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48 Cards in this Set
- Front
- Back
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They relies on markets enabling cross border funds transfers, with international transactions driving money movements between countries. |
International Business |
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Is a summary of transaction between domestic and foreign residents |
Balance of Payments |
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It plays a crucial role in the global economy, facilitating economic growth and financial stability. |
International trade of funds |
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What are the two components of balance of payments |
Current account Capital account |
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It represents an accounting of a country's international transactions for a period usually a quarter or a year |
Balance of payments |
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It represents a summary of the flow of funds resulting from the sale of assets between one country and all other countries over a specified period of time |
Capital account |
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It represents is summary of the flow of funds between one is specified country and all other countries due to purchase of goods and services or the provision of income on financial assets |
Current account |
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What are the components of current account |
Payment for merchandise and services Factor income payments Transfer payments |
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This covers the income earned by a country's residents from investments or employment abroad, as well as the income earned by foreign residents within the country. |
Factor income payments |
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This component combines both trade in goods and trade in services. |
Payments for merchandise and services |
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It consist of unilateral transfers, which or one-way transactions without an exchange of goods or services. |
Transfer payments |
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It includes the value of financial assets transferred across country borders by people who move to a different country |
Capital account |
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It represents transaction involving long-term financial assets between countries that do not affect the transfer of control |
Portfolio investment |
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It represents the investment in fixed asset in foreign countries that can be used to conduct business operations |
Direct foreign investment |
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It summarizes the flow of funds resulting from the sale or purchase of assets between one country and the rest of the world |
Financial account |
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It represents transaction involving short-term financial assets between countries |
Other capital investments |
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What are the key components of financial account |
Direct foreign investment Portfolio investment Other capital investments |
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It can bring in capital, technology and expertise stimulating economic growth and job creation. |
Foreign direct investment |
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Allows countries to expand their markets for both goods and services that otherwise may not have been available domestically |
International trade flows |
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It includes purchase of financial assets such as stocks and bonds issued by a country |
Portfolio Investment |
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It is the key to the rise of the global economy where supply and demand and therefore prices both effect and are affected by global events |
International trade flows |
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It provides a source of foreign capital inflow and can have a significant impact on countries financial markets |
Portfolio investment |
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What are the international capital flows |
Foreign direct investment Portfolio investment Remittances Bank loans and credit Foreign exchange reserves |
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This involves individuals or companies from one country making long-term investments such as buying or establishing businesses in another country |
Foreign direct investment |
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This are funds sent by individuals working abroad to their families in their home countries |
Remittances |
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This includes investment and financial assets like stocks and bonds of foreign companies or governments |
Portfolio investment |
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These reserves can be considered a form of capital flow |
Foreign exchange reserves |
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What are the influential factors affecting the trade flows? |
1. Impact of Inflation2. Impact of National Income3. Impact of Government Policies4. Subsidies for Exporters5. Restriction on Imports6. Lack of Restrictions on Piracy7. Impact of Exchange Rates |
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It refers to the movement of money or investment between countries |
International capital flows |
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It is the particular combination of debt and equity used by a company to finance its overall operations and growth |
Capital structure |
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It is the state of the global, economy the availability of funding and interest rates all play a role in determining a company's international capital structure |
Market conditions |
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It refers to the combination of debt and equity financing that a multi-national corporation uses to finance its global operations |
International capital structure |
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It can significantly impact capital structure decisions |
Taxation |
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Legal requirements such as local ownership laws and foreign equity ownership restrictions can heavily influence capital structure decisions |
Regulations |
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What are the factors influencing capital structure decisions |
Market conditions Taxation Risk management Regulations |
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The level of risk a business is willing to take on can affect the type of amount of capital a company is willing to raise from various sources including shareholders |
Risk management |
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What are the advantages of debt financing |
Access to capital Retained ownership |
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What are the disadvantages of debt financing |
Interest payments Risk of defaults |
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What are the advantages of equity financing |
Reduces reliance on debt Access to expertise and networks |
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What are the disadvantages of equity financing |
Loss of control Complexity |
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It is the rate of return that a company must earn on its investment in order to create value for its shareholders |
Cost of capital |
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What are the categories affecting the cost of capital |
Nature of business The size of the company Legal requirements Investor requirements |
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Some industries have higher growth potential than others |
Growth potential |
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What is the under of nature of business |
Risk profile Growth potential |
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What are the under of the size of the company |
Economies of scale Access to capital markets |
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Under the legal requirements |
Regulatory compliance Legal structure |
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Under investor requirements |
Investors risk tolerance Desired return |
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What are the differences of cost of capital among the countries |
Degree of financial integration Quality of corporate governance Macroeconomic conditions |
