International Financial Management Essay Example | Topics and Well Written Essays - 3000 words

International Financial Management - Essay ExampleThe paper tells that he military man is without delay a global village a phenomenon which can be interpreted as a fact that the advancement in communication and technology has integrated the mingled economies on the clump. A brief analysis of the current stinting scenario of any country would reveal that it is, in one way or the other, dependent on the social and economical activities of the other countries. A downward plunge in the New York stock exchange is likely to send shockwaves all across the globe which can be felt in financial securities industry as further as Far East countries. Recently, when the cherished credit rating of coupled State of America was downgraded to AA+ from AAA, it caused turmoil at a global stage especially in the European countries. All the giant economies much(prenominal) as mainland China and India were badly affected. The economies atomic number 18 carry become interlinked in this era due to the fact that now the firms are indulging in international trade and have started exploring markets outside their place of origin. Companies such as HSBC holdings, General Electric, ExxonMobil, British Petroleum and Toyota Motor have two things in common. First, they are the leading and biggest multinationals in the world and second, they all practice prudent international financial management. From a theoretical point of view, the firms engage in international trade in order to declare comparative advantage which allows the firms to penetrate the immaterial markets. Other popular explanations for the firms indulging in the international trade are the product cycle theory and debile market theory. There are several ways through which a firm can participate in international business. The most common methods are International Trade Licensing Franchising Joint Ventures Acquisition of companies Foreign subsidiary International Financial Markets In todays economy, international busine ss is carried out at international financial market. These markets can be categorized as foreign exchange market, international money market, international credit market, international bond market and international stock market. Foreign Exchange market allows for the trading of different currencies at a rate which is determined based on several facts such as inflation and relative interest rates. Foreign exchange market is not a specific building or place rather the companies featherbed in foreign currency transaction through commercial banks and telecommunication networks. Foreign exchange dealers serve intermediaries between the companies who intend to enter into a foreign exchange transaction. In International Money Market, the trading of currency futures and options takes place. Globalization have abridged the distances and abridged the financial bridges between the countries. Multinationals can now obtain medium and long term loan from banks and financial institution located i n other countries. Especially in Europe these loans are termed as euro credit loans and are transacted in the Euro Credit market. The international credit markets are now developing rapidly in Asia and South America. Recent global economic events have revealed