...Global Financing and Exchange Rate Mechanisms The operations of the global financing in an organization includes all these financial procedures. They are the financial analysis, financial planning, accounting, strategy planning, relationship with the investor, the treasury and the financial compliance. “An exchange rate is simply the rate at which on currency is converted into another” (Hill, 2009, p. 324). This assignment will define the tariff and non-tariff barriers, the impact in the operations of the global financing and the managing risks. Tariff and non-tariff barriers Tariff is a “tax levied on import (or exports)” (Hill, 2009, p. 6). There are different types of tariff. There are specific tariffs where the price never changes, is always the same. The revenue tariff who raise the money for the government The prohibitive tariff is the one that the price is so high that nobody imports or export with that type of tariff. The protective tariff price of the imports goods and keep their domestic industries save from the competition. The environmental tariff is like the protective tariff but is relate to the environmental. The last one is the retaliatory tariff, already have charges against the country. The non-tariff barriers (NTBs) is the one that will have restrictions for any imports. Some examples are packaging and labeling conditions, products standards, quotas (specific) for the product, licenses for import goods, and sanitation conditions. There...
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...Global Financing and Exchange Rate Mechanisms Michael C. McGee MGT/448 November 6, 2012 Ian Finley Global Financing and Exchange Rate Mechanisms Globalization is ushering in tremendous business opportunities, competitive advantages, and greater profitability for companies that choose to set up operations in foreign countries. However, along with these opportunities come various risks to these companies. One of the main risks these companies will face is foreign currency exchange rate risk. Companies that plan to set up operations in a foreign country must exchange its domestic currency into the currency of the host nation to buy the necessary building materials, supplies, and other necessary resources that the operations will require (Hill, 2009). For example, if a U.S. company desires to set up operations in the country of China, it will have to exchange U.S. dollars currency into Chinese currency-the Yuan. If a company in Japan wants to set up operations in Spain or Italy, it would have to exchange its currency- the Yen into these countries’ currency, which is the Euro. The foreign currency exchange rates between these countries consistently fluctuate causing one to appreciate or depreciate against the other. The unpredictable movement of the foreign currency exchange rates can have adverse effects on a company’s investments, and profits that have operations in a foreign country. Foreign companies with operations in the U.S. normally convert the dollars it earns back...
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...Global Financing and Exchange Rate Mechanisms Kris VanHoesen MGT448/ Global Business Strategies Facilitator Lara Dickerson August 15, 2010 Please see comments in the body of the paper and graded form at the end. It has been a pleasure having you in class. Best wishes. Abstract The constant advances of information systems and technology have led to the era of international expansion and globalization. This new age has brought about shrinking of theof the globe and tighter global communication. The emergence of this new revolution has changed and elevated the roles that financial institutions play in global functions and their importance. It has also increased their significance in managing risks. This paper intends to first define the roles of financial institutions and describe how they are applied to global financial operations. Then it will elucidate the significance of these institutions in managing risks. Defining International Financial Institutions Financial institutions are institutions that act as financial intermediaries and provide their members and customers with financial services and support. Like their counterparts, international financial institutions serve the same purpose, but are institutions by two or more countries and are subject to international laws (International Financial Institutions). Other functions of international financial institutions are stabilizing the exchange rate, regulating currency conversion...
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...Introduction Business continuously expands into global organizations finding it necessary to pay close attention to the foreign exchange market. These companies must follow the foreign exchange market closely and should develop appropriate hedging strategies to protect them. Exchange rate risk is the unexpected exchange rate that may cause an organization to lose or gain income. Currency hedging is a method of minimizing the exchange financial rate risk within an international organization. Global Companies involved in operations should have good understanding of the financial risks that the company could go through prior to starting its venture. Exchange Rate Mechanisms Currency hedging is “a particular hedging strategy used to reduce risks in the foreign exchange market which are used as in any hedging situation, where one security would be offset by another security, such as holding a short and long position of the same security at the same time, (Investor Words, 2009).”This content can be found on the following page:http://www.investorwords.com/6779/ Is impossible to predict how much the currency will be worth on the exact day that company will be converting it. With hedging, the uncertainly is gone. When companies decide to expand their business into growing globally the company will have to deal with many new issues that would not have affected them if they would have continued doing business locally. The exchange rate is a very important factor when doing international...
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...Global Financing and Exchange Rate Mechanisms of Hard and Soft Currencies Renita McBath MGT/448 University of Phoenix December 1, 2011 Professor David Grier Global Financing and Exchange Rate Mechanisms of Hard and Soft Currencies Trading, bartering, buying, and selling are known as the act doing business. The action of doing business has been a way of life for human beings for Centuries. At some point in our history the difficulty of doing business equally became a challenge. For instance, one person would like to trade a jar of jelly to another person that owns cows. The trade is off balance because of the value of each item. The difficulty arose when trying to access a credit. At this point, currency was born. In the beginning, currency was established by villagers in the form of stones, paper, linen, and other countable items. Nowadays humans have evolved currency into unique metal and paper items that have unique values. Currently these uniquely valuable currencies are referred to as hard and soft. Further research will reveal an analysis of the use of the currencies in global financing operations as well as describing the importance of managing risks that may arise. Hard Currency Hard currency is a status associated with the material, paper, and coins that are circulated within a country and globally in an effort to buy and sell goods. Currently, hard currency is the most traded currency. Countries...
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...Global Financing and Exchange Rate Mechanisms Introduction The globalization of companies has created the need for greater understanding and utilization of foreign currencies. The importance of this understanding should not be underestimated. Many companies have seen their profits plummet from poor decisions concerning global financing and exchange rate mechanisms. Contrarily, companies have also seen the success that can be reached by making the right decisions at the right time. This paper will analyze and discuss one particular aspect of global financing: Hard and soft currencies. Definition Understanding global financing and exchange rate mechanisms begins with the basics of hard and soft currencies. According to BusinessDictionary.com, hard currency can be defined as a “stable, convertible currency…serves as means of payment settlements because they do not suffer from sharp exchange rate fluctuations.” (What is Hard Currency?, 2011) Examples of hard currencies include the Euro, US dollar, and the Japanese Yen. In contrast to hard currencies, soft currencies can be defined as a currency that belongs to a “small, weak, or wildly fluctuating economy and…is not in favor with foreign exchange dealers.” (What is Soft Currency?, 2011) Examples of this include Mexico, Iraq and Afghanistan. Typically, underdeveloped countries are known to have soft currencies. Global Financing Operations Currency exchange rates fluctuate every day. For instance...
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...Running Head: GLOBAL FINANCING AND EXCHANGE RATE MECHANISMS EURO CURRENCY MARKETS Name: Instructor: Course: Date: Global Financing and Exchange Rate Mechanisms “International financial markets are a major source of funds for international transactions. Most countries have recently internationalized their financial markets to attract foreign business”. They include the banks that accept deposits and lend the loans in foreign currencies outside the country of issue. Globalization has enabled harmonization and reduction of barriers for free flow of capital and competition among firms in the markets (Globalization Financial Markets, n.d.). Dollars deposited in U.S. banks are called Eurodollars, while Japanese yen deposited in Europe are called Euro yen. Eurodollars is the most common currency which makes economists to refer it as Euro currency. It can be defined as dollar dominated deposits in other parts of the world except the United States while others define it as dollar dominated deposits in the European banks. This means that the Euro dominated currency is the U.S. dollar, but recently Euro has also become more dominating in the Euro currency loans due to the dollar losing value (Globalization Financial Markets, n.d.). Euro currency is considered efficient...
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...Global Finance and Exchange Rate Roderick Duncan MGT 448 06/11/2013 Sue Caruthers Global Finance and Exchange Rate Global finance operations are financial processes, such as accounting, financial planning and analysis, investor relations, treasury, and strategic planning. Web Finance states, exchange rate is “Rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another (such as for the purposes of travel to another country), or for engaging in speculation or trading in the foreign exchange market” (exchange rate, para.1). The purpose of this paper is to examine the exchange rate mechanism (Euro Currency Markets), explain how this mechanism is used in global financing operations, and to describe its significance in managing risks. The euro’s evolution began in 1946 when England’s Prime Minister Winston Churchill and other European leaders anticipated Europe to simulate the United States. This brought about the making of the 15- nation European Union that formed the euro. A&E (2013), states “On March 25, 1957, France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg sign a treaty in Rome establishing the European Economic Community (EEC), also known as the Common Market. The EEC, which came into operation in January 1958, was a major step in Europe's movement toward economic and political union” (common Market founded, para. 1). The European Monetary Unit (EMU) was formed in...
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...COURSE SYLLABUS COURSE TITLE: MGT/448 Global Business Strategies LSB04BSM09 REQUIRED TEXT/MATERIAL: Books 1. The World Is Flat A Brief History of the Twenty-first Century (Friedman) 2. International Business: Competing in the Global Marketplace, 5/e (Hill) 3. The Lexus and the Olive Tree: Understanding Globalization (Friedman) 4. Managing Cultural Differences (Harris, Moran) 5. Global E-Commerce Strategies for Small Business, (Da Costa, Laffont, Tirole) Scholarly Articles 1. International Business: Environments and Operations, (Daniels, Radebaugh, Sullivan) Journal of Political Economy 2. International Real Business Cycles, (Backus, Kehoe and Kyland) Journal of Political Economy 3. Going global: Using information technology to advance the competitiveness of the virtual, (Boudreau, Loch, Robey, Straub) Academy of Management Executive 4. Working with Americans, (Thompson) The FLAME of Claremont Graduate University Websites: 1. Economist.com (The Economist Magazine) 2. FT.com (Financial Times Newspaper) 3. cia.gov/cia/publications/factbook (CIA world Fact Book) 4. loc.gov/rr/international/portals.html (Library of Congress Country Info) 5. windowontheworldinc.com/countryprofile/index.html (Tips for Global Business Etiquette 6. transparency.org (Transparency International) 7. scholar.google.com (Google for academic search) INSTRUCTOR: Taj Ahmad Eldridge, MBA, Ph.D Int’l Political Economics & World Politics candidate WELCOME: ...
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...Global Financing and Exchange Rate Mechanisms Global Financing and Exchange Rate Mechanisms International financial institutions are very important for the world to function. International institutions provide capital, improves the standards of living in developing countries. International institutions include World Bank, IMF, and the regional development banks. This essay defines the roles of international financial institutions; as well as how they are used in financing operation. International financial comes with risk and the importance of managing the risk. Roles of international financial insititutions The role of international financial institutions is firm so that we can move forward to expanding to additional countries. The role of international financial institutions is to providing financial support and stable advice for project in developing countries. The role of international financial institutions is to provide stability in the developing countries. The role includes being governed by international laws because it involves more than one country. The international financial also supports the private sector in struggling countries by providing support and give initiatives to help the developing countries such as Africa. The international institutions provide loans and other aids to the countries ("Unisdr", n.d.). For example, with the Keystone pipeline project; this is project that is head by a company called TransCanada. Canada...
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...Global Financing and the Exchange Rate Mechanisms xxxxxxxx MGT/448 February 15th, 2012 xxxx Global Financing and the Exchange Rate Mechanisms During the height of World War Two representatives from 44 countries met in New Hampshire to design a new monetary system to replace the collapsed Gold Standard system. The agreement reached established two multinational institutions the International Monetary Fund (IMF) and the World Bank. The IMF job would be to maintain order in the international monetary system, the World Bank job would be to promote general economic development. The agreement called for a system of fixed exchange rates that would be enforced by the IMF. The IMF was the main custodian; it would try to avoid a repetition of the past through a combination of discipline and flexibility. Discipline the need to maintain a fixed exchange rate, slow down competitive devaluation, and bring stability to the world trade environment. The IMF enforces a fixed exchange rate and imposes monetary discipline on countries, thereby curtailing price inflation. The IMF stood ready to lend foreign currencies to members to get them over short periods of payment deficits. A pool of gold and currencies were contributed by IMF members to provide the resources for lending. Countries were allowed to borrow from the IMF without adhering to a specific agreement. Countries the borrowed heavily would have to agree to increasingly stringent IMF supervision of its macroeconomic...
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...and part of the diversified LOLC group of companies, which was listed on the Colombo Stock Exchange in June 2011.And backed by the strength of one of the global financial giant “ORIX CORPORATION JAPAN”. * Mr. Kapila Jayewardena was the chairman of the company. And he has appointed as a chairman in 2007 April.Mr.Ishara Nanayakkara was the deputy chairman of the company. And he has appointed as a Deputy Chairman in November 2002.Mr.Brindley de zylva was the CEO of the company and he has appointed as a CEO in April 2003. * LOFC is the only non-bank financial institution to have been granted a license from CBSL to engage in foreign currency business. This enabled LOFC to maintain nonresident foreign currency accounts Resident foreign currency accounts and special foreign investment deposit accounts for their customers. * LOFC is offering savings, Deposits & working capital facilities. The Growth and Diversification have led the company to start the areas such as Auto Finance, ME Finance, Islamic Banking, mobile banking and foreign currency business. * LOFC services are offered through a network of 42 fully fledged branches 10 savings centers strategically located island wide, including a significant presence in the North and the East. * They have several partnerships with business entities such as MAESTRO, IFAD, XPRESS MONEY, COMMERCIAL BANK, MONEY EXCHANGE for over the years. These alliances have helped them to create new possibilities for their...
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...considering adopting the associated material. The paper begins by arguing that the forces of globalization have fundamentally changed the scope and activities of firms thereby altering the practice of finance within these firms. As a consequence of an increasing reliance on tightly-integrated foreign operations, a parallel world of finance has been opened within every multinational firm and this world has, heretofore, been overlooked. The course materials are designed to address the many aspects of financial decision making within global firms prompted by these changes that are not addressed in traditional materials. The paper provides an overview of the structure of the course and its seven modules with particular emphasis on the three modules that constitute the core of the course. The paper also describes an analytical framework that has been developed through the creation of the course materials to guide critical financial decisions on financing, investment, risk management and incentive management within a multinational firm. This framework emphasizes the need to reconcile conflicting forces in order for multinational firms to gain competitive advantage from their internal capital markets. The paper concludes with a discussion of the course's pedagogical approach and detailed descriptions of all the course materials, including 19 case studies, corresponding teaching notes, several module notes and supplementary materials. Mark Veblen, Kathleen Luchs and Claire Gilbert...
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...A Term Paper On “The Role of Capital Market on The Economic Development of Bangladesh” GOVT. SUHRAWARDY COLLEGE, PIROJPUR Department of Accounting Term Paper On “The Role of Capital Market on The Economic Development of Bangladesh” Submitted To: Md. Faruk Hosain Assistant Professor Department of Accounting Govt. Suhrawardy College, Pirojpur Submitted By: Alamgir Hossain Roll No- 9792874 Reg. No-1727384 Session-2010-2011 BBA (Hons) 4th Year Department of Accounting Govt. Suhrawardy College, Pirojpur Date of Submission: February 12, 2014 Letter of Transmittal Date : Md. Faruk Hosain Assistant Professor Govt. Suhrawardy College, Pirojpur Subject: Submission of Term Paper on “The role of capital market on the economic development of Bangladesh”. Sir, As a part of BBA program a term paper is enclosed herewith. The report was prepared on “The role of capital market on the economic development of Bangladesh.” In the course of preparation the report, I tried with the best of my capacity to accommodate as much information and relevant issues as possible and tried to follow the instructions as you have suggested. In the time of preparation the report, relevant documents, data, information were studied and practical knowledge had been gathered. I tried my best to make this report as much informative as possible. I sincerely believe that it will satisfy your requirements. I however sincerely believe that this report will serve the purpose of my term paper...
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...Types of exchange rate systems (i.e. pegged exchange rate, etc.) International monetary system: refers to the institutional arrangements that countries adopt to govern exchange rates. Floating exchange rate System: exists when a country allows the foreign exchange market to determine the relative value of a currency. Pegged Exchange rate System: exists when a country fixes the value of its currency relative to a reference currency. Fixed exchange rate system: exists when countries fix their currencies against each other at some mutually agreed on exchange rate. Dirty float: exists when a country tries to hold the value of its currency within some range of a reference currency such as the U.S. dollar. Gold par value: refers to the amount of a currency needed to purchase one ounce of gold. Country’s trade balance surplus and deficit The World Bank: International institution set up to promote general economic development in the world’s poorer nations. - to promote general economic development also called the International Bank for Reconstruction and Development (IBRD) Free float: Managed float: System under which some currencies are allowed to float freely, but the majority are either managed by government intervention or pegged to another currency. Currency crisis: Occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency or forces authorities to expend large volumes of international...
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