Discussion Week 11 Due 3/18/2018 Sunday 7pm EST
amybeth1976
Week11DiscussionExamples.docxExample 1:
Questions 1: Provide two (2) examples that demonstrate an increase or change in your own theories of international finance since the beginning of this course.
Answer:
One example that demonstrates an increase in one of my own theories in regards to international finance is how much the central banks and federal had the ability to influence or intervene when foreign exchange markets require stability. I was aware of the selling of dollar reserves in different currencies but was surprised to learn a lot more just how powerful, and although not always successful the ability to attempt or influence. The second example that comes to mind is the power of currencies and how countries know when to enter the market and get out. For example a foreign market having a weaker currency, taking advantage of laxer trade regulations, and the lack of a governing presence.
Question 2: Rate the three (3) most important concepts that you learned in this course in order of importance, with one (1) being the most important; three (3), the least. Provide a rationale for your ratings.
Answer:
1. Measuring Exchange Rate Movements – very import concept I learned in this course not to mention it frequently was asked about or talked about on our discussion board. I think for any investor it’s important to know what a positive % change indicates and how or when a foreign currency will appreciate.
2. Possible Strategies for Hedging Economic Exposure –Any technique that you can use with derivatives to mitigate risk when investing in foreign markets is extremely value information. I love how the 2nd half of this class really deep dived into forward contracts, pricing policies, and financing with foreign funds.
3. Multinational Working Capital Management – this was just a detailed look at how MNC subsidiaries are affected by tied up funds and how to use short term assets to get out of a jam. I’m sure there is more meat on the bone and I am paraphrasing but this read just did not grasp my attention at the time.
Question1: Provide two (2) examples that demonstrate an increase or change in your own theories of international finance since the beginning of this course.
Answer:
Since the beginning of this course I have come across a few things that have changed my theories when it comes to international finance one being how important and relevant exchange rates play a major role when it comes to international finance. I did not there were so many aspects that one must consider regarding exchange rates before conducting any international business. The second thing is looking at the different countries and measuring their risk. I knew when it came to doing international business, but was unaware of how thorough a risk analysis can be. There are many different components that one must look at.
Question 2: Rate the three (3) most important concepts that you learned in this course in order of importance, with one (1) being the most important; three (3), the least. Provide a rationale for your ratings.
Answer:
1. The International financial market. A capital market is one in which individuals and institutions trade financial securities. Organizations and institutions in the public and private sectors also often sell securities on the capital markets in order to
2. Exchange rate determination between any two currencies is determined by relative money demand and money supply between the two countries.
3. Managing transaction exposure. You have to look at the risk shifting, currency risk sharing and leading and lagging.
Example 3:
Question1: Provide two (2) examples that demonstrate an increase or change in your own theories of international finance since the beginning of this course.
Answer:
1.) During the course I learned how the investing in foreign countries have exposure to Transaction, Translation and economic exposure.
2.) I learned how the interest rates increase and decrease in domestic and in foreign countries affects the investments in foreign countries and the same for exchange rate fluctuation.
· Question 2: Rate the three (3) most important concepts that you learned in this course in order of importance, with one (1) being the most important; three (3), the least. Provide a rationale for your ratings.
Answer:
1. Managing Exposure to Transaction, Translation and economic exposure
2. Multinational capital budgeting
3. Forecasting Exchange Rates
