Why it is to study international finance?
Foreign Exchange Risk
Every country in the world, the natural resources. These resources can be used in many ways very specific to the country that owns them.
In many cases, the resources of a country to be the basis for the development of the national economy. They are often raw materials and products that are exported to world markets.
The countries that are increasingly dependent on imported goods from other countries in other parts of the world. Some of these resources, which can be very important for the sustainable growth of the importing country.
The import and export activities require use of foreign currencies. The values of exported and imported raw materials are determined on the basis of national foreign policy and foreign Exchange Management Regulations of the Exchange management.
Countries thus have a strong foreign policy Exchange Management to adopt compatible and acceptable in international trade. The Foreign Exchange Management Act is to be the guide for the establishment of the management system of the country's foreign exchange.
Political Risk
For investors, political risk may simply be due to the risk of losing money can be defined, because of the changes that occur in the government of a country or regulatory environment. Acts of war strikes, terrorism and military are all extreme examples of political risk. Expropriation of assets by the government - or even just the threat - can also have a devastating effect on stock prices.
In the spring of 2007, Venezuelan President Hugo Chavez has announced plans to nationalize CANTV abruptly, the local telephone company. CANTV shares plunged by almost 50% before the details of Chavez's plans were. Investors sold first and asked questions later.
But is the political risk in many different forms. Other examples are: a new president or prime minister, a change in the land of the ruling party or an important piece of new legislation. All these changes can have a strong impact on economic performance in the context of a country and the perception of investors about the prospects of a country.
Market Imperfections
Market imperfections affect virtually every transaction in some way and causes costs to make that trade with rational individuals do, or interfere in the absence of imperfection. Understanding these costs gives us in relation to the total cost of operations, where to put them, or to make them at all. It may also reduce market imperfections generate profit opportunities for entrepreneurs, or delete them.
Institutions or individuals, to reduce costs in order to trace the defects may have a competitive advantage and can earn economic rents to adapt to their competitors. Imperfections can and do change over time, but collectively, they never go to zero. Identification and resolution of the underlying business issues associated with these imperfections, remains a constant challenge and opportunity for profit.
Expanded Opportunity Set
Today the world trade is expanding, the number of listings is growing worldwide, and some of the larger companies and more rapid growth exist abroad. Investors who have access to the largest, most dominant companies in their industries you want to have a global perspective.
