CHAPTER 1: INTRODUCTION TO INTERNATIONAL FINANCE 1. Introduction to International finance 2. Financial instruments 3. International financial market 1. Introduction to International finance 2. Financial instruments 3. International financial market 1. Introduction to International finance 1.1. Why is International Finance Important? 219/12/10 B02013 - Introduction to International finance Why is International Finance Important? Companies (and individuals) can raise funds, invest money, buy material, produce goods and sell products and services overseas. With these increased opportunities comes additional risks. We need to know how to identify these risks and then how to control or remove them. 3 Companies (and individuals) can raise funds, invest money, buy material, produce goods and sell products and services overseas. With these increased opportunities comes additional risks. We need to know how to identify these risks and then how to control or remove them. 19/12/10 B02013 - Introduction to International finance 1.2. What is different about international Financial Management? 1.2.1. Culture, history and institutions 1.2.2. Corporate governance 1.2.3. Foreign Exchange Risk 1.2.4. Political Risk 1.2.5. Market Imperfections 1.2.6. Expanded Opportunity Set 4 1.2.1. Culture, history and institutions 1.2.2. Corporate governance 1.2.3. Foreign Exchange Risk 1.2.4. Political Risk 1.2.5. Market Imperfections 1.2.6. Expanded Opportunity Set 19/12/10 B02013 - Introduction to International finance 2. Financial instruments: • Cash • Shares • Bonds • Other cash instruments such as loans and deposits • Derivative instruments • Cash • Shares • Bonds • Other cash instruments such as loans and deposits • Derivative instruments 519/12/10 B02013 - Introduction to International finance 3.1.International capital transfer. • Unilateral transfer • Bilateral transfers • Multilaterals transfer. 3. International Financial Market 3.1.International capital transfer. • Unilateral transfer • Bilateral transfers • Multilaterals transfer. 619/12/10 B02013 - Introduction to International finance 3.2. Classification of Financial Market 3.2.1. Form of Financial Instruments • Equity market • Bonds market • Foreign exchange markets 3.2. Classification of Financial Market 3.2.1. Form of Financial Instruments • Equity market • Bonds market • Foreign exchange markets 719/12/10 B02013 - Introduction to International finance 3.2.2. Length of Maturity – Currency market – Capital market 3.2.3. Kind of Trading: - Primary Market - Secondary Market - Collateralized Mortgage Obligations - Future contracts. 3.2.2. Length of Maturity – Currency market – Capital market 3.2.3. Kind of Trading: - Primary Market - Secondary Market - Collateralized Mortgage Obligations - Future contracts. 819/12/10 B02013 - Introduction to International finance Discussion questions • What are the Advantages and disadvantages of financial instruments? • Update financial news • What are the Advantages and disadvantages of financial instruments? • Update financial news 919/12/10 B02013 - Introduction to International finance . remove them. 19 /12 /10 B02 013 - Introduction to International finance 1. 2. What is different about international Financial Management? 1. 2 .1. Culture, history and institutions 1. 2.2. Corporate governance 1. 2.3 instruments 3. International financial market 1. Introduction to International finance 1. 1. Why is International Finance Important? 219 /12 /10 B02 013 - Introduction to International finance Why. Risk 1. 2.4. Political Risk 1. 2.5. Market Imperfections 1. 2.6. Expanded Opportunity Set 4 1. 2 .1. Culture, history and institutions 1. 2.2. Corporate governance 1. 2.3. Foreign Exchange Risk 1. 2.4.