International Financial Relations

International Financial Relations - International Financial...

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International Financial Relations International Finance Cross-border investment can improve welfare in both countries o Investment in a foreign country can help both countries Financial interests cooperate to maintain capital flows, yet can conflict over the distribution of return and risk o How does the thing get divided Financial tires can make societies mutually vulnerable Types of Cross Border Investment Portfolio o Investor has no role in management o Bonds Net value is specified at time of sale Issued by government or firm o Loans Terms (interest rate) is known at time of sale, but value is not known or set Issued from individuals, banks, firms, government, organizations o Stocks Value and dividend vary without guarantee Firms sell shares to individual and institutional investors Direct Investment o Investor maintains control of facilities and risk Multinational corporations engage in foreign direct investment Conflicts between firm and host country can arise over distribution of profits and control of
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This note was uploaded on 02/28/2011 for the course PSC 001 taught by Professor Teitelbaum during the Fall '08 term at GWU.

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International Financial Relations - International Financial...

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