Got a tricky question? Receive an answer from students like you! Try us!

International Financial Management - Essay Example

Only on StudentShare
Author : dubuqueabbie

Summary

This research begins with the brief overview of international financial management. There are several ways through which a firm can participate in international business. The most common methods are international trade; licensing; franchising; joint ventures; acquisition of companies; foreign subsidiary…

Extract of sample
International Financial Management

The paper tells that еhe world is now a global village – a phenomenon which can be interpreted as a fact that the advancement in communication and technology has integrated the various economies on the globe. A brief analysis of the current economic scenario of any country would reveal that it is, in one way or the other, dependent on the social and economical activities of the other countries. A downward plunge in the New York stock exchange is likely to send shockwaves all across the globe which can be felt in financial market as further as Far East countries. Recently, when the cherished credit rating of United State of America was downgraded to AA+ from AAA, it caused turmoil at a global stage especially in the European countries. All the giant economies such as China and India were badly affected. The economies are have become interlinked in this era due to the fact that now the firms are indulging in international trade and have started exploring markets outside their place of origin. Companies such as HSBC holdings, General Electric, ExxonMobil, British Petroleum and Toyota Motor have two things in common. First, they are the leading and biggest multinationals in the world and second, they all practice prudent international financial management. From a theoretical point of view, the firms engage in international trade in order to obtain comparative advantage which allows the firms to penetrate the foreign markets. Other popular explanations for the firms indulging in the international trade are the product cycle theory and imperfect market theory. ...
Download paper

Related Essays

Financial Management in Multinational Organizations
In addition, it becomes convenient for an organization to draw additional funds from the shareholders if it supports shareholder wealth maximization. Financial management also helps organizations in financial planning and controlling, and evaluation of risks. It has been rightly argued that maximizing shareholder value perhaps only most effective method to benefit every stakeholder. Table of Contents Executive Summary 2 Introduction 4 Maximizing Shareholder Value 5 Financial Planning and Control 6 Forecasting 7 Investment 7 Exchange Risk 7 Credit Risk 10 Conclusion 10 References 13…
10 pages (2510 words)
International Financial Management
The spot rates extracted from reliable sources for the foreign currencies are depicted in the following table: Currency Spot Exchange Rates Euro / USD 0.7624 € Yuan / USD 6.3123 Yuan These spot exchange rates were used in computing forward exchange rates which are the rates at which a bank or any party is willing to exchange or trade one currency for another at some prescribed date in the future. The forward exchange rate is a kind of a forward price. This rate is computed with the use of the relationship among the spot exchange rate and the differences in the interest rates between two…
7 pages (1757 words)
international financial management
Foreign exchange market makes it possible for both private and commercial transactions including loans, investments, and foreign trade. The existence of a foreign exchange market is a result of economies employing national currencies rather than a common currency (Kumar, and Mukherjee, 2007; Butcher, 2011). If the world economy was to use a single currency, foreign markets could not be a necessity. The foreign exchange market is exceedingly active, and it is largely an over the counter market. Although the exchanges trade futures and option, a number of transactions are over the counter…
9 pages (2259 words)
International financial management
Forward contracts can be traded on recognized markets, whilst futures contracts can not Ans-9) (a). Enter into a 90-day forward contract to sell US Dollars for Euros Ans-10) (e). Insufficient data given to enable the calculation to be made Section B Q1 a) The political risk refers to the scenario where the economic yield would be influenced and undergoes due to the uncertain changes in political environment that cause volatility in the state (MCKELLAR, Robert, 2012, pp. 36). Any uncertain circumstances directly impact the investment returns that could be ranging from switching the governments,…
4 pages (1004 words)
International Financial Management
Moreover, Wall-Mart also has projected plan to invest further 37% of its US $ 13.05 million and 38 percent of US $ 12.5 million of capital investment in the international market for the year 2013 and 2014 respectively. Significant portion of the above mentioned investment is aimed at adjustments and capturing e-commerce retail sales in US, Brazil and China (Wal-Mart, 2013). In light of the Wall-Marts decision to invest and since the conditions of the world are constantly changing; therefore, underlying report is aimed at exploring factors that affect the foreign direct investment in specific…
10 pages (2510 words)
International Financial Management
Companies engage in foreign direct investment due to various reasons, but mainly to generate profit and secondly to hedge risk. Sometimes the companies would have huge cash surplus and fear that due to unfavourable movement in the exchange rate the dollar value of the cash surplus would decrease (Bajaj, 2001). The companies would park their extra cash in various foreign countries in the form of foreign direct investment. Generally the FDI are long term in nature but a company looking for quick gain can resort to short term borrowing. The research endeavours to create an international financial…
10 pages (2510 words)
International Financial Management
Pertaining to planned investments in South Africa by Neptune, this report outlines the possible threats of local firms’ resistance and how Neptune might respond to them. Finally, the report outlines the effects of currency variation of citing production abroad, if Neptune let sales in South Africa to be in Rand. Effects of the Possibility that the United States will take Action to reduce its Current Account Deficit on Neptune The current account deficit refers to a situation where the total imports into a country exceed the total exports (RupyaGyan, 2013). Reduction of the current account…
10 pages (2510 words)