Global Finance Paper
University of Phoenix
Sadaf Asghar, Ryan Crooks, Joseph Martinez, David Trejo, and Anthony Thorton
FIN/370: Business Finance
Nikita G. Silver
January 10, 2010
Global Finance Paper
In today’s global marketplace, doing business abroad has become as common as getting dressed each day. Technology has bridged the gap for entrepreneurs and corporate visionaries to expand into global markets with ease. Extensive risk analysis and market research must be communicated effectively to enable strategic financial steps that maximize shareholder equity and minimize company risk and exposure to be exercised. This paper will identify and discuss various factors that will impact global finance over the next 10 years …show more content…
Risks to consider include exchange rate risk and hyper-inflation. When analyzing exchange rates and the risks involved for a project, an organization must keep in mind that the discounted cash flows become the discounted cash flows of the foreign subsidiary, which are converted to the currency of the Parent Company at the prevailing exchange rate (Okolo). Another risk to consider is the stability of the foreign government. With emerging markets in countries like Brazil, China, and India the next 10 years are set to bring greater investing opportunities for Domestic organizations with an International presence.
Recently and in the next 10 years, the political risks of doing business in global finance have dramatically increased. With failing economies around the globe many countries are unstable and the people often unruly. Many examples exist of countries with citizens who are unhappy enough to hold demonstrations that carry out into the streets. “Bulgaria, Greece, and Latvia are all examples of countries once seen as stable that have experienced widespread unruly demonstrations recently. Even Russia and China have had scattered protests, signs that citizens are unhappy enough to risk reprisal repressive authorities” (Ewing, 2010). In the next 10 years it will be interesting to see how the global economy deals with uncertainty.