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CFA Level I SS6 2005 - tài liệu luyện ôn thi chứng chỉ CFA

CFA Level I SS6 2005 - tài liệu luyện ôn thi chứng chỉ CFA



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Published by: bantinsom on May 06, 2009
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Bản Tin Sớmwww.bantinsom.com
2005 CFA
Offered by SASF
Class NotesLevel I
Date of Class: May 9, 2005Instructor: John Veitch, Ph.D., CFAPhone: (415) 422-6271Email: veitchj@usfca.eduTopic: Investment Tools
Global Economic Analysis
CFA Institute Study Session(s): 6
Slides used in class available on my website -www.usfca.edu/economics/veitch/
Security Analysts of San Francisco
, ,
The CFA Institute does not endorse promote review or warrant the accuracy of the products or services offered  
by SASF or the verify pass rates claimed by SASF CFA
and Chartered Financial Analyst 
are a licensed  
trademarks owned by CFA Institute 
Bản Tin Sớmwww.bantinsom.com
CFA Level I - Study Session 6
1. A.
“Gaining from International Trade”
The candidate should be able to:
the conditions under which a nation can gain from international trade;
 Nations can gain from trade if they produce goods in which they have a comparativeadvantage and trade for goods in which they have a comparative disadvantage.
Comparative Advantage is the ability to produce a good at a lower opportunity costthan others can produce it.
As long as the relative costs of production differ across nations, gains fromspecialization and trade will be possible.When nations produce and trade based on Comparative Advantage trade between nationsleads to an expansion in total world output and mutual gains to each nation.
the effects of international trade on domestic supply and demand;
When product can be transported long distances at low cost (relative to its value) thendomestic price of the product is determined by world demand and supplyTrade & specialization thus results in:1.Lower prices and higher domestic consumption for imported products.
Domestic Consumers benefit from trade2.Higher prices and higher domestic production for exported goods.
Domestic Producers benefit from trade.
commonly used trade-restricting devices including tariffs, quotas, voluntary exportrestraints, and exchange-rate controls;
Commonly used trade-restricting policies are:
Import Tariff 
– are a tax on goods and services imported into the country.
Import Quota
– puts an upper limit on the amount of a good or service that isallowed to be imported into the country.
Voluntary Export Restriction (VER)
– an agreement by foreign firms to limit theamount of a good or service they will export into the country
Exchange Rate Controls
– when the government either sets the exchange rate at arate above the market rate or it limits the access to foreign currency by its citizens.Effect is to make imports into the country more expensive and reduce trade.
the impact of trade barriers on the domestic economy and
who benefits andloses from the imposition of a tariff;
Bản Tin Sớmwww.bantinsom.com
Trade restrictions promote inefficiency and reduce the potential gains from trade for thedomestic economy. Thus trade restrictions are harmful to the wealth of the economy.Tariff is a tax levied on imports, has following effects:i)Domestic Price rises by amount of tariff.ii)Reduction in the quantity of imports of the good.iii)Loss of consumer surplus as less of good consumed at higher price.iv)Gain of producer surplus as domestic production increases.v)Government revenue increases from tariff revenues.vi)Net Deadweight loss to society.Effects of an import quota are similar to those of a tariff but involve a larger deadweight loss because it generates NO revenue for the government as a result of the quota.
why nations adopt trade restrictions;
Power of Special Interests : Trade restrictions provide concentrated benefit to smallgroups while imposing widely-dispersed costs on majority of nation. Thus politiciansoften have the incentive to favor trade restrictions even though they hurt economicefficiency.
Economic Illiteracy: Many fallacies associated with arguments for trade barriers.(1)Trade restrictions that limit imports save jobs for Americans.(2)Free trade with low wage countries will reduce the wages of Americans.Both statements are untrue and ignore the effects of trade based on comparativeadvantage on the welfare of the nation as a whole and the effects of specialization in whatwe are comparatively good at on our standard of living.
the validity of the arguments for restrictions.
Trade barriers are generally harmful to level and growth of economic well-being in a country, withthe following exceptions:
Partially Valid Economic Arguments
National Defense
: Certain industries “vital”, must be protected.
Argument has some validity but often abused as relatively few industries are trulyvital to our national defense.
Infant Industry
: New industries “need protection” until established.
Argument is valid as stated but generally abused. More often used to cushionindustries from international competition rather than provide temporary shelter while they become internationally competitive.
: Domestic producers “need protection” from foreign suppliersselling products below cost (dumping).
Often considerable ambiguity about whether true dumping is occurring or not.Dumping aimed at eliminated domestic competitors should be met with tariffs.Other types of dumping should not be met with tariffs but other policies, such asincome supplements to affected industries.3

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