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8 Cards in this Set
- Front
- Back
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Introduction of IF |
International finance is concerned with the study of foreign investments, changes in the foreign exchange rates and how international trade is influenced by them. International finance also inflow techniques for allocation of resources and funds in international trade |
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Multiple Currencies |
There is involvement of multiple Currencies in international finance. Any nation operating globally has to deal in various foreign currencies. Every country has different values relative to each other. US dollars prevails as the dominant international trade currency |
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Involvement of Various players |
There are multiple players involved in international finance transactions. Some of the important players involved are commercial banks, Investments banks, central banks, corporates, fund managers, brokers and other financial consultants. |
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Foreign exchange rate |
International finance involves the concept of exchange rate. It is the price of currency of one nation in terms of currency of another nationa. An exchange rate has two components, domestic currency and foreign currency |
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Expanded Opportunity in Business |
Due to globalization in business there is an expanded opportunity to businesses. Businesses can raise more funds globally from capital markets at lesser cost of capital. |
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Foreign Exchange Risk |
It is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. Because the countries deal into various currencies, there is à risk of volatility in foreign exchange rates. |
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Imperfect Market |
Due to difference in law and customs among the countries, tax systems, cultural difference, business practices, international finance are more in complex in nature than domestic finance. International Finance is said to be an imperfect market. Due to imperfection in market, investors are restricted by limit to invest and manage their portfolio. |
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Political Risk |
Another feature of International Finance is that it is faced with Political risk. Political risk includes risk of loss from political International finance can be affected because of unfavourable unforeseen and government issues. political decisions. |
