Module 2 Class Discussion
1. There are several issues with pegging a currency. Largely they relate to the economic distortion this creates – Chinese good are cheaper than they should be in America and American goods are more expensive than they should be in China. This results in higher employment in China, higher GDP, but also much higher inflation. In the US, inflation is held low but employment and GDP growth are suppressed (Lee, 2017).
2. Liability isn't the same thing as risk. Liability is a form of risk, so I'm not 100% what the question is asking. Yes, pharmaceutical companies are likely to face a substantial amount of liability. Liability risk arises when a company sells anything that is ingested into the body, and pharmaceuticals can be especially powerful. They are a product that, despite being tightly regulated, often has tremendous potential to harm its users, and that alone will create a fair amount of liability risk.
But there are other ways pharmaceutical companies face risk, such as with their marketing. Marketing drugs for off-label uses is prohibited by law, but there are often powerful economic incentives for pharmaceutical companies to do so. Drug companies are often sued for...
References
Fame, E. & French, K. (1989) Business conditions and expected returns on stocks and bonds. Journal of Financial Economics. Vol. 25 (1989) 23-49.
Lee, R. (2017) The pros and cons of a pegged exchange rate. Investopedia. Retrieved August 5, 2017 from http://www.investopedia.com/articles/forex/08/pegged-vs-floating-currencies.asp
MSN Moneycentral (2017) General Electric. MSN Moneycentral. Retrieved August 5, 2017 from http://www.msn.com/en-us/money/stockdetails?symbol=GE&ocid=qbeb
MSN Moneycentral (2017) Target. MSN Moneycentral . Retrieved August 5, 2017 from http://www.msn.com/en-us/money/stockdetails?symbol=TGT&ocid=qbeb
MSN Moneycentral (2017) Wal-Mart MSN Moneycentral . Retrieved August 5, 2017 from http://www.msn.com/en-us/money/stockdetails?symbol=WMT&ocid=qbeb
Stempel, J. (2016) Pfizer in $486 million settlement of Celebrex, Bextra litigation. Reuters. Retrieved August 5, 2017 from http://www.reuters.com/article/us-pfizer-lawsuit-idUSKCN10D1D8
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