International Finacial Management Notes PDF

INTERNTIONAL FINANCIAL MANAGEMENT  THE PURPOSES OF INTERNATIONAL FINANCIAL MANAGEMENT 1. Measuring the profitability 2. Determine the best alternative of investment 3. To achieve a good career positions 4. To gain skills to manage your personal resources. 5. To be able to deal with the...

INTERNTIONAL FINANCIAL MANAGEMENT  THE PURPOSES OF INTERNATIONAL FINANCIAL MANAGEMENT 1. Measuring the profitability 2. Determine the best alternative of investment 3. To achieve a good career positions 4. To gain skills to manage your personal resources. 5. To be able to deal with the world of business 6. Indicating the trend of Achievements 7. Evaluate the growth potential of the business 8. Evaluate overall financial strength  SPECIAL FEATURES OF INTERNATIONAL FINANCIAL MANAGEMENT 1. Foreign exchange risk 2. Political Risks 3. Market Imperfection 4. Enhanced Opportunity  DEFINITION OF EXCHANGE MARKET : 1. exchange market is a corporation which provides trading facilities for stock brokers and traders to trade stocks and bond with a security way and at this market the companies issue shares for any investors want to have share at the capital of companies and this market manage by the government >  TYPES OF INTERNATIONAL FINANCIAL EXCHANGE MARKET Stocks Bonds Mutual Funds …..money market Real Estate Savings/Certificates of Deposit …money market Collectibles Derivatives securities Treasury bills future contracts/ Swap contract / forward contracts Commercial paper ….money market Certificates of deposits (CDs): Eurodollar certificates of deposits Bankers' acceptances  DEFINITION OF STOCK 1. Stock :is the percentage of an investor at the capital of an institution and this investor collect a changeable profit on this percentage because he has an ownership at this institution and this percentage equal the stock value  FUNCTION OF STOCK 1. Raising capital for business 2. Facilitating institution growth 3. Redistribution the wealth 4. Creating investment opportunity or small investor 5. Raising capital for development project  DEFINITION OF BOND 2. Bond :is a large term debt securities that are issued by corporation and government with fixed interest and fixed end date  MUTUAL FUNDS An investment that collect money from several investors to buy a particular type of investment, such as stocks.  REAL ESTATE An investor buys pieces of property, such as land or a building, in hopes of generating a profit.  SAVINGS/CERTIFICATES OF DEPOSITS A deposit that earns a fixed interest rate for a specified length of time. The longer time is the greater rate of return. There is a substantial penalty for early withdrawal. Example Certificates of banks  COLLECTIBLES ‫المقتنيات‬ Unique items that are relatively rare or highly valued. Art work Baseball trading cards Coins Automobiles Antiques  TREASURY BILLS.Treasury bills: they are issued by the government with different expiration or maturities: 30, or 91, or 180, or 360 days.; they carry no specific interest rate. The return on treasury bills can be equal the risk-free return (interest of bank).  COMMERCIAL PAPER 2-Commercial paper: It is a bill or promissory note issued by the large and creditworthy corporations, with expiration maturities ranging from one day to 270 days. The commercial paper may be interest-bearing, or sold with discounted basis.(check & bill &payment order ) EURODOLLAR CERTIFICATES OF DEPOSITS (CDS Eurodollar Certificates of deposits (CDs): This Certificate buys with foreign currency (Euro /dollar) and has maturity date 3 /5/7 years and collect interest with the same foreign currency , who hold this Certificates can borrow foreign currency with Guarantee of this Certificates This is a tool to decrease the risk of  DERIVATIVES SECURITIES: Derivatives securities: A derivative security is any contract that derives its value directly from another security. It can be found in commodity markets, foreign exchange markets, interest rates markets and securities markets. The derivatives may be options, forward contracts, and future contracts or swap contracts.. These derivatives are widely used to manage risk faced by corporations and investors, thus they may be called "risk control instruments or tools "..  FUTURE CONTRACTS future contracts : is an agreement between two parties to buy or sell specific quantity and quality for a specific time in the future at an agreed price while entering into the contract in the futures exchange, the stock market sets all terms and conditions related to each type of future contracts traded on the stock exchange The future contract trades at the stock  TYPES OF MONEY MARKET SECURITIES ARE forward contracts, It is an agreement between two parties to buy or sell an asset "commodities and others" at a future date at an agreed price at the time of signing the contract. The term contract is not traded on the stock exchange and it is one of the oldest and simplest forms of derivative contracts.  TYPES OF MONEY MARKET SECURITIES ARE swap contracts: they are agreements for a future exchange of cash flows or for a specific asset that one of the parties owns in exchange for a flow or asset that the other party owns according to a previously arranged formula.... in "interest rate swaps", it is agreed between two parties to exchange variable interest rates at fixed rates of MONEY MARKET SECURITIES : 5-Bankers' acceptances: They are promises of banks to pay the face amount of the draft, to any draft-holder presenting it for payment.(Bank guarantee letter)