Exchange Rate Risks and Direct Foreign Investment: A Comprehensive Guide
Arguments for and against the Relevance of Exchange Rate Risks
– Exchange rates are highly volatile.
– The dollar value of an MNC’s future payables or receivables in a foreign currency can change significantly in response to exchange rate movements.
- Investor Hedge Argument
- Currency Diversification Argument
- Stakeholder Diversification Argument
Forms of Exchange Rate Exposure
- Transaction exposure: sensitivity of the firm’s contractual transactions in foreign currencies to exchange rate movements.
- Economic
Credit Markets and Risk Management in Low-Income Economies
Credit Markets | Asset Transfer
Provide context-sensitive assets (cattle, tools, equipment, irrigations) that will allow long-term income generation.
Human Capital
Provide training in:
- Use of assets
- Business skills
- Financial literacy
Social Protection
Provide insurance to strengthen resilience and allow households to recover from shocks (offset effect of high-risk aversion).
- Formal Insurance
- Savings
- Income Transfer
Coaching
Provide training on soft skills and psychological assets (lower people’s discount rate)
Read MoreFinancial Markets and Institutions
Summaries
Ch 1
•Real assets create wealth. Financial assets represent claims to parts or all of that wealth. Financial assets determine how the ownership of real assets is distributed among investors.
•Financial assets can be categorized as fixed-income (debt), equity, or derivative instruments. Top-down portfolio construction techniques start with the asset allocation decision—the allocation of funds across broad asset classes—and then progress to more specific security-selection decisions.
Read MoreUnderstanding Financial Risk and Asset Valuation
Duration Gap Analysis
Market value-based model used to measure and manage interest rate risk. It involves calculating the difference between the average duration of a bank’s assets and the duration of its liabilities. 
Macaulay Duration
Measures the average financial life of an asset or liability and is calculated as the weighted average of the maturities of the cash payments. The formula for Macaulay duration: 
where: m= maturity
Modified Duration
Expresses the interest sensitivity of an asset or liability’
Read MoreThe Essential Guide to Advertising Agency Departments
FINANCE DEPARTMENT
Main Roles
The Finance Department is responsible for the control of billing, expenses, treasury, payments, etc. within the agency. They must be informed about the management of different clients.
The Finance Department includes personnel, accounting, billing, and supplier relations. They are responsible for billing clients and claiming collections.
- Understand the agency business
- Work closely with the Account Department
- Focus on profitability
- Maintain control over finances
- Manage relationships
The 4 Phases of Strategic Pricing: A Comprehensive Guide
The 4 Phases of Strategic Pricing
Phase 1: Research Factors that Determine Price
- This phase involves studying the key factors that influence the selling price, such as cost, demand, and competition. These factors provide the foundation for subsequent decisions.
- Determining factors for price setting are referred to (costs, demand, and competition).
Phase 1: Pricing Methods
Pricing based on:
- PERCEIVED VALUE AND DEMAND (21.5% of Spanish firms)
- COMPETITION (25.6% of Spanish firms)
- COST (PYME’s in Spain >