International Financial Management

Added on -2020-02-05

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International FinancialManagement
Table of ContentsINTRODUCTION...........................................................................................................................3TASK ..............................................................................................................................................31. Models and theories of International Financial Management.................................................32. Methods and techniques of international business for financing............................................43. Theoretical models of corporate value, international costof capital and financial structure................................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7
INTRODUCTIONInternational finance having another name that is overseas macroeconomics and it is asection of financial economics which deals with the monetary interactions that occur betweentwo or more countries. It includes the foreign direct investment and currency exchange rates.Finance function of a multinational firm having two functions which includes treasury andcontrol (Brown, 2016). It helps in doing the financial planning analysis, fund acquisition,investment financing. Along with this they have to do proper and appropriate cash management,risk management as well as investment decisions. The individual person who are doing thepractice in the international finance management requires the knowledge and skills in thedifferent field which includes the knowledge of latest changes in the forex rate as well asinvestment behaviour of the investors, macro level charges as well as micro level economicindicators (International Finance Management, 2012). TASK 1. Models and theories of International Financial ManagementThere are different theories and models which are used in the financial managementinternationally which includes purchasing power parity(PPP) and product cycle theory. Purchasing Power Parity: This theory refers to the exchange rate between the currenciesare in equilibrium when their purchasing power is same in the two different countries. It is atheory and also a element of international financial management and it is related to exchangerates as well as rate of inflation between the different countries as it is equal to the changeswhich are expected in the spot exchange rates to the differential between the two differentcountries (Egginton, Van Ness and Van Ness, 2016). This theory as well as law helps inmaintaining the price of identical product in the competitive market in the different countries. Itincludes the different cost which includes the transport and transaction cost as well as otherbarriers to do free trade so that they can cause the significant change to the price parity. It

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