Chapter 11 Student P10 MGT 302

Chapter 11 Student P10 MGT 302 - TheGlobalCapitalMarket...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
The Global Capital Market Chapter 11 
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Growth of the Global Capital Market Advances in information technology Deregulation by governments 
Background image of page 2
Financial Globalization Benefits of Financial Globalization Lower Cost of Capital Portfolio Diversification Dangers of Financial Globalization Excessive Speculative Capital Flows
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Impossible Trinity Exchange Rate Stability Independent Monetary Policy Capital Mobility
Background image of page 4
                                       Capital Mobility Exchange Rate Stability    Independent  Monetary Policy
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Advantages of the Eurocurrency Market Reserve requirements for eurocurrency  accounts are generally not regulated. The interest rate spread between the  eurocurrency deposit and lending rates is less  than the spread between the domestic deposit  and lending rates. Savers earn a higher interest rate and  borrowers pay a lower interest rate as  compared to domestic deposits. 
Background image of page 6
Drawbacks of the Eurocurrency Market Because the eurocurrency market is  unregulated, there is a higher risk of  bank failure. Individuals and companies borrowing  eurocurrencies can be exposed to  foreign exchange risk.
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Foreign Exchange Risk  and the Cost of Capital Adverse changes in exchange rates can  increase the cost of foreign currency loans. Firms can hedge their risk by entering into 
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/22/2010 for the course MGT 302 taught by Professor West during the Spring '10 term at ASU.

Page1 / 18

Chapter 11 Student P10 MGT 302 - TheGlobalCapitalMarket...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online