Global Finance Paper Essay Example

from the United States.

The Syphilis study at Tuskegee worksheet answers can aid in saving money and minimizing the risk of poor investments. Moreover, there exist two potential situations that could result in a worldwide crisis. One situation involves China's emphasis on exports and the likelihood of foreign investors losing faith in the American financial system due to holding U.S. dollars. This may lead to an increase in capital costs. These circumstances are connected to the Triffin dilemma which pertains to a decline in trust for the American dollar. Chinese policymakers acknowledge these risks as mentioned by Ahamed.

Zhou Xiaochuan, the Governor of the People’s Bank of China, explicitly mentioned Triffin’s dilemma and emphasized the need for reform of the international monetary system in a speech in March 2009.

According to Deardorff (2001), direct foreign investments are when a country exports its goods to and imports from specific countries, rather than trading specific types of goods. Direct foreign investments can also be defined as when a foreign investor owns 10% or more of the ordinary shares or voting power of a local company. Therefore, direct foreign investments typically follow a bilateral trade pattern.

When investing in other countries, organizations face additional risks such as business risk. Thus, it is crucial for organizations to prioritize projects that will create value for their Parent Company when investing in foreign projects.

When assessing a project, organizations must be mindful of risks such as exchange rate risk and hyper-inflation (Okolo). It is crucial to take into account that the discounted cash flows for the project will be converted to the currency

of the Parent Company at the prevailing exchange rate, as they become the discounted cash flows of the foreign subsidiary. Another risk to consider is the stability of the foreign government. As emerging markets in countries like Brazil, China, and India continue to expand, there will be more investment opportunities for Domestic organizations with an International presence. In recent years and in the next decade, political risks associated with global finance have significantly risen.

There are protests happening in many countries due to unstable economies and unruly populations. Bulgaria, Greece, and Latvia were once stable but have recently seen widespread demonstrations. Even Russia and China have witnessed scattered protests despite the risk of repression by authorities (Ewing, 2010). It will be interesting to see how the global economy handles this uncertainty in the next decade. The global financial market decline has made many companies hesitant to make any financial commitments.

Global financial risk is influenced by factors such as currency exchange and a government's willingness to let companies send profits or funds overseas, as noted by Okolo. During times of devaluation and inflation, it becomes even more challenging for firms to operate profitably and maintain stability. Restrictions on foreign companies repatriating funds imposed by certain countries often lead to less productive investment methods. Additionally, governmental seizure or confiscation of company assets can also result in losses.

Despite uncertainty, many companies may choose to conduct business exclusively in their home country. However, there are still numerous opportunities for global participation. Global business partners have become comfortable with collaborating to decrease corporate risk and increase shareholder equity. The future of global commerce is expected to follow a similar trend as

recent years. All companies operating in the marketplace deeply concern themselves with risk analysis initiatives. This article examines several factors that will impact global finance in the next decade, including business risk, political risk, and financial risk. Additionally, advancements in technology have helped reduce barriers for global businesses, allowing them to offer competitive products, services, and technologies.