StudentShare solutions
Triangle menu

International Finance - Essay Example

Nobody downloaded yet

Extract of sample
International Finance

In this age of globalisation, many companies conduct businesses in countries other than their own. With opportunities in new markets come various types of risks—business risks, macro environmental risks, as well as foreign exchange risks (Pattichis et al. 2004). When a company conducts a business outside the country where it is based, the company is said to be exposed to some foreign exchange risks, where the fluctuations in the differences between the home countrys currency and the host countrys currency may result in adverse impacts in the companys income from international operations, as well as its balance sheet.
In this age of globalisation, many companies conduct businesses in countries other than their own. With opportunities in new markets come various types of risks—business risks, macro environmental risks, as well as foreign exchange risks (Pattichis et al. 2004). When a company conducts a business outside the country where it is based, the company is said to be exposed to some foreign exchange risks, where the fluctuations in the differences between the home countrys currency and the host countrys currency may result in adverse impacts in the companys income from international operations, as well as its balance sheet.
Companies need to protect themselves from these risks; a drastic change in the exchange rate between the home countrys currency and that of the host country can result in significant gains or losses (Nazarboland 2003). Aside from this, those which are otherwise very profitable international ventures of the company, due to fluctuations in the foreign exchange rate, may seem to be a losing business. For companies that have significant foreign direct investments across the globe, in order to assess more accurately the performance of their international subsidiaries, managing the foreign exchange risk is very important (Collier et al. 1990). Also, these differences will have a ...Show more

Summary

On one hand, there are some who proposes against hedging using derivatives. According to them, a company may not hedge, as shareholders are…
Author : effiedenesik
International Finance essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"International Finance"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

International finance
Covered interest arbitrage is defined in Wikipedia as “the investment strategy where an investor buys a financial instrument denominated in a foreign currency, and hedges
2 pages (500 words) Essay
International Finance
As a major part of its revenue is in terms of foreign currency, the company is vulnerable to exchange rate fluctuations. To counter this, companies having a global presence hedge their positions by entering
8 pages (2000 words) Essay
International Finance
This present essay has two sections. The first section focuses on Japan as a foreign market that plays host to numerous American MNEs. Under this section, the essay will use General Electric, which is an American MNE operating in Japan as the case study to investigate why the company decided to venture into the Japanese market.
7 pages (1750 words) Essay
International Finance
This rapid growth was because of the following factors. The gold average refers to the technique, which controlled the worth of exchanges around the world in expressions of a convinced quantity of gold (Staiger, 2006).
10 pages (2500 words) Essay
International Finance
The producers enter into future contracting so that they can control risks of unfavorable price fluctuations (Copeland, 2008) whereas, industrialists who are responsible for transforming raw
6 pages (1500 words) Essay
International finance
rk undertaken within the US mortgage industry witnessed a huge change over the past few years, wherein usually, the banks were responsible for raising funds and accordingly, the bank lent these funds to the borrowers. Likewise, if in case the borrowers defaulted from paying back
7 pages (1750 words) Essay
International Finance
The monetary model assumes a situation of perfect capital mobility. Another mechanism of determination of exchange rates is known as ‘flow approach’. Inflow approach, shifts in monetary policies alter the flow of
6 pages (1500 words) Essay
International Finance
Moreover, if the PPP is held continuous, the domestic currency would depreciate by the same amount restoring the equilibrium. Thus, the flexible price model of exchange rate determination simply put entails that money demand and supply
6 pages (1500 words) Essay
International finance
here s represents the spot exchange rate which is defined as foreign currency price in terms of domestic and p & p* represent domestic and foreign levels of price, respectively. If the domestic approach maintains that bond supplies never affect exchange rates or interest as
4 pages (1000 words) Essay
International Finance
Therefore, the driving force behind the establishment of foreign exchange market is the creation of a system that facilitates the conversion of a country’s currency into another (Sowa & Acquaye 1999, pp.
6 pages (1500 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment