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Global Finance Paper Fin 370

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Global Finance Paper

University of Phoenix
Sadaf Asghar, Ryan Crooks, Joseph Martinez, David Trejo, and Anthony Thorton
FIN/370: Business Finance
Nikita G. Silver
January 10, 2010
Global Finance Paper

In today’s global marketplace, doing business abroad has become as common as getting dressed each day. Technology has bridged the gap for entrepreneurs and corporate visionaries to expand into global markets with ease. Extensive risk analysis and market research must be communicated effectively to enable strategic financial steps that maximize shareholder equity and minimize company risk and exposure to be exercised. This paper will identify and discuss various factors that will impact global finance over the next 10 years …show more content…

International banks would decrease in size due to the lowered flow of U.S. dollars and reduce the chances for poor investments. The other two scenarios result in a continued global crisis, as countries such as China may remain focused on exports and foreign investors holding the U.S. dollar may lose confidence in the American financial system causing a rise in the cost of capital. These situations are likely based on the Triffin dilemma, or the loss of confidence in the American dollar. According to Ahamed, "The risk of such a situation is clearly on the minds of Chinese policy makers. Zhou Xiaochuan, the Governor of the People’s Bank of China, explicitly referred to Triffin’s dilemma in a speech this March on the need for reform of the international monetary system" (2009).
Direct Foreign Investments

Deardorff (2001) stated that, direct foreign investments refer to the particular countries and kinds of countries toward which a country's exports are sent, and from which its imports are brought, in contrast to the commodity composition of its exports and imports. Besides, direct foreign investments also can be defined as the situation in which a foreign investor owns10% or more of the ordinary shares or voting power of a local company. Thus, the pattern that the direct foreign investments follow is that of a bilateral trade.

Business risk An organization

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