Introduction to Finance

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H O W T H I S C H A P T E R A P P L I E S TO M E . . .
You live in a global environment. You likely have already purchased products grown or 
manufactured in foreign countries and sold in the United States. For example, you may pur-
chase fresh fruit during the winter that was grown in and shipped from South America. Or, 
you may have purchased a Swiss-made watch from a retail store in the United States. You 
may also have had to convert U.S. dollars into a foreign currency such as euros for a direct 
product purchase from a manufacturer in Germany. You may have traveled internationally 
and needed to exchange your dollars for that country’s currency. You may even live and work 
outside the United States in the future. Thus, a basic understanding of international trade and 
factors that aff ect currency exchange rates will be useful knowledge to have. 
It is important to have an “open view” of other countries from the perspective of what they 
do and why they do it. Maria Mitchell, a U.S. astronomer, probably summed it up best when 
she stated,
I have never been in any country where they did not do something better than 
we do it, think some thoughts better than we think, catch some inspiration from 
heights above their own.
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Interactions among countries are quite complex. Philosophical, cultural, economic, and religious 
diff erences exist. These diff erences jointly establish the basis for international relations and 
help us understand the practice of internationalism by specifi c countries. Diff erences in philo-
sophies, cultures, economic models, and religion also often provide the basis for establishing 
a nation’s foreign policy. At the same time, virtually everyone would agree that it is in the 
best interests of worldwide economic growth and productivity for countries to work together 
in facilitating international trade and the fl ow of fi nancial capital. While this chapter focuses 
on the economics of international trade and fi nance, we recognize the importance of being 
willing to try to understand the basis for diff erences among countries in terms of philosophies, 
cultures, economic models, and religions.