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International financial management - Essay Example

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Most investors in the UK and other parts of the world choose to place a portion of their portfolios in foreign securities. The decision, however, should involve an analysis of various mutual funds, exchange traded funds and bond offerings…
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Download file to see previous pages Most investors in the UK and other parts of the world choose to place a portion of their portfolios in foreign securities. The decision, however, should involve an analysis of various mutual funds, exchange traded funds and bond offerings. To be successful in this venture of overseas investment, the company must begin first by determining the risk that characterizes the investment climate of the countries under its consideration. This would involve a careful analysis of both the economic, political and business risks associated with such investments in these countries (Michalet, 1997, p.19). The main factor to be considered by the company before investing overseas would be the types of the markets to be penetrated. There exist the developed, emerging and the frontier markets. The developed markets are those that consist of the largest and most industrialized economies whose economic systems are well developed, with politically stable environments and where the rule of law is well entrenched. These markets are considered by several economists to be the safest investment destinations, but with lower economic growth rates often trailing those of countries in earlier stages of development. An investment analysis of such markets would concentrate more on the current economic and market cycles and less by the political considerations. This would be the situation when the firm decides to invest in the United States of America (Organization for Economic Co-Operation and Development, 2011, P.77). ...Download file to see next pagesRead More
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