Hey guys Im thinking about taking this course instead of Financial Management and Policy (because this course is just hard to learn for the exam). How would you rank the difficulty of International Financial Management?
Thanks for your help xoxo
4. Opportunities for the MNC to enhance revenues include each of the following EXCEPT ______.
a. advantages of scale
b. advantages of scope
* c. economies of vertical integration
d. global branding
e. marketing flexibility
Doesn't economies of vertical integration increase revenue because you can produce cheaper inhouse?
Economies of vertical integration. Firms possess economies of vertical integration when they enjoy lower costs through their control of a vertically integrated supply chain. Firms vertically integrate when it is more efficient to arrange the steps of a production process through internal rather than external markets. Vertical integration is common in industries that need to protect their processes or technologies from competitors. Mature MNCs often integrate their supply chains from labor and raw material inputs right through the final marketing, distribution, and after-sale service of their products.
Can someone give me a clear explanation what the difference is between currency risk and currency risk exposure?
6. Currency risk and currency risk exposure refer to the same thing—the possibility that currency values will differ from their expectations.
False. A firm has a currency risk exposure when its assets or liabilities can change in value with unexpected changes in currency values.
I personally explain it to me as: Currency risk = Possibility that currency value will differ from their expectation =/= Firm value is affected. A manager can think that a certain currency appreciate or depreciate, but it does not necessarily have to do anything with the firm. But I am not sure
I think the key part is that it is a contract traded (1) outside the borders of the country issuing it, and (2) denominated in a currency different from that of the country issuing it. - I suppose it could therefore be denominated in more than one foreign currency, but I don't think it is relevant.