GLOBAL FINANCIAL MANAGEMENT

Global Financial Management

Global Financial Management

Introduction

A change in exchange rate through its result on the costs of inputs, outputs, and substitute goods affects the comparable position of domestic companies with no direct worldwide engagement relation to foreign corporations. Exchange rate movements can sway an one-by-one investor who owns a portfolio consisting of securities in distinct currencies, multinational business (MNC) with subsidiaries and branches in foreign locations, an exporter/importer who concentrates on worldwide trade and even a firm that has no direct worldwide activities.(Belk, 2002)

Discussion

The empirical clues supports the outlook that UK industries' stock returns are influenced by foreign exchange rate exposure. A higher percentage of significant foreign exchange rate exposure is documented for the trade-weighted nominal exchange rate. Similarly, the number of significant correlations between industries' stock returns and changes in trade-weighted genuine exchange rate is somewhat smaller than the movements in trade-weighted nominal exchange rates.(Bae,1990) On mean, the findings supply a stronger support for the trade-weighted nominal and genuine exchange rates being an financial variable which sway industries' stock returns. The results also show a high number of positive exposure coefficients amidst industries with significant exchange rate exposure, showing a higher percentage of industries advantage as the bash appreciates.(Atindéhou,2001)

On the whole, the Transport industry exhibits positive and significant exposure to the genuine and unforeseen changes in exchange rate factors used in the study except for unforeseen changes in the trade-weighted genuine exchange rate. In supplement, the retail industry has positive exposure coefficients for all exchange rates (actual and unexpected) and all of its coefficients are significant except for unforeseen changes in the trade-weighted genuine exchange rate. Further, the Diversified Industries have contradictory exposure coefficients for the genuine and unforeseen changes in exchange rates, though all exposure coefficients are statistically insignificant.(Kim,2001)

What did Carlos Ghosn and Nissan do in order ...