international fnance.ppt - International Business Finance...

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International Business Finance
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Today’s agenda 1.1 Why companies go outside domestic territory? 1.2 Why study International Finance? 1.3 Theories of International Business 1.4 International Financial markets and Business Methods
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Resident (Normal Resident) of a Country: National income has also been defined as “Sum total of factor incomes earned by the normal residents of a country during a year.” Thus, like domestic territory, normal resident has a special meaning and importance in national accounting. 1.1 Why companies go outside domestic territory
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Resident (Normal Resident) of a Country: A resident is said to be a person (or institution) who ordinarily resides in a country and whose centre of economic interest lies in that country. He is called a normal resident since he normally lives in the country of his economic interest. The period of stay should be at least one year or more. Thus, (i) staying for more than a year and (ii) having economic interest [e.g. earning, spending, accumulation) are the two normal conditions for becoming a normal resident. It needs to be kept in mind that national income is the sum total of income of only normal residents of a country during a year. 1.1 Why companies go outside domestic territory
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Following points need to be noted: Normal residents cover both individuals and institutions Normal residents Include both citizens and non-citizens International bodies like World Bank, World Health Organisation or International Monetary Fund are not considered residents of the country in which these organisations operate but are treated as residents of international territory. Local employees working in foreign embassies located in their country are treated as normal residents. Workers from across the border who cross border in the morning to work in the other country Normal residents of India include (i) Citizens (and institutions) of India, (ii) Citizens of other countries (i.e., non-citizens) who normally reside in India for more than a year and whose centre of economic interest lies in India, (iii) Citizens of India working in (a) international bodies like I.M.F., (b) foreign bodies like banks, enterprises operating in India and (c) foreign embassies located in India.
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