How is multinational financial management different from financial management as practicedby a firm that has no direct contacts with foreignfirms or customers? What special problems andchallenges do multinational firms face? Whatfactors cause companies to “go multinational”?

How is multinational financial management different from financial management as practicedby a firm that has no direct contacts with foreignfirms or customers? What special problems andchallenges do multinational firms face? Whatfactors cause companies to “go multinational”?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter1: An Overview Of Managerial Finance

Section: Chapter Questions

Problem 17PROB

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Question

How is multinational financial management different from financial management as practiced
by a firm that has no direct contacts with foreign
firms or customers? What special problems and
challenges do multinational firms face? What
factors cause companies to “go multinational”?

Approach to decide on the efficient procurement and investment of funds for the day-to-day operations of a business. Financial management aims at profit maximization, and it includes financing and capital budgeting.

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Companies go global for various reasons. Although becoming a multinational corporation provides prospects for high returns and diversification, it makes financial management more complicated for financial executives and managers. Based on your understanding of the factors that complicate financial management in multinational firms, complete the following statement: Compared to domestic corporations, multinational corporations have (increased or reduced) risk from exchange rate fluctuations.
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