Question

#1

The J-Curve Adjustment Path means:

		The exchange rate will decrease first and then go up during covered interest rate arbitrage
		The interest rate will decrease first and then go up during covered interest rate arbitrage.
		The balance of trades will decrease first and then go up when the local currency devalues.
		The value of firms will decrease first and then go up when the domestic interest rate decreases

#2

About the corporate governance, which is wrong

a. in Anglo-American firms maximization of shareholders’ wealth is the goal.

b. in non-Anglo-American firms all stake holders play roles.

c. Some investors seek short-term profits and some seek long term ones and there exists conflicts.

d. In the non-Anglo-American markets, government intervention may be common.

e. Failures in corporate governance is not important in recent years

Answer 1

1. The J-Curve Adjustment Path means:
The balance of trades will decrease first and then go up when the local currency devalues.

J-Curve is the graphical representation or a trendline which shows initial loss at the starting followed by a dramatic gain later. The country's balance of trades are often reflected through J-curve which shows how the situation decreases at the first but later when the currency devalues, it recovers and increases at a faster pace.

2. About the corporate governance, which is wrong
Failures in corporate governance is not important in recent years