Interpret the operation of the international financial system, its current state, and challenges for the future.The most popular way for international expansion is for a local firm to acquire foreign companies. One of the most benefits for international expansion is global distribution capability that helps expanding the market share. There are different implications of running a company that is within or outside of the European Union. If you were the head of a firm based in the United States, please answer the following questions, providing the rationale behind your answers: Would you seek to acquire a company within the European Union or outside of it? Why? Describe the advantages and disadvantages of the choice you made. Describe the advantages and disadvantages inherent in the option you did not choose. Explain why an MNC may invest funds in a financial market outside its own country. Explain why some financial institutions prefer to provide credit in financial markets outside their own country. Grading Rubric: Grading Criteria Percentage Deliverable requirements addressed; understanding of material and writer’s message and intent are clear 35% Scholarly research which supports writer’s position properly acknowledged and cited direct quotations may not exceed 10% of the word count of the body of the assignment deliverable (excluded title page, abstract or table of contents if used, tables, exhibits, appendices, and reference page(s). Inclusion of plagiarized content will not be tolerated and may result in adverse academic consequences. 20% Critical thinking: position is well justified; logical flow; examples 20% Structure: includes introduction and conclusion; proper paragraph format and reads as a polished, academic paper or professional presentation, as appropriate for the required assignment deliverable 10% Mechanical – no spelling, grammatical or punctuation errors 10% APA – deliverable is cited properly according to the APA Publication Manual (6th Ed.) 5%
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Finance: Operation of the International Financial System
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Operation of the International Financial System
The international finance has increased over the past decades as the economy of various countries has increasingly become interdependent (Beddoes, 1999). In the perspective of finance, a financial system is a system, which facilitates the exchange of money between the borrowers and investors. The financial system can function within a country, a region or between countries and regions. International financial system encompasses all the exchanges that take place in the global market place. However, in order for exchange to take place in the international financial system, certain components must be in play.
The first component is the medium of exchange is money. The inter-country commercial and economic relations involve the exchange of services and goods for payments. The exchanges involve payments in form of currency. However, each country has its own financial system, currency and assets, and any exchange in the international market involves currency conversion. For payments to be made, the currency used must be same as the one in the country receiving payments. For example, an exchange of goods and services between an American manufacturer and a European buyer involves the exchange of the product for European Euro. Such international foreign transaction is facilitated through the foreign currency exchange markets. According to (Menkhoff, 2013), foreign exchange currency markets perform billions of currency exchanges in a day. The forces of demand and supply determine the rate at which the currencies are traded. In the case of an exchange……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………….
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