there is no risk of inflation and interest rate. The inflation and interest rates are main key components of valued or devalued currency. Disadvantages of spot market The spot market is faced by several risks including transaction risk, translation risk and government fiscal policy. Transaction risk; This risk is associate with the exchange rate between two different currency during the process of buying and selling, at the spot rate it might be the rate is high compare to the future rate. Translation
influence of exchange rate volatility on international trade is relatively new for economic literature, taking into account that this area of economic thought is extremely actual for modern world economy, a multitude of different theoretical, as well as empirical, articles and scientific works has been already written. It is arduous to distinguish the common feature of these works, because of their great variety: the existence of large amount of various approaches to modeling the effect of exchange rate
Pros & Cons From the 20 journal articles, we may know some pros and cons of exchange rate in International trade or the author had facing the problem when doing this research. According to Nicita (2013); Auboin and Ruta (2012) had found exchange rate misalignment do affect international trade flows in a substantial manner and the currency undervaluation is found to promote exports and restrict imports, moreover, in magnitudes misalignment across currencies result in trade diversion quantifiable
as other countries such as Japan and South Korea if adopted due to the current dependence on them financially. Even though a change in currency may help stimulate and revolutionize future markets the financial damage it may cause and the security risks that affect the current system will most likely make it unable to work in the future. The general mechanics of Bitcoin are that everyone has a copy of a ledger that can be changed at any time (Lewis et. al 7). Bitcoin is different from the system
crowdfunding are it can help to raise awareness for new business, it can be a fast way to raise finance and there are no upfront fees and investors can track business progress and may help to promote brand through their networks. Nevertheless the disadvantages are if entrepreneur haven’t protected the business idea with a patent or copyright, someone may see it on a crowdfunding site and steal the concept and if the entrepreneur don’t reach the funding target, any finance that has been pledged will usually
purchases commodities from a client against cash. At the same time, the lender signs a repurchase agreement specifying the date and amount at which the borrower can repurchase the commodity. The repo rate is based on the difference between the purchase and the repurchase prices and is determined by the interest rate. Ownership of the commodity puts the financial institution in a stronger position in case of default or bankruptcy, because it eliminates any requirement to justify the financial institution’s
amount of capital to finance their business. Venture capital is a type of funding for a new or growing business. It usually comes from venture capital firms that specialize in building high risk financial portfolios. With venture capital, the venture capital firm gives funding to the startup company in exchange to the returns in the future. IMPORTANCE OF VENTURE CAPITAL FINANCING The following are the importance of venture capital financing. 1. Promoting Entrepreneurs: Just as a scientist brings out
what would have been a rival and if the acquired firm had created good relations then the home firm will adopt those too, however, on the same reasoning; the firm is buying into the problems and hidden surprises of the acquired firm. Further disadvantages are that there is always uncertainty as to the acquired firm’s value from not be able know the whole picture of it, potentially tax and legal problems arise more than with Greenfield investment, and there can be difficulties in “absorbing” acquired
while the United States urged the immediate implementation of the provisions, poor economic conditions in most parts of the post-war world made it difficult to compensate for the balance of payments problems under a fixed exchange rate system without some current account-exchange controls and external sources of finance. The meeting was held from July 1 to 2, 1944. After the agreement was signed,
To what extent do the costs of globalisation outweigh the benefits (30 marks) Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. There are many costs and benefits of globalisation, in this essay I will discuss the extent to which the cost of globalisation outweighs the benefits. One of the advantages of globalisation is that firms have access to larger markets meaning they may experience higher demand