International Trade: Finance and Investment

International Trade
Finance and Investment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Background of financial market:.................................................................................................1
Capital allocation within domestic economy:..............................................................................2
Capital allocation within international market:...........................................................................4
TASK 2............................................................................................................................................5
Evaluation of the economy........................................................................................................5
Critically evaluating the challenges faced by the country in respect to Industrialization
and trade policies.......................................................................................................................5
Conclusion.......................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
International finance and trade investment refer to the financing activity which is included
between the financial transaction between the countries in the world for a specific period. It
means expanding of the industry and business in other country by increase the area of the income
for the generation and investment purpose for country. In this report there is the analysis of the
international trading and financing of the United Kingdom with the international market. in this
report there is the background of the financial markets and which is the main platform for the
security transaction because it increases the liquidity and efficiency of the company in increase
of the gross domestic product (Alvarado, Iniguez and Ponce., 2017). There are various financial
markets is described for that for the better utilization of the resources in the efficient manner. In
this there is the capital allocation of the domestic country in international trade and allocation of
the domestic in the international market. there are some challenges also faced by the country
which is related to industrialization and trade policies which is evaluated.
TASK 1
Background of financial market:
Financial market refers to marketplace that pertains trading of security. It is vital for
providing smooth functioning of capitalist economy by ensuring resource allocation and liquidity
creation for business. This market makes procedure easier for sellers and buyers for the purpose
of trading in relation to financial holdings. This market helps in security creation as it enables
return on excessive security, such as, investors (Anwar and Sun., 2018). Along with it, financial
market enables fund availability to people which pertains desire of excessive fund, such people
are borrowers. Various financial instruments are purchased and sold in this financial platform.
Types of financial market are forex market, derivative market, money market, over the counter
market as well as bond market. Over the counter market can be explained as market which do not
have physical location and which is decentralised. Electronic trading is conducted in this market
and participants are involved in direct trading in context to securities, in other words,
requirement of broker is not there. In context to bond security, in this type of financial security
investors loan money for specific time period and even interest rate is pre-established. Bond is an
agreement between borrowers as well as and in this detail of loan is recorded for the purpose of
payment. Trading in money market is incorporated with products of high liquidity value which
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matures in short term period. Return on interest in this market is low although its safety level is
high. Value of money market is derived from primary security value. Forex security ensures
purchase, selling and speculation of currency by its participants.
UK financial market: economy of country pertains financial holding of 25% in context to
private equity around world. Additionally, UK covers 52% of European equity market. At this
period, London stock exchange is considered as largest stock market in context to Europe, it
employs almost 5000 people in United Kingdom (Araújo and et.al.,2017). Contribution of
country in relevance to gross domestic product is 0.8% in 2007. From past 300 years financial
market of United Kingdom. This financial market generates income of 1.4 trillion at year end. It
is popular for sale of assets, which states derivatives as well as foreign exchange. Business man
and entrepreneurs most probably prefers this financial market because it enables expansion of
business and high profit earning. UK’s financial market performs different types of functions, for
example, open system creation for attraction of large fund for business and this can be achieved
by bond market and stock market. Utilization of this market is conducted through large number
of individuals and price that is set is transparent. Users are provided with adequate liquidity in
this market. On consideration of authenticity of financial market, it can be noted that it is
productive approach for generating profit as limited foreign money is hold by it. This efficient
tool provides finance to big organizations and is helpful in achievement of business goals. In the
year 1977, Apple persuade loan of amount 250000 from the investors, after 5 years, company
borrowed loan of 100 million amount by sharing shares of small size from financial market.
Capital allocation within domestic economy:
Domestic economy: It can be defined as production activities and trade activities that is
consisted in country’s economy. Economy of United Kingdom is entitled as fifth largest among
globe while measured in context to nominal gross domestic product. Its economy is market
oriented and is highly developed. In context to PPP or purchasing power parity economy of UK
is ninth highest across globe. In addition to it, this economy is twenty first largest in relevance to
gross domestic product in per capita which is comprised of almost 3.3% of globe’s gross
domestic product (Cumming and Zahra., 2016). In 2019, UK was entitled to be as 5th largest
around world in context to exports and imports. It is further comprised as third largest in
relevance to inward foreign direct investment and fifth largest in context to outward foreign
direct investment. UK is estimated as top globalised in context to economy. Country pertains
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