FIN 320 week 5 International Risk

FIN 320 week 5 International Risk - Running head...

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Running head: INTERNATIONAL RISK 1 International Risk Your name Corporate Finance/FIN320 February 6, 2011 Professor
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INTERNATIONAL RISK 2 Abstract International financing involves several risks. The breakdown of currency exchange, bias of a country’s people, and the politics involved in operating a business are explained.
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INTERNATIONAL RISK 3 International Risk When an organization is dealing with other countries for a business opportunity, it must be aware of the risks involved. Three risks for organizations investing in foreign countries involve the currency exchange rate, the population’s opinion or bias against its country, and the politics of the foreign country. Although engaging in international finances can be exciting and profitable, a company must expect and guard against the risk it needs to take. The currency exchange rate is the first risk a company must understand. Foreign Exchange Risk Currency exchange involves changing one currency for another. Anytime a company decides to invest in another country, a currency exchange happens. Because the rate of currency changes daily this could prove to be beneficial or harmful for the company. To prevent loss when adding additional funds to a project or retrieving profit from a business, it becomes necessary to guard against the flexuation.
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