International Finance Assignment Solution

Running head: INTERNATIONAL FINANCE
International Finance
Name of the Student:
Name of the University:
Authors Note:

INTERNATIONAL FINANCE
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Table of Contents
Question 1:.................................................................................................................................2
Question 2:.................................................................................................................................2
Question 3:.................................................................................................................................4
Question 4:.................................................................................................................................4
Question 5:.................................................................................................................................5
Question 6:.................................................................................................................................6
Question 7:.................................................................................................................................7
Question 8:.................................................................................................................................8
Question 9:.................................................................................................................................9
Question 10:...............................................................................................................................9
Reference and Bibliography:....................................................................................................12

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Question 1:
The theory of comparative advantage relevantly indicates the ability of a producer to
provide goods and services at lower opportunity cost in comparisons to other producers. In
addition, the principle of comparative advantage relevantly indicates the positive attribute,
where agents are willing to produce more and consume less of the goods, who have a
comparative advantage in the economic reality. Furthermore, the comparative advantage can
be identified as the overall progress obtained by industry such as technological progress,
endowments, and economic model, who increases the opportunity cost of the company or
producer.
In addition, David Ricardo developed the comparative advantage theory, where he
explained the efficiency of workers of developing an edge for the industry in the country. The
theory is effectively applicable in the current context, where the with the competitive hedge
companies can minimise the opportunity cost of goods and services. This increases their
competitive edge in the market and improves the level of profits that could be generated from
operations. The companies with competitive advantages are able to improve the level of
revenues, while reducing nay kind of extra expenses incurred from operations. In this context,
Borio, Gambacorta & Hofmann (2017) stated that with the use of skilled labour organisations
can reduce opportunity cost of production and maximise the profits from operations.
Question 2:
There are four corporate governance regimes such as Market-based, Family-based,
Bank-based and Government Affiliated, which has adequate difference and comparison for
the companies. The difference between the corporate regimes are depicted as follows.
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Regimes Difference
Market based The characteristics of the regime relevantly
indicates the efficient market and dispersed
ownership of the regime
Family based This regime mainly combines both family
ownership and minority shareholders
Bank based The bank-based regimes are controlled by
governments and have lack of transparency
Government affiliated There are state ownership enterprises, where there
is lack of transparency
The major comparison between the overall regimes is the rule of corporate
governance, which needs to be followed by the companies operating in the region. In
addition, the laws and situations in the regimes could be conducted for improving the level of
returns that could be generated from operations. In addition, the regimes are a function of
financial market developments, with a degree of separation of owners and managers. In
addition, the regimes also have disclosure and transparency condition with a historical
development of legal system.
MNCs needs to be concerned regarding the difference in corporate governance
regimes, as it will affect their operational capability. In addition, the subsidiary in that region
will have to follow the rules and regulations of that country, while the actual mother company
will have different set of rules and corporate governance regimes. This increases the
difficulty for the company for effectively conducting its operations in all its companies
situated in different regimes (Frieden, 2015).