Nobody downloaded yet

International finance - Assignment Example

Comments (0) Cite this document
Summary
As much as devaluation has been embraced as a strategy to improve competitiveness of a country in the currency wars, it is associated with increased inflation in the end. As such, devaluation reduces the purchasing power of citizens when they chose to travel to foreign countries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.5% of users find it useful
International finance
Read TextPreview

Extract of sample
"International finance"

Download file to see previous pages This could lead to reduced investments of the government or organizations involved in the debt, thus leading to adoption of compensatory mechanisms such as increased taxation by governments and increased product prices by organizations in order to cater for the cost. On the other hand, devaluation is likely to discourage investors from foreign countries, as governments that devalue their currency are perceived as weak. This would lead to decreased revenue and thus high rates of inflation.
An increase in national income in Japan as compared to the US, with floating rates of exchange would lead to the depreciation of the rate of current exchange for Japan, and thus appreciation of the US dollar.
An increase in the prices in both Japan and the US would ensure that the two countries maintain their purchasing power parity. As such, the US dollar would remain the same relative to the Japanese yen.
High real interest rates in Japan would lead to appreciation in the value of their currency and subsequent depreciation in the value of the US dollar. As such, global investors would wish to hold financials in the Japanese yen. For them to buy Japanese stocks or bonds, the Japanese yen must be bought, causing it to appreciate.
The fixed exchange rate system guards countries from exchange rate uncertainties by allowing countries that experience deficits in the payment balance to use their dollar reserves to finance such deficits (Arnold 891). With the decline in the number of dollars, the supply of money in the country is reduced. The interest rates thus increase in response to the reduced prices. The reduction in price results in the goods of the nation becoming more competitive at the international level, increasing capital flow into the nation. As such, the fixed exchange rate system allows different nations to establish equilibrium through balancing payments.
The fixed exchange rate systems place the exchange risk ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“International finance Assignment Example | Topics and Well Written Essays - 500 words - 1”, n.d.)
International finance Assignment Example | Topics and Well Written Essays - 500 words - 1. Retrieved from https://studentshare.org/finance-accounting/1683933-international-finance
(International Finance Assignment Example | Topics and Well Written Essays - 500 Words - 1)
International Finance Assignment Example | Topics and Well Written Essays - 500 Words - 1. https://studentshare.org/finance-accounting/1683933-international-finance.
“International Finance Assignment Example | Topics and Well Written Essays - 500 Words - 1”, n.d. https://studentshare.org/finance-accounting/1683933-international-finance.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
International finance
...? International finance Table of Contents  International finance Table of Contents 2 Answer to Question 3 Answer to Question 2 4 Answer to Question 3 6 Answer to Question 4 7 Answer to Question 5 9 Answer to Question 6 10 References 11 Answer to Question 1 The International Monetary and Financial Conference of the United and Associated Nations, commonly known as the Bretton-Woods Conference after the name of the location where it was held, had been summoned during July, 1944. The primary objective of the conference had been to incorporate robustness into the world financial system. Most of the nations around the world had been victimised at that time by...
8 Pages(2000 words)Essay
International Finance
...of the crisis of European Exchange rate system in early 90s, they begin to suspect the viability of this monetary union. From the very beginning of the European monetary integration process, this union is always question on the basis of the optimum currency area theory. The basis of all criticism was that the Europe was not at all an optimum currency area. Moving forward towards perfect mobilization of factors of production, European Economic Community had introduced Schengen Area, an area comprises of 25 member countries operates as a single legal territory or state for the purpose of travelling without any internal border controls. As a customs union, European Union also removed custom barriers among member countries...
8 Pages(2000 words)Assignment
International Finance
...% IRR (Post tax) 3.52% Weighted Average Cost Of Capital Table 3 Instrument Market Value (?) Rate of return Weightage(?) Equity Shares 720,000,000 9.50% 68,400,000.00 Bank overdraft 169,800,000 6% 10,188,000.00 Redeemable bond 310,200,000 3.52% 10,905,381.42  Total 1,200,000,000 89,493,381.42 WACC 7.46% Current Debt to Equity ratio Debt 480,000,000 Equity 720,000,000 Ratio 0.67 The weighted average cost of capital of the company is the weighted average of the various sources of finance used by the company. Debt is cheaper than equity finance as it lower risk prone and there is always a tax incentive. Increasing amount of debt in the capital structure of the company has its disadvantages as well. Increasing...
14 Pages(3500 words)Coursework
International Finance
...ICI GROUP: ANALYSIS OF INTERNATIONAL OPERATIONS Introduction ICI is one of the world's leading coatings, adhesives, starch and synthetic polymer businesses with products and ingredients developed for a wide range of markets. ICI is headquartered in the UK with manufacturing in 24 countries. ICI was formed in 1926 by the merger of four UK chemical companies: Brunner Mond, Nobel Industries, British Dyestuffs, and United Alkali. ICI is one of a small number of companies listed continuously on the leading UK stock index - originally the FT 30, currently FTSE 100 - since the 1930s (ICI Annual Report, 2006). Over the last few decades, ICI has been an acknowledged leader in diverse disciplines, including fundamental science,...
10 Pages(2500 words)Case Study
International finance
...International Finance Running head: International Finance International Finance 2 The objective of this paper is to show how covered interest arbitrage protects banks and individuals when making international financial investments. Further, the theory of purchasing power parity would be used to explain the impact of inflation on exchange rates. A hypothetical situation on winning the lottery would be utilized to explain the abovementioned concepts in detail. International Finance 3 Answers to Questions: 1. If the exchange rate is US$= Eur1.25, you won 800,000 in...
2 Pages(500 words)Essay
International Finance
...International Finance Table of Contents Chapter Introduction: The Peso 3 The Colombian Peso 3 Republic of Colombia 4 Exchange Rate to US dollars 5 Chapter 2 – The Monetary History of Peso 6 Major Currency Events 6 Exchange Rate Regime in Colombia 8 Chapter 3 – Capital Flow 10 Capital Account Convertibility 10 Capital Controls 11 Balance of Payments 12 Chapter 4 – Foreign Exchange Markets 14 Chapter 5 – The Purchasing Power Parity 15 The Big Mac Index 15 The International Fisher Effect 15 Reference 17 Ben-Basa, A. The Israeli economy, 1985-1998: from government intervention to market economics. USA: MIT Press, 2002. 17 Chapter 1 - Introduction: The Peso ‘Peso’ happens to be one of the most...
14 Pages(3500 words)Essay
International Finance
...International Finance International Finance 1a) Steps taken to stimulate the worlds economy after World War 2 differed significantly from those taken to stimulate the worlds economy after World War 1 According to Stagier (2002), the Second World War brought massive destruction to Europe. Most of the European countries that had taken part in the war were economically shattered after the war. The economy growth of Europe began to recover in the year 1948, and in the year 1950 onwards, this economic growth developed rapidly. This rapid growth was because of the following factors. The gold average refers to the technique, which controlled the worth of exchanges around the...
10 Pages(2500 words)Essay
International Finance
...COLLEGE OF BUSINESS AND FINANCE DEPARTMENT OF BANKING AND FINANCE 2nd semester Assignment 2 FINC 506 : International Finance Name: ------------------- ----- Number: ------------------ --- Section # ----- ( ) 1. Definitions, Define the following terms: a. Foreign exchange market: The market functions through the provision of an institution as well as the physical organization where a country’s money exchanged for that of another. Prior the transaction, a determination of the rate of exchange fist takes place (Eighth...
2 Pages(500 words)Assignment
International Finance
...INTERNATIONAL FINANCE Flexible Price Monetary Model of Exchange Rate Determination Exchange rate refers to the price of one currency expressed in terms of another currency. There are several different models for determining exchange rates. The monetary models of exchange rate determination assert that exchange rates are the relative prices of assets, determined in organized markets where prices can adjust instantaneously. 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 trade through changes in terms of trade or relationship between domestic...
6 Pages(1500 words)Essay
InternationAL FINANCE
...Social responsibility in finance decision making al affiliation) Introduction It is hard to imagine if there exists any economic sector that calls for a proper sense of corporate societal accountability than the financial services. A series of governance scandals has followed repeated concerns about pay levels, successive poor financial service advice and agency problems in private equity companies. Financial service industry is no longer playing a critical role aimed at initiating corporate social responsibilities as expected. The primary essence of a corporate social responsibility is not all about socializing corporations. The movement encourages companies and other firms to generate profits while at the same time...
5 Pages(1250 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Let us find you another Assignment on topic International finance for FREE!
Contact Us