International Trade, Finance, and Investment

International Trade
Finance
and
Investment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Financial market background:.....................................................................................................1
Allocation of capital within domestic economy:.........................................................................2
Allocation of capital within international market:.......................................................................4
TASK 2............................................................................................................................................5
Economic evaluation:..................................................................................................................5
Critical evaluation of the challenges that are faced by a nation regarding trade policies as well
as industrialization:......................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
International finance and trade investment can be explained as a financing activity that
indicates financial transaction among international borders of countries for specific period of
time. It signifies expansion of an industry as well as business in other countries by enhancing
area of income for the purpose of generating and investing funds in a country (Hafeez and et.al.,
2018). This report is based on evaluation of an international trading as well as financing of
United Kingdom along with international market.
This report covers determination of background of financial markets. Further, it analyses
main platform which are there for the purpose of security transaction and the reason is that it
improves the liquidity as well as efficiency of a business and in addition to it, facilitates
increment of gross domestic product. Various types of financial markets are there which are
described for fostering enhanced utilization of available resources in an efficient manner. Apart
from it, this report states evaluation of capital in context to domestic market as well as
international trade. Allocation of capital in the domestic and in an international market is
determined. Lastly, challenges that are faced by a nation in relation to industrialization as well as
trade policies are analysed.
TASK 1
Financial market background:
Financial market can be indicated as a marketplace which pertains trading for security. It is
essential as it provides smooth functioning in context to capitalist economy by enabling adequate
allocation of resource and ensuring creation of liquidity for an organization. Financial market
provides procedure that is easier in relation to sellers as well as buyers in relevance to trading of
financial holdings. It helps in creation of security because it ensures effective return on excessive
or improvised security, for example, investors (Hill and et.al., 2017).
In addition to it, financial market ensures availability of fund for people that pertains desire
for excessive fund, as such type of people are borrowers. Various types of financial instruments
are sold as well as purchased in such a financial platform. Different types of financial market are,
derivative market, money market, bond market, forex market as well as over the counter market.
Over the counter market refers to a market that do not pertain any physical location, such types
of financial market is decentralised. Further, electronic trading is computed in this type of market
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and even participants are included in the process of direct trading in relation to securities. In
other words, it can be stated that there is no requirement of broker in it. In relevance to bond
security, in this type of financial market, loan money of investors is for specific period of time
and along with it interest rate for it is pre-established. It can be described as an agreement among
borrowers and payer where detail regarding loan is actively recorded with the motive of
payment. Trading for money market incorporates products that are of high liquidity value that is
matured in the short-term period of time (Kirton and Maclaren, 2018). In this type of market,
return on interest is low apert from the fact that its level of safety is high. Value associated with
money market is evaluated from value of primary security. Forex security enables participants to
purchase, sale as well as speculate currency.
Financial market of United Kingdom: Economy of United Kingdom incorporates
financial holding which is 25 percent in relevance to private equity in world. In addition to it,
United Kingdom covers 52 percent of European equity market. During this period, Stock
exchange of London is indicated as a largest stock market in Europe. Almost 5000 number of
people are employed in it in United Kingdom. Contribution of nation in context to GDP is 0.8
percent in the year 2007. From prior 300 years, financial market of UK. It generates total income
of 1.4 trillion at the end of the year. Nation is popular in relation to sale of assets, that states
derivatives and foreign exchange. Entrepreneurs as well as business-men mostly prefers financial
market due to the fact that it ensures expansion of business activities and enables high earning of
profit. Financial market of United Kingdom performs various types of functions, such as,
creation of open system for the purpose of attracting large amount of fund for business and it can
be achieved by stock market as well as bond market. Utilization of financial market is computed
through large number of people and that is set for it is transparent. Further, users are provided
with appropriate liquidity in the market. In consideration for authenticity in financial market, it
can be stated that it serves as a productive approach for the purpose of generating profit as
limited amount of foreign money that is hold by it. It is an efficient tool that provides finance to
large businesses and is helpful for achievement of goals of an organization (Lester, Mercurio and
Davies, 2018).
While considering FDI stock of United Kingdom it can be noted that inward FDI stock of
country is 1.196 trillion US dollar and its outward FDI stock is 1.443 trillion US dollar. As the
currency of the UK, the pound sterling pertains a rich history as well as it is one of the oldest
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