic interest rate differs from the world rate and the high costs of enforcing the controls.9. Yes, it does seem that the external balance problem of a deficit country is moresevere. While the macroeconomic imbalance may be equally problematic in the long run regardless of whether it is a deficit or surplus, large external deficits involve the risk that the market will fix the problem quickly by ceasing to fund the external deficit. In this case, there may have to be rapid adjustment that could be disruptive. Surplus countries are rarely forced into rapid adjustments, making the problems less risky.10. An inflow attack is different from capital flight, but many parallels exist. Inan “outflow” attack, speculators sell the home currency and drain the central bank of its foreign assets. The central bank could always defend if it so chooses (they can raise interest rates to improbably high levels), but if it is unwilling to cripple the economy with tight monetary policy, it must relent. An “inflow”attack is similar in that the central bank can always maintain the peg, it is just that the consequences of doing so may be more unpalatable than breaking the peg. If money flows in, the central bank must buy foreign assets to keep thecurrency from appreciating. If the central bank cannot sterilize all the inflows (eventually they may run out of domestic assets to sell to sterilize thetransactions where they are buying foreign assets), it will have to either let the currency appreciate or let the money supply rise. If it is unwilling to allow and increase in inflation due to a rising money supply, breaking the peg may be preferable.11. a. We know that China has a very large current account surplus, placing them highabove the XX line. They also have moderate inflationary pressures (describedas “gathering” in the question, implying they are not yet very strong). This suggests that China is above the II line, but not too far above it. It wouldbe placed in Zone 1 (see below).b. China needs to appreciate the exchange rate to move down on the graph towardsbalance. (Shown on the graph with the dashed line down)c. China would need to expand government spending to move to the right and hitthe overall balance point. Such a policy would help cushion the negative aggregate demand pressurethat the appreciation might generate.。
From: O'Neill, Jim [IMD]Sent:10 October 2010 18:41Subject:CURRENCY WAR(RYING)... Available for External DistributionCURRENCY WAR(RYING)I have just returned from the US, where in the past 2 days I participated in various events related to the annual IMF-World Bank meetings, and met with many interesting people. Plentiful topics were raised but two struck me as most popular.One, throughout a GS client event re so-called Emerging Markets, the topic of pending significant asset allocations to the brave new world was discussed repeatedly, and in my new life, it is something I will be planning to pursue in some depth with my colleagues.The second was the topic of currencies, with the phrase of the week being “ Currency Wars”. My view is that this is somewhat exaggerated media grabbing headline, although there are some competitive issues of complexity at the core.My own bottom line, is that we are likely to see further strength of currencies of the “new world” against all those of the G3, but whether this emerges in some organized or disorganized manner is up for grabs.THE DOLLAR.Amongst the reasons why this is not is not a straightforward topic, is that the Dollar’s weakness appears to be , part a consequence of the aggressiveness of US monetary and fiscal policy to try and stop the economy from weakening further. Indeed, Dollar weakness is not only a product, but probably a desired one. At a time when the President has declared a goal of doubling exports over 5 years, and below trend inflation, $ weakness seems quite desirable.On one level therefore, the US itself is participating in the “ war” itself although as some I discussed it with , pointed out, it is consequence of policy.What complicates the situation somewhat, is that the Dollar appears to be “ cheap” against a number of currencies, primarily in the developed world in the first place, so Dollar weakness is being desired on top of a weak Dollar. Each of the A$, C$, Euro, Swiss Franc and Pound seem quite expensive relative to the Dollar according to Goldman Sach’s so called GSDEER estimate of fundamental value. Of course, as mentioned, this is something that US policymakers are probably quite happy about, as a tool to help pull the US away from the struggles of the post crisis world.THE YEN.According to the GSDEER approach, the Yen is considerably overvalued, in fact by more than 2 standard deviations against the Dollar. Given Japan’s own deflationary challenges and their competitive issues, seen from a Japan lens, their recent intervention seems quite justified. Of course, seen from a US lens, that is not quite so clear, not least as some other approaches to estimating currency fair value, probably including the IMF preferred one, might suggest the Yen is not especially expensive.On return from Washington, I have a suspicion that US policymakers have some sympathy to the Japanese plight, andI would not be at all surprised if the MOF intervene further, especially now that the BOJ has conducted some furtherQE.Another aspect of the Japanese angle, that needs to be considered, is, in contrast to when the Yen accompanied CNY appreciation in 2005, the authorities are eager to ensure that the Yen is not regarded as a CNY “proxy”.THE EURO.In the past week or so, it has become fashionable for the Euro to recommence its old role as the “non Dollar” as participants search for the week spot in the currency wars, and in line with the Euro area economy growing better than many expected given the EMU crisis, as well as the occasional hawkish line about early exit strategy, a rising Euro appears to be a kind of default attraction.Amongst the dilemma with this judgement, is that close to 1.40, the Euro itself seems overvalued by close to 15pct against the Dollar and if many-especially Asian –currencies peg to the Dollar, EMU policymakers don’t want the Euro rising any more either. For the more troubled crisis Euro countries with significant open trade sectors, Ireland and Spain especially, an ever trade weighted rise of the Euro is the last thing they need. I suspect in coming days, Europe’s policymakers will get more and more noisy about this if the Euro were to rise much above 1.40.OTHER DEVELOPED CURRENCIES.Given this background for the G3 currencies, the search for attractiveness within this battleground, naturally leads one to the currencies of the few that are cyclically recovering so strongly. Each of the A$, C$ and NZ$ have endless attractions, although for each of them, they look anything but cheap against the Dollar by conventional standards, either. In this regard, the Swedish Krona stands out as it has both the cyclical attraction, and despite its strong rally since the Summer, appears to one of the few currencies that is undervalued within the developed world.THE CHINESE REMNINBI.At the heart of the global currency dilemma is of course, the CNY. Widely perceived as being significantly undervalued by most in the developed world, and many in the developing world too, the pressure is back for a faster appreciation of the CNY. Premier Wen, apparently felt so strong about all the pressure last week, on his visit to Europe, that he admonished policymakers to not join in the US calls for a major rally, describing the prospect of a 20pct rise as a disaster for China. As one participant in the GS conference pointed out, the fact he suggested this might mean that an appreciation somewhat between 0 and 20pct might therefore be acceptable! One other participant talked about the issue as one to consider in terms of four stages of development for emerging countries, with the final one being the self confidence that the economy had reached maturity. He felt, and I think he is right, Chinese policymakers don’t feel at all confident enough to absorb such a large move in a short space of time. As I was eager to point out to many, given how strong Chinese consumption, and with it import growth has been the past year, it is far from obvious to me that they need to , in any case.On listening to the various views of other people , and thinking it more though myself, I remain of the view I adopted earlier this year. While China hasn’t reached the full stage of self confidence, it has moved closer to one, and critically, is increasingly focused on a future led by personal consumption. One policymaker was quoted this weekend on the newswires suggesting that China is targeting a current account surplus of no more than 4pct in coming years. I think the decision to allow some fresh strengthening of the CNY, in the context of it also being allowed to move up and down more, was decided in the Spring. It began implementation in the Summer, and they are now allowing some appreciation. I would think we are going to see more of what we have been in September, ahead of the Seoul G20 meetings next month. Another 3pct is quite conceivable in coming weeks before year end.OTHER CURRENCIES.Both for the Euro, and a vast group of emerging currencies, what happens to the CNY is key. For a CNY led move to be especially helpful to the US, it would a special bonus if there were corresponding participation of many other Asian currencies ( although not the Yen as discussed). Whether all of the rest of Asia has the self confidence to accept this or not, we shall see in coming days.Of course, currencies will not just be determined by these issues alone, and the general “ risk on/risk off” mindset superimposed on top of the above issues will also be important. For currencies such as the A$, if you combine the prospect of more confidence from Asian countries to allow their currencies to rise, with that of the easiness of the Fed, it is tough to see the A$ doing anything other than rising further, despite how expensive it might be.Of course, it is quite likely that , even within this framework, some countries will continue to intervene. Moreover, it would seem to me that the justification for some is quite clear. Brazil, for example, which has become such a darling due to both its BRIC status and its high carry, now has a currency which seems considerably overvalued, and I cant see why anyone could object to their trying to restrain it. In their case, a post election tightening of fiscal policy might be key prescription in order to make it easier for themMARKETS DON’T THINK THIS IS A CURRENCY WAR.A final note on the topic. Last week saw another strong week for many equity markets, which suggests that despite the media hype, markets aren’t worrying about currency wars of the worrying type. Indeed, at the core of it, if China isgoing to allow more CNY appreciation, however slowly, in the context of shifting their engine of growth to domesticconsumption, this is rather bullish for all. As I talked about in my thoughts last week, and discussed at length in DC,China is at the core of a broader BRIC and N11 group which is going to create between them , between $ 10 -15 trillionDollars worth of additional consumption this decade. As this happens, there will be plenty for all producers to benefitfrom, almost irrelevant of currency values.Jim O'NeillChairman, Goldman Sachs Asset ManagementCopyright © 2010, Goldman, Sachs & Co. All rights reserved.The views of Jim O’Neill, Chairman of Goldman Sachs Asset Management (GSAM), do not constitute research, investment advice or trade recommendations. Jim’s views may not represent the views of GSAM’s portfolio management teams, the Global Investment Research (GIR) Department (of which Mr. O’Neill is no longer a part), and/or any otherdepartments/divisions of Goldman Sachs and its affiliates. This material is not a product of GIR. Copyright © 2010,Goldman, Sachs & Co. All rights reserved. Please visit our website for additional disclosures.。
Phoney currency wars货币战争？危言耸听！The world should welcome the monetary assertiveness of Japan and America世界应该欢迎日本与美国的货币自信OFFICIALS from the world’s biggest economies meet on February 15th-16th in Moscow on a mission to avert war. Not one with bombs and bullets, but a “currency war”. Finance ministers and central bankers worry that their peers in the G20 will devalue their currencies to boost exports and grow their economies at their neighbours’ expense.2月15至16日,来自世界几大经济体的官员集聚莫斯科,旨在避免一场战争。
这不是一场真刀真枪的战争，而是“货币战争”。
20国集团国家的财政部长、央行行长们都担心对方会贬低货币价值来拉动出口，即采取以邻为壑的措施来促进经济增长。
Emerging economies, led by Brazil, first accused America of instigating a currency war in 2010 when the Federal Reserve bought heaps of bonds with newly created money. That “quantitative easing” (QE) made investors flood into emerging markets in search of better returns, lifting their exchange rates. Now those charges are being levelled at Japan. Shinzo Abe, the new prime minister, has promised bold stimulus to restart growth and vanquish deflation. He has also called for a weaker yen to bolster exports; it has duly fallen by 16% against the dollar and 19% against the euro since the end of September (when it was clear that Mr Abe was heading for power).2010年，以巴西为首的新兴国家率先指责美国挑起货币战。
财富战争第一季中英对照台词101你渴望接受调教对吗You're in need of correction,aren't you?是Yeah.可能会留下痕迹I might leave marks.这可不太好Not a great idea.这可不算拒绝That's not a no.烫得厉害吧That's got to burn.我来帮你缓解一下Let me fix it.纽约南区美国联邦检察官办公室迈克你要明白See,what you have to understand,Michael,这里他妈的是自由区is that this is a fucked up free zone.坐查克位子的人会成为市长Guys who sit in Chuck's chair become mayor.州长Governor.我们不能给别人落下口实We have to be beyond reproach.办公室里容不得一丝火星明白吗So no tinder at the goddamn office,okay?这些话像是我昨天才跟你说过It feels like yesterday I was telling you all this.是18个月前Mm,18months ago.还加了一些我自己的话Added some stuff of my own in there.对火星嘛我听到了Yeah.Tinder.I heard.来吧他在等着呢Come on.He's waiting.私下告诉你司法部长Well,off the record,the,uh,Attorney General's在任命联邦法官时always happy to take my recommendations总是愿意采纳我的建议on who to appoint to the federal bench.很好Very good.谢谢Thank you.长官Sir.好我们手头上有什么案子Okay,guys.What do we got on deck?两起公开调查案件的进度报告Progress report on two of the open investigations.证券交易委员会的阿里·斯派罗Ari Spyros from the S.E.C...等会儿回电话Call back.到了...is here.对不起长官他他不愿I'm sorry,sir.He...he wouldn't...没事金没事谢谢It's fine,Kim.It's okay.Thank you.斯派罗Well,Spyros.什么风把你吹来了What's the occasion?我们现在不是在面谈We're not interviewing right now.有意思这个Funny.Here.就是这东西让你尿裤子了This got your panties all sticky?湿透了Drenched.珀萨姆制药出现可疑交易模式Suspect trading pattern on Pepsum Pharmaceuticals.我一个手下幸运地One of my grunts riding the Midas发现了持续数日的买入高峰spotted a days-long buy spike.世纪资产老橡树投资贵格山脊我找斯派罗Yeah,get me Spyros.看看Take a look.你们可以尽可能地好好分析图表You can all study the charts,或者我也可以把调查结果告诉你们or I can give you the answers to the test.-请说-兰尼·博斯克老橡树投资-Please.-Lenny Bosco...Old Oaks Investments.皮特·德克尔贵格山脊金融Peter Decker...Quaker Ridge Financial.丹·马格里斯世纪资产Dan Margolis...Century Capital.这三家小公司These three small firms对股票买进卖出的时间点掌握得非常准确all knew exactly when to buy and when to sell the stock.他们有内部信息They had inside information.你们一定每天都能接收到这样的信息吧You must get pings like that every day.没错We do.所以呢找他们谈话向他们罚款啊So?Get them talking and fine them.事情没这么简单It's bigger than that.三家公司都与波比·阿克斯罗德有关All three firms have links to Bobby Axelrod.他娘的波比·阿克斯罗德出身平民Bobby fucking Axelrod.Man of the people.你只有在这儿才会露出这副表情You only have that exact look on your face when you're here.这儿的披萨真的好吃极了The pizza's just really fucking good.尝一口Take a bite.不错It's good.只是不错吗分明是美味Good?That is a thing of beauty.这就是我们从小住在这儿的原因That's why we lived in here when we were kids.各位我这儿早上一般不营业I don't usually open for breakfast,guys.还要一份吗You want another?要I do.全都要了We want'em all.全部All?我想加盟你I want to come in with you.合伙经营Partner up.小子你他妈跟他瞎说什么What the fuck did you tell him,kid?我不需要施舍I don't want no charity.我只是把实情告诉他了布鲁诺Look,all I told him was the truth,Bruno,okay?有人打电话跟我说That I got a call from a guy他要在这儿开一家沙拉三明治店who said he was coming in here with a falafel shop,问我能否承包室内改造and would I contract the rebuild.我问你这事的时候And when I asked you about it,你说你被新房东压榨you said that you were getting squeezed by a new landlord.我接到电话后就打了几通电话And when I got that call,I made a couple calls of my own.沙拉三明治店进驻商场Falafel shop goes in the mall.我们给你签了20年的租约We lock in you in on a20-year lease,超额部分我承担and I cover the overage.这这样好吗波比I-I-I don't know,Bobby.你还需要了解什么Come on.What is there to know?以前我每天放学后来你这儿You let me slide for weeks without paying一连几周不付钱你也由着我when I was coming in here every day after school.那是因为你是个好顾客That was just'cause you were a good customer.我想继续做个好顾客Which I want to keep being.一如当年Nothing changes.谢谢谢谢Thank you.Thank you.我想告诉你我早知道你长大后I'd love to tell you I knew you'd grow up会成为这样的人to become what you did,但老实说我真没想到but to be honest,I had no idea.我也一样That makes two of us.来Come here.谢谢Thanks.阿克斯资本康涅狄格州韦斯特波特市波比有个好机会我们准备下手Bobby,we are ready to roll on something sweet.我想你一定有兴趣参一脚I think you'll want to piggyback.什么情况What do you got?鲁姆瑟姆能源被电阳收购Lumetherm Power getting bought by Electric Sun.价格为41美元股票交易价格为35美元Price is$41.Stock's trading at$35.我们预期交易完成后的两周内We're looking at a17%bump股价将上涨17%in two weeks when the deal closes.按年计算就是442美元Annualized,that's$442...据我估算I'd love to size up.买两百万股就能成为主力资金Maybe you buy2million shares for the main fund. -听起来没什么问题-很好-Sounds about right.-Great.盛传斯科特·卡兹维兹是新任董事长Scott Kazawitz's name is being floated as the new chairman.卡兹维兹Kazawitz.这是新信息That's a new piece of information.你花钱聘我不就是为这个Well,that's what you pay me for.谁说这次交易快结束了Who said this deal is gonna close?本今天早上说的Ben said it would this morning.我吗大家都这么说Me?Everyone's saying it.这谁Who is this?我新请的分析师My new analyst.我们会雇用你你一定是个天才Well,if we hired you,you must be a genius.耶鲁毕业Yale?斯坦福然后去了沃顿商学院Stanford.Then Wharton.好斯坦福-沃顿高材生Okay,Stanford-Wharton.卡兹维兹控股电阳Electric Sun is controlled by Kazawitz.他也持有19.3%的鲁姆瑟姆股份He also owns19.3%of Lumetherm因为他和南方风能利害攸关才偷偷拿到的backdoored through his stake in Southern Wind.你知道上周四美林的那笔大宗交易吗You see that block trade last Thursday come out of Merrill?美国证券公司知道那是富塞视Yeah.That was Fortress想在并购前把资金短缺的部分套现cashing out their shorts before the merger.不是吗Wasn't it?交易是在12:52进行的那是午餐时间Trade was at12:52,when everyone was at lunch,也就意味着他们不想被他人知道which tells me they wanted it to be missed.可你们注意到了有点本事You guys caught it,which is something,I guess.但你们看待这个事情的方向不对But you're looking at it backward.电阳出的价是为了暂时支持鲁姆瑟姆Electric Sun's offer was just a ploy而耍的花招to temporarily prop up Lumetherm.典型的科兹维兹式背弃输家手段他很无情Typical Kazawitz play to bail on a loser.He's an animal.那笔大宗交易让科兹维兹摆脱南方风能The block trade was Kazawitz getting out of Southern Wind,摆脱鲁姆瑟姆getting out of Lumetherm.他操控全局现已置身事外He rode the story,now he's out,这意味着你得出来which means you need to be out.实际上要卖空In fact,short.股价将跌至32美元谈判破裂后还会变It'll slide to$32and change after word breaks.这一手真漂亮阿克斯That's a good catch,Axe.我的胆固醇够高了My cholesterol's high enough.别说这些腻歪我丹泽学聪明点Don't butter my ass,Danzig.Just get smarter.你对手头上的信息解读得不错Your read was good with the information you had.你还是新人会明白的You're new.You'll figure it out.否则就给我走人Or you'll be gone.老天爷啊Jesus Christ.对啊他念的是霍夫斯特拉大学Yeah.And he went to Hofstra.这事可闹大了是犯罪啊This is big.It's criminal.我也想抱波比·阿克斯罗德大腿了And I want to be a part of treeing Bobby Axelrod.我还想当宇航员呢Hey,I want to be an astronaut,可你得知道天气要是不好我也会晕机but,uh,you know,I get airsick in choppy weather.你的举证责任要轻一些Your burden of proof is lower.他们愿意和你谈They'll talk to you因为他们很乐意交完罚款然后接着干because they're happy to pay a fine and move on.我可是干活跑腿的一线员工I'm at the coalface.我真不想看到你在这儿溜达And I really don't appreciate you strolling in here教我如何调配我的资源and telling me how to deploy my resources因为你他妈的都没法自己立案because you can't build your own fucking case.我懂了你们是摇滚明星I get it.You guys are rock stars.对我们也懂了你也想加入Yeah,we get it.You want to be one,too.都无所谓了None of that matters.斯派罗你要是锁定了Uh,Spyros,if you've locked on to some trail of bread crumbs某些能指向波比·阿克斯罗德的线索that leads to Bobby Axelrod,那对大家而言可是共赢啊that could be a win for everyone.那么把你的东西留下我们会看的So,leave your stuff,we'll take a look,也会通知你案子是否严重到and we'll let you know if it rises to the level我们可以起诉的程度that we can prosecute,不会被驳回上诉one that won't be reversed on appeal.你知道我也理解你的为难之处You know,I understand the source of your reluctance.我也有妻子I have a wife,too.可这是你的工作...But it's your job...你得到答复了Hey,you got your answer.没什么好说的了We're done.我爱着也牢记你们每一个人的父亲I loved and remember each and every one of your fathers,你们将在今年秋季入学so I'm proud of all of you我以你们为傲who are ready to head off to school in the fall.到目前为止在纪念基金会的帮助下26of ours put through college我们有26人上完大学by the Memorial Foundation so far.今年的这批我们来认识一下And this year's group...so let's bring them up,为他们取得的成绩给予热烈的掌声and let's give them a round of applause for their achievement.弗雷迪·阿卡费诺考上了杜克大学Freddie Aquafino,off to Duke.弗雷迪弗雷迪Freddie,Freddie.我和你父亲曾是并肩打拼的商业伙伴I traded shoulder to shoulder with your father.他会为你今天取得的成绩骄傲He'd be so proud of you today.这是第一年的学费和食宿费First year's tuition and board.好过来All right,come here.各位这就是重点所在That's what this is all about,guys.不仅在于我们公司如何挺过了911Not only how our firm survived9/11,还在于我们没有放弃but how we didn't give up.在于我们如何向对方及我们的家人承诺How we committed to each other,to our family.今日能共富贵我甚为感动And I am so moved by how we've all flourishedtogether.有人比其他人更富贵Some flourishing more than others.站在那里的不应该是你It's just wrong that you're the one standing there.好了够了All right,that's enough.不不没事琼No,no.It's okay.June...我能体会I'd feel the same way.我懂I get it.你一定在想"他为何可以幸免于难You got to be thinking,"Why was he spared?而我丈夫遇难了"Why is my husband gone?"在飞机袭击后的几个月里For months after the planes hit,我能做的就是扪心自问all I could do was ask myself why.为何我是唯一幸存下来的人Why was I the only surviving partner?我当时为何没在那里Why wasn't I there?我本可以做点什么吗Could...could I have done something?为何我是那天上午Why was I the only one out of the office唯一出去开会的人on meetings that morning?我们永远无法得知答案We'll never know.所以我给了自己理由So I made up my own"Why."因为你们Because of you.你把一切都揽到了自己身上波比You put it all on your back,Bobby.我是世上最伟大的人吗Am I the greatest guy in the world?当然不是Hell,no.我只是做了已逝伙伴和好友们I just did what I knew the partners and friends I'd lost 也会为我家人做的事would've done for my family.你丈夫也会做的事琼What your husband would've done,June.你也知道我很难过And you know I'm sorry.因为我每天都在想念雷克'Cause I miss Rake every day...就像我美丽的妻子萝拉just as my beautiful wife,Lara,思念她英勇的哥哥迪恩一样misses her heroic brother Dean.波比·阿克斯罗德就像全盛期的麦克·泰森Bobby Axelrod is Mike Tyson in his prime.而你不会希望遭遇全盛时期的麦克·泰森And you do not want Mike Tyson in his prime.还记得当时和他对战的家伙们结局如何吗Remember what happened to the guys who fought him then?记得他们被打得面目全非Yeah,they got their faces pushed in.可最后他也被打败了But eventually he got beat.博斯特·道格拉斯把他打得很惨Buster Douglas knocked him on his ass.-没错-要番茄酱吗-Right.-Ketchup?关键词是"最后""Eventually"is the key word.泰森该退位的时候When Tyson was ready to go.我履职以来Since my appointment,我们办公室在金融起诉案上未尝一败this office is undefeated in financial prosecutions...81比081and0.那是因为我知道什么才是正确的时机And that's because I know when the time is right.我明白但是这可是起大案子I get it,but...this would be a big one.布莱恩今天早上的事你有什么看法Bryan,what do you think happened here this morning?我们得到了一条重大信息We got significant information.有可能也可能是斯派罗在给我们下套Maybe.Or maybe it was Spyros setting us up.如果我们先出手在刑事诉讼上输了Now,we go in first and lose in the criminal action,身处证交会的斯派罗仍然可以做民事起诉Spyros in the S.E.C.can still get him civilly.我们赢斯派罗获利我们要是输了Now,we win,Spyros wins.We lose...他妈的斯派罗还是获利Spyros still fucking wins.去他的番茄酱没了Damn.The ketchup's empty.我们这是在下三维国际象棋We've got to be playing three-dimensional chess.阿克斯是这个地方的民间英雄Axe is a folk hero in this town.这家伙去年向纽约市消防员基金会The guy gave the New York City Firefighter's Foundation捐了一亿美元$100million last year.警方在世贸大楼遗址给他立了个牌子Police gave him a plaque at Ground Zero他那破名字就写在上面with his goddamn name on it.以前公路标志牌上不也都是斯皮策州长的名字Spitzer's name was on all the highway signs,too.是牌子就会倒下Signs come down.所以我这么爱你啊That's why I love you,man.但是斗牛士不会杀一头刚出场的牛But a good matador doesn't try to kill a fresh bull.你得等牛被刺了几次之后再说You wait until he's been stuck a few times.我们需要一个切入的机会无论多小We need an opening,however small.等抓到了可乘之机再下手Then we get the guy the moment that he's gettable,就像对其他人一样just like the others.如果有输的可能就绝不动手But not if there's a chance we lose.那另一件事呢What about...the other issue?斯派罗提到的家里面的那位The one Spyros mentioned...home?他说对吗Was he right about that?不对No.对不起对不起I'm sorry.I'm sorry.我我不I-I don't...-我不知道-今天过得不容易-I don't know what...-You know what,it's a tough day大家都一样for everyone.只是Just...我才被逼无奈把遨享仕游艇卖掉I just had to sell the Oceanis.雷克超爱那艘船的Rake just loved that boat.我相信你这么难过就是因为这个I am sure that's why it upset you.其实我在和波比开始约会之前You know,me,I never set foot on a yacht从未上过游艇until I started dating Bobby.在因伍德这个地方长大In Inwood,growing up,我坐过的船只有史坦顿岛的渡轮the only boating we ever did was the Staten Island Ferry.爱尔兰大家庭兄弟姐妹五个Big Irish family.Five sibs.关系倒是不错Close,though.消防员警察护士Firemen,cops,nurses.我后来搬到这边Then,when I moved up here,在这里我看懂了每个人是如何看待我this world,I saw how everyone looked at me.我从来没有瞧不起你I never judged.当然没有Of course not.所以我努力打理自己So I got my act together.我现在已经很适应这样的生活And I'm comfortable in this life.但是在因伍德学到的一些事But certain things you learn in Inwood,从来不会忘却比如说they never leave you...you know,like the idea如果有人和你不愉快that if someone has a problem with you还亲自找上你and they come to you in person,你就要尽力解决这个问题you do what you can to take care of it.但是如果他们当着大家的面抱怨But if they take that beef public,按照我老家的人的作风场面就不可收拾了the ground just falls out from beneath them where I'm from.你会发现你只有孤身一人You find yourself all alone.你是在威胁我吗Are you threatening me?你说的真他妈对You're fucking right I am.我就是这么长大的It's how I grew up.先生打扰一下Excuse me,sir?什么事Yes?可能是我多嘴I may be speaking out of turn...当你们讨论艾克斯罗德的事的时候I probably shouldn't have even been in the room 我本来都不应该待在你办公室的where Axelrod was discussed...但是你们知道沙滩那边有个叫诺顿的地方吗but you know the Norton place out at the beach?-怎么-不是你们是美国检察官-Why would we?-Not you.The U.S.Attorney.他父亲的房子就在那码头附近His father's house is around the jetty.我知道那栋房子怎么了Yes,I know the house.What?我刚听说波比·艾克斯罗德想买下那栋房子I just heard Bobby Axelrod is trying to buy it.你从哪儿听说的Where did you hear that?书记员的表亲是房产经纪人的员工他说的Court clerk's cousin works for therealtor and mentioned it.-多少钱-8300万美元-How much?-$83million.真的吗Really?那一定会被大肆报道That would be widely reported.铺天盖地Widely.人们厌恶购买这类东西的人People hate guys who buy things like that.最近我的魔力都不知道丢哪儿了I just lost my mojo somewhere along the line.都他妈没了It's fucking gone.而你是魔力太太所以我预约了面谈And you're Mrs.Mojo,so I booked the appointment.是魔力医生It's Dr.Mojo.没错Right.我听说人到了这个岁数就会这样I hear it happens to guys my age.我可能是抑郁了Maybe I'm depressed.我可能需要吃点百忧解或者郁复伸什么的Maybe I should try some Prozac, Effexor...这个我们等会再说We'll get to that.你有保持按时吃饭睡觉锻炼吗Now,have you been eating,sleeping, exercising?有或多或少吧Yeah,more or less.可能睡得不多Maybe not so much with the sleeping.和你夫人相处呢And things with your wife?大部分时间还好Okay,mostly.性生活呢Sex?正常Normal.我结婚十年了所以I've been married10years,so...所以减少到每天一次了So down to just once a day.所以真的只是业绩的事吗So,it's really just the book?从年初至今I'm down4%...我亏损了4%year to date.别人都是两位数增长Everyone else is up double digits.我却亏了I'm down.-我完了-你不用吃药-I'm fucked.-You don't need meds.你不过是听从了错误的声音You're just listening to the wrong voice.你在听的那个声音正对着你You're tuned into the one yelling at you用大喇叭喊你真他妈笨over the loudspeaker that you're fucking stupid你的绩效一团糟and your performance blows.然而你忽略了你内心中那个安静的声音And you're ignoring the quiet one inside它告诉你男儿血性在哪telling you where the alpha is.就是那个声音让你来这Now,that's the voice that got you here.如果你愿意倾听那声音还在原地And it's still there if you're willing to listen.那个声音告诉你了什么What's that voice telling you?虽然我有小小的失败That even though I've stiffed a few但我非常的优秀that I'm pretty damn good.站起来Stand up.站起来Stand up.你去年拿下的记录是多少What'd you take down last year?720万$7.2million.720万$7.2million.720万...你感受一下$7.2mill...feel that.720万$7.2million.手拿近一点Bring it close.720万$7.2million.你心里那个声音是怎么说的So,what's it saying?-说我是奇才-这就对了-That I'm awesome.-There you go.还要对那个吵闹的只会冷言冷语的声音And what does it have to say back回敬一句什么呢to that loud,critical voice?回一句"滚你妈的"It's saying,"Fuck you."很好Good!坐下Sit down.现在回到你的彭博平台Now,I want you to go back to your Bloomberg斩掉那些亏损的仓位你清楚是哪些and cut bait on your losers...you know the ones.你一直在死扛着The ones you've been defending,希望它们会逆转hoping they'll come round,但私心里你知道它们永远不会but,secretly,you know never will.我要你保证I want you to just commit你准备好打持久战that you're in it for the long haul,你终将成功that you will succeed.当你那么做时新的思路And once you do that,the new ideas,盈利品种会自然地展现出来the winners,will present themselves因为你是个成功者because you are a winner.你身处特种部队You're in the Special Forces here.你是海豹突击队的队员You are a Navy SEAL.你能成为他们一员是有原因的And there's a reason for that.海豹突击队会签错你吗Did the S.E.A.L.S make a mistake signing you up?不他们不会No.They did not.海豹突击队从不犯错The S.E.A.L.S don't make mistakes.所以回去那边做该做的事So get out there and do what needs to be done.我们就聊到这里了We have to stop here.阿克斯资本小家伙们Hello,guys.-爸爸-你们过得怎么样-Daddy!-Oh,how are you?Hm?学校怎么样学了什么How was school?What'd you get up to?-好无聊-好无聊-It was boring.-It was boring.无聊很好钱花得值Boring.Fantastic.Money well spent.那些我们吃过晚饭再聊好吗Those go off after dinner,okay?好Okay!宝贝Hey,babe.亲爱的Hi,honey.你在忙些什么呢What are you working on?只是一些会议记录Just session notes.恋母情结泛滥导致他们举步维艰了吗Wall-to-wall Oedipal Complexes making them all go limp?你对人性的理解可真是透彻You have an amazing understanding of people.我们有什么喝的What are we drinking,here?老样子The usual.犯罪打击得如何How's crime fighting?老样子The usual.你对你的职位还满意吗You good with your situation?我知道你说这阵子可能过得有点无聊I know you said you might've been feeling bored a while back.我可不是这么说的That's not exactly what I said.你是说你不能肯定自己是否还在成长You said,uh,you weren't sure if you were still growing.为什么说这个What's this about?我和美国通用公司的首席法律顾问聊过了I was talking to the head counsel of G.E.,他们在招HR的老大and they're looking for a new head of H.R.如果你有兴趣我可以去打个招呼I can put in the word if you want it.是不是...Is there s...有什么原因导致我不能继续现在的工作is there some reason I can't keep doing my job?没有你这话什么意思No.What do you mean?我听别人说有职位空缺所以来告诉你I heard about a position,so I presented it.工作的时候在董事会里操控别人Don't you get enough of moving the pieces还不够吗around the board at work?好吧这个工作机会你不想听那就算了Okay.You don't want to hear about opportunities,fine.你准备起诉阿克斯公司里的谁吗Are you prosecuting somebody at Axe?怎么了查克What's going on,Chuck?第一个问题答案是没有First off,no.第二个你知道我们不能讨论And second,you know that we don't discuss that.所以赶紧把你那破工作辞了So quit your fucking job.凯文带你妹妹上楼Hey,Kev,will you take your sister upstairs把洗澡水打开and,uh,start the bath?我一会就上去好吗I'll be up in a minute,okay?谢谢Thank you.放松点儿Take it easy,okay?我他妈的是美国联邦检察官温蒂I'm the goddamn U.S.Attorney,Wendy.所以呢我们结婚之前我就在那上班了So?I've been working there since before we were married比你当职还早得多 and long before you were in office.并不是说我们那会儿Look,not that we're there,不过我们确实一直有讨论没准哪天but we did always discuss that the day might come就会发生冲突when there was a conflict.那是在我收入是你八倍之前讨论的That was before I was making eight times what you make.也在你让老查克开始玩这招之前And before you started making Chuck Sr.plays like this.别扯上他好么Leave him out of it.Okay?还有谁挣的钱多真的吗And who makes more money?Really?我们就这么教孩子们吗Is this,uh,what we're teaching the kids?那我们是要教孩子Oh,are we teaching them that Daddy's job爸爸的工作总是比妈妈的工作重要is always more important that Mommy's?我为公众利益而工作I work for the public good.不你为查克·罗兹的利益而工作No,you work for the good of Chuck Rhoades.只是也许某些时候这两个目的交叉了Maybe sometimes they intersect.我的天Oh,my God.你能收起你心理专家这套吗Would you turn off your fucking shrink switch?我们都冷静点Let's take this down a notch.好Yeah.我不知道这是刮哪门子的风I just...I don't know where all this is coming from,你也知道我讨厌别人对我指手画脚and you know I don't like to be manipulated.我没有对你指手画脚I'm not manipulating.并不是说你真这么做了Not that that's what you were doing,只是我就是这么觉得的but that's what I felt like.还有你的工作当然很重要And of course your job's important.你是位超级英雄You're a superhero.而且我为你深感自豪And I'm super proud of you.但是我的工作对我来说也很重要But my thing matters to me,too.当然Of course.你工作那么出色You're killing it.小心艾蒙Watch it,there,Elmo!不趴下乖狗狗No!Get down,boy!悠着点大家伙Easy,big guy.别管它别管它Ah,let him be.Hey,let him be.别管它没事让它随便跑吧Let him be.It's okay.Let him go free.这狗就跟上了发条似的He's a live wire,that one.没错它把定做的沙发都咬坏了Ooh,yeah.He chewed up a custom sofa.我们必须让它冷静下来We've got to calm him down.把它送去宠物训练学校Send him to obedience school.把它送给兽医好好修理一番He's going to the vet to get fixed.各位请享用Enjoy,guys.孩子们我们该向瑞恩主厨说什么All right,boys.What do we say to Chef Ryan?谢谢Thank you!孩子们孩子们看看看这个Boys,boys,look.Look.Look at this.看它在标记它的领地Look,look.He's marking his territory.它在家具上撒尿He's peeing on the furniture.对对但它是在告诉瑞恩谁是头Yeah.Yeah,but he's showing Ryan who's boss.所以两个男人抢夺地盘时That's why it's called a pissing contest会比赛尿尿when two men try and stake out their turf.我也不喜欢男人那样做I don't love it when men do that,either.艾蒙现在就出去Elmo,outside now!别这样可怜的家伙Come on.Poor guy.迪恩第七任总统是谁Dean,seventh president.提示门罗后两任Hint...two after Monroe.杰克逊安德鲁·杰克逊Jackson.Andrew Jackson.戈弟他是哪的人Gordie,where was he from?我们聊聊洋基队吧Let's talk Yankees.因为你不知道别想转移话题'Cause you don't know.Don't switch the subject.我知道I do know.那你说啊Prove it.西雅图Seattle?那时还没有西雅图呢笨蛋There was no Seattle back then,idiot.我打赌我再猜一个就能猜中I bet I'll get it on the next guess.-我赌你猜不着-赌多大-Bet you don't.-How much?十个俯卧撑10push-ups.成交Deal.卡罗莱纳州的边境地区Border areas near the Carolinas.你不能每次都上当迪恩You can't fall for that every time,Dean.他了解你给你下套了See,he knows his customer,and he sets you up.他是愿意扮猪吃老虎He's willing to look foolish short-term to win long-term.你得记住这点You got to remember that.戈弟别老耍你哥哥And,Gordie,don't sucker your brother.好了来吧输了做俯卧撑吧All right,come on.Pay your bet.我们可不赖账啊We don't welsh.让我们瞧瞧你的本事See what you got.一二One.Two.低点Lower.三Three.先生十分钟后进行宽大处理会议Sir?The leniency conference starts in10 minutes.下午好Afternoon.谢谢你愿意见我们Thank you for agreeing to see us.你在这做什么爸What the fuck are you doing here,Dad?想让我被取消资格吗Trying to get me disbarred?天啊你比你妈还小题大做Christ.You're more dramatic than your mother.我们没有违反任何规定We are not breaking any rules or regulations.。
1.Having a 24/7 lifestyle can also interrupt regular sleep patterns.拥有24/7的生活方式也可以打断正常的睡眠模式。
2. This morning Microsoft CEO Satya Nadella published a report on his vision for the company’s future.今天早上，微软CEO萨提亚·纳德拉公布了公司未来在他的视觉报告。
Henry has many friends working in the government. His sources of information are usually reliable.亨利有许多朋友在政府工作。
他的情报来源通常是可靠的。
4. We believe that building a powerful navy is in the interest of our national defense.我们相信建设一支强大的海军符合我们国防的利益。
5. One of the first flight training lessons taught to student pilots is how to perform a(n) emergency landing in a small airplane.第一个飞行训练课程教给学生飞行员是如何执行（N）紧急降落在一架小型飞机上。
6. Tom was on the point of leaving the garden when he heard someone cry: “Isn’t it Tom? I can hardly believe my eyes.”汤姆刚要离开花园，突然听到有人喊：“不是汤姆吗？”我简直不敢相信自己的眼睛。
”7. When you read the newspaper, you’re probably not reading it word-by-word, instead you’re scanning the text.当你读报纸的时候，你可能不是逐字读的，而是在浏览文本。
为什么热钱涌入中国Hot Money to Chinaving vast amounts of speculative ―hot money‖.鉴于资本流入远远超过贸易和外国直接投资总量，中国似乎正在接收巨额的投机性―热钱‖。
China has two big attractions for foreign investors – interest rates are higher than in the US and the currency is expected to appreciate. ―China's FX reserves seem to have turned into some kind of massive black hole for the world's liquidity,‖ says Stephen Green, economist at Standard Chartered.对于外国投资者而言，中国有两大吸引力——利率水平高于美国，以及人民币升值的预期。
―中国外汇储备似乎已变成吸取全球流动性的某种巨大的黑洞，‖渣打银行(Standard Chartered)经济学家王志浩(Stephen Green)表示。
There are plenty of legal routes to bring capital into China. Foreign residents can deposit up to $50,000 a year and Hong Kong residents have a much higher quota.资本进入中国的合法途径很多。
外国居民每年最多可以存款5万美元，而香港居民的额度则更高。
But government officials also believe that illegal transfers are taking place –through foreign companies declaring that funds are for direct investment and then putting the money in the bank and exporters exaggerating the value of overseas revenues in order to bring in extra funds. (As an aside, economists point out that if fraudulent export receipts really are widely used to bring in hot money, China's politically troublesome trade surplus would actually be much lower than thought.)但政府官员也认为目前存在非法转移资金的情况——方法是外国公司声称资金是用作直接投资，之后将钱存入银行；或是出口商夸大海外收入，以便带入额外资金。
双语阅读：货币政策流行词指南环球外汇货币政策和央行的运作是世界经济前景的核心。
“货币战争”、“非传统货币政策”、“央行独立性威胁因素”等流行词的运用十分广泛，这些词通常让实际辩论变得晦涩而非澄清相关议题。
货币政策的意图是什么？每个人都同意其核心目的是维持物价稳定。
通过利率和近期采用的非常规货币政策，如量化宽松来刺激花费就可达到这一目的。
量化宽松是指创造货币，通过购买政府债券等资产将其注入经济之中。
为什么会有大规模政策辩论？在经济增长令人失望的成熟经济体中，问题在于是基本面表现不佳还是暂时脱轨。
一些人认为缓慢增长将成为新常态。
而另一些人完全不同意这样的判断，他们认为要通过货币政策刺激来推升花费水平，在不造成通胀的情况下使得经济发展得以维系。
央行独立性为什么很重要？在制定货币政策方面的独立性可以防止政治家们为赢得选举需求过多的刺激措施，引起通胀，导致长期经济受损。
通过使家庭和企业相信通胀处于控制之中，独立性还有助于构建政策的可信度，使央行在危机中采取宽松政策时更有决断力。
央行的独立性处于威胁之下吗？本周日本央行受政府压力调高了通胀目标后，德国央行行长魏德曼(Jens Weidmann)警告称，央行的独立性受到了威胁。
然而，对立性受威胁的程度主要取决于对独立性的定义——独立性是自主运行方面的，还是绝对的。
德国央行、欧洲央行和日本央行传统上在制定货币政策目标和达成办法上有“绝对的独立性”。
英国央行和美联储在达成政府制定的目标方面有“自主运行的能力”。
事实上，日本央行是被迫与美联储和英国央行行动一致的。
这是对绝对独立性的威胁，而并非政治上的接管。
日本央行是受害者吗？与其他央行不同，日本央行似乎不愿遵循其定义的价格稳定，这让政治家们十分恼怒。
由于允许持续的通缩——它可以创造通胀——它不能将自己作为政治干预的受害者，至少目前还不能。
就独立性产生的辩论如何与货币战争向关联？沾点边。
令人担忧的是，日本的货币政策在变化，它或通过推动日元下跌，提高进口价格(这也帮助日本出口商)刺激经济增长和通货膨胀。
CHAPTER 4THE TIME VALUE OF MONEY AND DISCOUNTED CASH FLOW ANALYSISObjectives∙To explain the concepts of compounding and discounting, future value and present value.∙To show how these concepts are applied to making financial decisions.Outline4.1Compounding4.2The Frequency of Compounding4.3Present Value and Discounting4.4Alternative Discounted Cash Flow Decision Rules4.5Multiple Cash Flows4.6Annuities4.7Perpetual Annuities4.8Loan Amortization4.9Exchange Rates and Time Value of Money4.10Inflation and Discounted Cash Flow Analysis4.11Taxes and Investment DecisionsSummary∙Compounding is the process of going from present value (PV) to future value (FV). The future value of $1 earning interest at rate i per period for n periods is (1+i)n.∙Discounting is finding the present value of some future amount. The present value of $1 discounted at rate i per period for n periods is 1/(1+i)n.∙One can make financial decisions by comparing the present values of streams of expected future cash flows resulting from alternative courses of action. The present value of cash inflows less the present value of cash outflows is called net present value (NPV). If a course of action has a positive NPV, it is worth undertaking.∙In any time value of money calculation, the cash flows and the interest rate must be denominated in the same currency.∙Never use a nominal interest rate when discounting real cash flows or a real interest rate when discounting nominal cash flows.How to Do TVM Calculations in MS ExcelAssume you have the following cash flows set up in a spreadsheet:A B1t CF20-1003150426053706NPV7IRRMove the cursor to cell B6 in the spreadsheet. Click the function wizard f x in the tool bar and when a menu appears, select financial and then NPV. Then follow the instructions for inputting the discount rate and cash flows. You can input the column of cash flows by selecting and moving it with your mouse. Ultimately cell B6should contain the following:=NPV(0.1,B3:B5)+B2The first variable in parenthesis is the discount rate. Make sure to input the discount rate as a decimal fraction (i.e., 10% is .1). Note that the NPV function in Excel treats the cash flows as occurring at the end of each period, and therefore the initial cash flow of 100 in cell B2 is added after the closing parenthesis. When you hit the ENTER key, the result should be $47.63.Now move the cursor to cell B7to compute IRR. This time select IRR from the list of financial functions appearing in the menu. Ultimately cell B7 should contain the following:=IRR(B2:B5)When you hit the ENTER key, the result should be 34%.Your spreadsheet should look like this when you have finished:A B1t CF20-1003150426053706NPV47.637IRR34%Solutions to Problems at End of Chapter1.If you invest $1000 today at an interest rate of 10% per year, how much will you have 20 years from now,assuming no withdrawals in the interim?2. a. If you invest $100 every year for the next 20 years, starting one year from today and you earninterest of 10% per year, how much will you have at the end of the 20 years?b.How much must you invest each year if you want to have $50,000 at the end of the 20 years?3.What is the present value of the following cash flows at an interest rate of 10% per year?a.$100 received five years from now.b.$100 received 60 years from now.c.$100 received each year beginning one year from now and ending 10 years from now.d.$100 received each year for 10 years beginning now.e.$100 each year beginning one year from now and continuing forever.e.PV = $100 = $1,000.104.You want to establish a “wasting” fund which will provide you with $1000 per year for four years, at which time the fund will be exhausted. How much must you put in the fund now if you can earn 10% interest per year?SOLUTION:5.You take a one-year installment loan of $1000 at an interest rate of 12% per year (1% per month) to be repaid in 12 equal monthly payments.a.What is the monthly payment?b.What is the total amount of interest paid over the 12-month term of the loan?SOLUTION:b. 12 x $88.85 - $1,000 = $66.206.You are taking out a $100,000 mortgage loan to be repaid over 25 years in 300 monthly payments.a.If the interest rate is 16% per year what is the amount of the monthly payment?b.If you can only afford to pay $1000 per month, how large a loan could you take?c.If you can afford to pay $1500 per month and need to borrow $100,000, how many months would it taketo pay off the mortgage?d.If you can pay $1500 per month, need to borrow $100,000, and want a 25 year mortgage, what is thehighest interest rate you can pay?SOLUTION:a.Note: Do not round off the interest rate when computing the monthly rate or you will not get the same answerreported here. Divide 16 by 12 and then press the i key.b.Note: You must input PMT and PV with opposite signs.c.Note: You must input PMT and PV with opposite signs.7.In 1626 Peter Minuit purchased Manhattan Island from the Native Americans for about $24 worth of trinkets. If the tribe had taken cash instead and invested it to earn 6% per year compounded annually, how much would the Indians have had in 1986, 360 years later?SOLUTION:8.You win a $1 million lottery which pays you $50,000 per year for 20 years, beginning one year from now. How much is your prize really worth assuming an interest rate of 8% per year?SOLUTION:9.Your great-aunt left you $20,000 when she died. You can invest the money to earn 12% per year. If you spend $3,540 per year out of this inheritance, how long will the money last?SOLUTION:10.You borrow $100,000 from a bank for 30 years at an APR of 10.5%. What is the monthly payment? If you must pay two points up front, meaning that you only get $98,000 from the bank, what is the true APR on the mortgage loan?SOLUTION:If you must pay 2 points up front, the bank is in effect lending you only $98,000. Keying in 98000 as PV and computing i, we get:11.Suppose that the mortgage loan described in question 10 is a one-year adjustable rate mortgage (ARM), which means that the 10.5% interest applies for only the first year. If the interest rate goes up to 12% in the second year of the loan, what will your new monthly payment be?SOLUTION:Step 2 is to compute the new monthly payment at an interest rate of 1% per month:12.You just received a gift of $500 from your grandmother and you are thinking about saving this money for graduation which is four years away. You have your choice between Bank A which is paying 7% for one-year deposits and Bank B which is paying 6% on one-year deposits. Each bank compounds interest annually. What is the future value of your savings one year from today if you save your money in Bank A? Bank B? Which is the better decision? What savings decision will most individuals make? What likely reaction will Bank B have? SOLUTION:$500 x (1.07) = $535Formula:$500 x (1.06) = $530a.You will decide to save your money in Bank A because you will have more money at the end of the year. Youmade an extra $5 because of your savings decision. That is an increase in value of 1%. Because interestcompounded only once per year and your money was left in the account for only one year, the increase in value is strictly due to the 1% difference in interest rates.b.Most individuals will make the same decision and eventually Bank B will have to raise its rates. However, it isalso possible that Bank A is paying a high rate just to attract depositors even though this rate is not profitable for the bank. Eventually Bank A will have to lower its rate to Bank B’s rate in order to make money.13.Sue Consultant has just been given a bonus of $2,500 by her employer. She is thinking about using the money to start saving for the future. She can invest to earn an annual rate of interest of 10%.a.According to the Rule of 72, approximately how long will it take for Sue to increase her wealth to $5,000?b.Exactly how long does it actually take?SOLUTION:a.According to the Rule of 72: n = 72/10 = 7.2 yearsIt will take approximately 7.2 years for Sue’s $2,500 to double to $5,000 at 10% interest.b.At 10% interestFormula:$2,500 x (1.10)n = $5,000Hence, (1.10)n = 2.0n log 1.10 = log 2.0n = .693147 = 7.27 Years.095310rry’s bank account has a “floating” interest rate on certain deposits. Every year the interest rate is adjusted. Larry deposited $20,000 three years ago, when interest rates were 7% (annual compounding). Last year the rate was only 6%, and this year the rate fell again to 5%. How much will be in his account at the end of this year?SOLUTION:$20,000 x 1.07 x 1.06 x 1.05 = $23,818.2015.You have your choice between investing in a bank savings account which pays 8% compounded annually (BankAnnual) and one which pays 7.5% compounded daily (BankDaily).a.Based on effective annual rates, which bank would you prefer?b.Suppose BankAnnual is only offering one-year Certificates of Deposit and if you withdraw your moneyearly you lose all interest. How would you evaluate this additional piece of information when making your decision?SOLUTION:a.Effective Annual Rate: BankAnnual = 8%.Effective Annual Rate BankDaily = [1 + .075]365 - 1 = .07788 = 7.788%365Based on effective annual rates, you would prefer BankAnnual (you will earn more money.)b.If BankAnnual’s 8% annual return is conditioned upon leaving the money in for one full year, I would need tobe sure that I did not need my money within the one year period. If I were unsure of when I might need the money, it might be safer to go for BankDaily. The option to withdraw my money whenever I might need it will cost me the potential difference in interest:FV (BankAnnual) = $1,000 x 1.08 = $1,080FV (BankDaily) = $1,000 x 1.07788 = $1,077.88Difference = $2.12.16.What are the effective annual rates of the following:a.12% APR compounded monthly?b.10% APR compounded annually?c.6% APR compounded daily?SOLUTION:Effective Annual Rate (EFF) = [1 + APR] m - 1ma.(1 + .12)12 - 1 = .1268 = 12.68%12b.(1 + .10)- 1 = .10 = 10%1c.(1 + .06)365 - 1 = .0618 = 6.18%36517.Harry promises that an investment in his firm will double in six years. Interest is assumed to be paid quarterly and reinvested. What effective annual yield does this represent?EAR=(1.029302)4-1=12.25%18.Suppose you know that you will need $2,500 two years from now in order to make a down payment on a car.a.BankOne is offering 4% interest (compounded annually) for two-year accounts, and BankTwo is offering4.5% (compounded annually) for two-year accounts. If you know you need $2,500 two years from today,how much will you need to invest in BankOne to reach your goal? Alternatively, how much will you need to invest in BankTwo? Which Bank account do you prefer?b.Now suppose you do not need the money for three years, how much will you need to deposit today inBankOne? BankTwo?SOLUTION:PV = $2,500= $2,311.39(1.04)2PV = $2,500= $2,289.32(1.045)2You would prefer BankTwo because you earn more; therefore, you can deposit fewer dollars today in order to reach your goal of $2,500 two years from today.b.PV = $2,500= $2,222.49(1.04)3PV = $2,500= $2,190.74(1.045)3Again, you would prefer BankTwo because you earn more; therefore, you can deposit fewer dollars today in order to reach your goal of $2,500 three years from today.19.Lucky Lynn has a choice between receiving $1,000 from her great-uncle one year from today or $900 from her great-aunt today. She believes she could invest the $900 at a one-year return of 12%.a.What is the future value of the gift from her great-uncle upon receipt? From her great-aunt?b.Which gift should she choose?c.How does your answer change if you believed she could invest the $900 from her great-aunt at only 10%?At what rate is she indifferent?SOLUTION:a. Future Value of gift from great-uncle is simply equal to what she will receive one year from today ($1000). Sheearns no interest as she doesn’t receive the money until next year.b. Future Value of gift from great-aunt: $900 x (1.12) = $1,008.c. She should choose the gift from her great-aunt because it has future value of $1008 one year from today. Thegift from her great-uncle has a future value of $1,000. This assumes that she will able to earn 12% interest on the $900 deposited at the bank today.d. If she could invest the money at only 10%, the future value of her investment from her great-aunt would only be$990: $900 x (1.10) = $990. Therefore she would choose the $1,000 one year from today. Lucky Lynn would be indifferent at an annual interest rate of 11.11%:$1000 = $900 or (1+i) = 1,000 = 1.1111(1+i)900i = .1111 = 11.11%20.As manager of short-term projects, you are trying to decide whether or not to invest in a short-term project that pays one cash flow of $1,000 one year from today. The total cost of the project is $950. Your alternative investment is to deposit the money in a one-year bank Certificate of Deposit which will pay 4% compounded annually.a.Assuming the cash flow of $1,000 is guaranteed (there is no risk you will not receive it) what would be alogical discount rate to use to determine the present value of the cash flows of the project?b.What is the present value of the project if you discount the cash flow at 4% per year? What is the netpresent value of that investment? Should you invest in the project?c.What would you do if the bank increases its quoted rate on one-year CDs to 5.5%?d.At what bank one-year CD rate would you be indifferent between the two investments?SOLUTION:a.Because alternative investments are earning 4%, a logical choice would be to discount the project’s cash flowsat 4%. This is because 4% can be considered as your opportunity cost for taking the project; hence, it is your cost of funds.b.Present Value of Project Cash Flows:PV = $1,000= $961.54(1.04)The net present value of the project = $961.54 - $950 (cost) = $11.54The net present value is positive so you should go ahead and invest in the project.c.If the bank increased its one-year CD rate to 5.5%, then the present value changes to:PV = $1,000= $947.87(1.055)Now the net present value is negative: $947.87 - $950 = - $2.13. Therefore you would not want to invest in the project.d.You would be indifferent between the two investments when the bank is paying the following one-year interestrate:$1,000 = $950 hence i = 5.26%(1+i)21.Calculate the net present value of the following cash flows: you invest $2,000 today and receive $200 one year from now, $800 two years from now, and $1,000 a year for 10 years starting four years from now. Assume that the interest rate is 8%.SOLUTION:Since there are a number of different cash flows, it is easiest to do this problem using cash flow keys on the calculator:22.Your cousin has asked for your advice on whether or not to buy a bond for $995 which will make one payment of $1,200 five years from today or invest in a local bank account.a.What is the internal rate of return on the bond’s cash flows? What additional information do you need tomake a choice?b.What advice would you give her if you learned the bank is paying 3.5% per year for five years(compounded annually?)c.How would your advice change if the bank were paying 5% annually for five years? If the price of thebond were $900 and the bank pays 5% annually?SOLUTION:a.$995 x (1+i)5 = $1,200.(1+i)5 = $1,200$995Take 5th root of both sides:(1+i) =1.0382i = .0382 = 3.82%In order to make a choice, you need to know what interest rate is being offered by the local bank.b.Upon learning that the bank is paying 3.5%, you would tell her to choose the bond because it is earning a higherrate of return of 3.82% .c.If the bank were paying 5% per year, you would tell her to deposit her money in the bank. She would earn ahigher rate of return.5.92% is higher than the rate the bank is paying (5%); hence, she should choose to buy the bond.23.You and your sister have just inherited $300 and a US savings bond from your great-grandfather who had left them in a safe deposit box. Because you are the oldest, you get to choose whether you want the cash or the bond. The bond has only four years left to maturity at which time it will pay the holder $500.a.If you took the $300 today and invested it at an interest rate 6% per year, how long (in years) would ittake for your $300 to grow to $500? (Hint: you want to solve for n or number of periods. Given these circumstances, which are you going to choose?b.Would your answer change if you could invest the $300 at 10% per year? At 15% per year? What otherDecision Rules could you use to analyze this decision?SOLUTION:a.$300 x (1.06)n = $500(1.06)n = 1.6667n log 1.06 = log 1.6667n = .510845 = 8.77 Years.0582689You would choose the bond because it will increase in value to $500 in 4 years. If you tookthe $300 today, it would take more than 8 years to grow to $500.b.You could also analyze this decision by computing the NPV of the bond investment at the different interest rates:In the calculations of the NPV, $300 can be considered your “cost” for acquiring the bond since you will give up $300 in cash by choosing the bond. Note that the first two interest rates give positive NPVs for the bond, i.e. you should go for the bond, while the last NPV is negative, hence choose the cash instead. These results confirm the previous method’s results.24.Suppose you have three personal loans outstanding to your friend Elizabeth. A payment of $1,000 is due today, a $500 payment is due one year from now and a $250 payment is due two years from now. You would like to consolidate the three loans into one, with 36 equal monthly payments, beginning one month from today. Assume the agreed interest rate is 8% (effective annual rate) per year.a.What is the annual percentage rate you will be paying?b.How large will the new monthly payment be?SOLUTION:a.To find the APR, you must first compute the monthly interest rate that corresponds to an effective annual rate of8% and then multiply it by 12:1.08 = (1+ i)12Take 12th root of both sides:1.006434 = 1+ ii = .006434 or .6434% per monthOr using the financial calculator:b.The method is to first compute the PV of the 3 loans and then compute a 36 month annuity payment with thesame PV. Most financial calculators have keys which allow you to enter several cash flows at once. This approach will give the user the PV of the 3 loans.Note: The APR used to discount the cash flows is the effective rate in this case, because this method is assuming annual compounding.25.As CEO of ToysRFun, you are offered the chance to participate, without initial charge, in a project that produces cash flows of $5,000 at the end of the first period, $4,000 at the end of the next period and a loss of $11,000 at the end of the third and final year.a.What is the net present value if the relevant discount rate (the company’s cost of capital) is 10%?b.Would you accept the offer?c.What is the internal rate of return? Can you explain why you would reject a project which has aninternal rate of return greater than its cost of capital?SOLUTION:At 10% discount rate:Net Present Value = - 0 + $5,000 + $4,000 - $11,000 = - 413.22(1.10)(1.10)2 (1.10)3c.This example is a project with cash flows that begin positive and then turn negative--it is like a loan. The 13.6% IRR is therefore like an interest rate on that loan. The opportunity to take a loan at 13.6% when the cost of capital is only 10% is not worthwhile.26.You must pay a creditor $6,000 one year from now, $5,000 two years from now, $4,000 three years from now, $2,000 four years from now, and a final $1,000 five years from now. You would like to restructure the loan into five equal annual payments due at the end of each year. If the agreed interest rate is 6% compounded annually, what is the payment?SOLUTION:Since there are a number of different cash flows, it is easiest to do the first step of this problem using cash flow keys on the calculator. To find the present value of the current loan payments:27.Find the future value of the following ordinary annuities (payments begin one year from today and all interest rates compound annually):a.$100 per year for 10 years at 9%.b.$500 per year for 8 years at 15%.c.$800 per year for 20 years at 7%.d.$1,000 per year for 5 years at 0%.e.Now find the present values of the annuities in a-d.f.What is the relationship between present values and future values?SOLUTION:Future Value of Annuity:e.f.The relationship between present value and future value is the following:FV = PV x (1+i)n28.Suppose you will need $50,000 ten years from now. You plan to make seven equal annual deposits beginning three years from today in an account that yields 11% compounded annually. How large should the annual deposit be?SOLUTION:You will be making 7 payments beginning 3 years from today. So, we need to find the value of an immediate annuity with 7 payments whose FV is $50,000:29.Suppose an investment offers $100 per year for five years at 5% beginning one year from today.a.What is the present value? How does the present value calculation change if one additional payment isadded today?b.What is the future value of this ordinary annuity? How does the future value change if one additionalpayment is added today?SOLUTION:$100 x [(1.05)5] - 1 = $552.56.05If you were to add one additional payment of $100 today, the future value would increase by:$100 x (1.05)5 = $127.63. Total future value = $552.56 + $127.63 = $680.19.Another way to do it would be to use the BGN mode for 5 payments of $100 at 5%, find the future value of that, and then add $100. The same $680.19 is obtained.30.You are buying a $20,000 car. The dealer offers you two alternatives: (1) pay the full $20,000 purchase price and finance it with a loan at 4.0% APR over 3 years or (2) receive $1,500 cash back and finance the rest at a bank rate of 9.5% APR. Both loans have monthly payments over three years. Which should you choose? SOLUTION:31.You are looking to buy a sports car costing $23,000. One dealer is offering a special reduced financing rate of 2.9% APR on new car purchases for three year loans, with monthly payments. A second dealer is offering a cash rebate. Any customer taking the cash rebate would of course be ineligible for the special loan rate and would have to borrow the balance of the purchase price from the local bank at the 9%annual rate. How large must the cash rebate be on this $23,000 car to entice a customer away from the dealer who is offering the special 2.9% financing?SOLUTION:of the 2.9% financing.32.Show proof that investing $475.48 today at 10% allows you to withdraw $150 at the end of each of the next 4 years and have nothing remaining.SOLUTION:You deposit $475.48 and earn 10% interest after one year. Then you withdraw $150. The table shows what happensAnother way to do it is simply to compute the PV of the $150 annual withdrawals at 10% : it turns out to be exactly $475.48, hence both amounts are equal.33.As a pension manager, you are considering investing in a preferred stock which pays $5,000,000 per year forever beginning one year from now. If your alternative investment choice is yielding 10% per year, what is the present value of this investment? What is the highest price you would be willing to pay for this investment? If you paid this price, what would be the dividend yield on this investment?SOLUTION:Present Value of Investment:PV = $5,000,000 = $50,000,000.10Highest price you would be willing to pay is $50,000,000.Dividend yield = $5,000,000 = 10%.$50,000,00034. A new lottery game offers a choice for the grand prize winner. You can receive either a lump sum of $1,000,000 immediately or a perpetuity of $100,000 per year forever, with the first payment today. (If you die, your estate will still continue to receive payments). If the relevant interest rate is 9.5% compounded annually, what is the difference in value between the two prizes?SOLUTION:The present value of the perpetuity assuming that payments begin at the end of the year is:$100,000/.095 = $1,052,631.58If the payments begin immediately, you need to add the first payment. $100,000 + 1,052,632 = $1,152,632.So the annuity has a PV which is greater than the lump sum by $152,632.35.Find the future value of a $1,000 lump sum investment under the following compounding assumptions:a.7% compounded annually for 10 yearsb.7% compounded semiannually for 10 yearsc.7% compounded monthly for 10 yearsd.7% compounded daily for 10 yearse.7% compounded continuously for 10 yearsa.$1,000 x (1.07)10 = $1,967.15b.$1,000 x (1.035)20 = $1,989.79c.$1,000 x (1.0058)120 = $2,009.66d.$1,000 x (1.0019178)3650 = $2,013.62e.$1,000 x e.07x10 = $2,013.7536.Sammy Jo charged $1,000 worth of merchandise one year ago on her MasterCard which has a stated interest rate of 18% APR compounded monthly. She made 12 regular monthly payments of $50, at the end of each month, and refrained from using the card for the past year. How much does she still owe? SOLUTION:Sammy Jo has taken a $1,000 loan at 1.5% per month and is paying it off in monthly installments of $50. We could work out the amortization schedule to find out how much she still owes after 12 payments, but a shortcut on the financial calculator is to solve for FV as follows:37.Suppose you are considering borrowing $120,000 to finance your dream house. The annual percentage rate is 9% and payments are made monthly,a.If the mortgage has a 30 year amortization schedule, what are the monthly payments?b.What effective annual rate would you be paying?c.How do your answers to parts a and b change if the loan amortizes over 15 years rather than 30?EFF = [1 + .09]1238.Suppose last year you took out the loan described in problem #37a. Now interest rates have declined to 8% per year. Assume there will be no refinancing fees.a.What is the remaining balance of your current mortgage after 12 payments?b.What would be your payment if you refinanced your mortgage at the lower rate for 29 years? SOLUTION:Exchange Rates and the Time Value of Money39.The exchange rate between the pound sterling and the dollar is currently $1.50 per pound, the dollar interest rate is 7% per year, and the pound interest rate is 9% per year. You have $100,000 in a one-year account that allows you to choose between either currency, and it pays the corresponding interest rate.a.If you expect the dollar/pound exchange rate to be $1.40 per pound a year from now and are indifferentto risk, which currency should you choose?b.What is the “break-even” value of the dollar/pound exchange rate one year from now?SOLUTION:a.You could invest $1 today in dollar-denominated bonds and have $1.07 one year from now. Or you couldconvert the dollar today into 2/3 (i.e., 1/1.5) of a pound and invest in pound-denominated bonds to have .726667(i.e., 2/3 x 1.09) pounds one year from now. At an exchange rate of $1.4 per pound, this would yield 0.726667(1.4) = $1.017 (this is lower than $1.07), so you would choose the dollar currency.b.For you to break-even the .726667 pounds would have to be worth $1.07 one year from now, so the break-evenexchange rate is $1.07/.726667 or $1.4725 per pound. So for exchange rates lower than $1.4725 per pound one year from now, the dollar currency will give a better return.。
