INTERNATIONAL FINANCIAL MANAGEMENT

International Financial Management



International Financial Management

Part A

Introduction

The study is related to the investment of International Investment Bank which intends to invest $25billion. Therefore, it is important for the bank to consider the all the factors that can affect the investment decision like the diversification of the portfolio is a vital part of international financial management of International Investment Bank.

Strategy of International Diversification

For any business in today's world, not expanding internationally is practically a sin. Not only does such expansion provide diversification and additional revenue, it also exposes one to different methods of doing business. In addition, the U.S. business that expands overseas can benefit back home from increased cultural sensitivity, competitive intelligence, new opportunities and better management practices (Shapiro, 2009). One of the key reasons to expand overseas is diversification. Although we live in a global economic society and cross-border economic slowdowns affect us all, different countries are at different stages of their economic development. Therefore, markets that are ultra competitive and mature in the United States may still be emerging, or do not yet even exist, in other countries. This offers firms an opportunity to become less dependent on their domestic economic situation. Thus, the International Investment Bank should diversify its portfolio.

In recent times there has been an increase in investment in stock items there are several reasons for the formation of a portfolio, whether for an individual to a company or institution, notably at obtaining a profitable and acceptable liquidity resources idle eventually achieve long-term permanent surpluses provide us with additional income at the end of our life work , such as pension funds or acquiring shares in a company needed to exercise controls over cash management that is why this will give a clear idea of how to manage a portfolio and what is its diversification funds investment (Shapiro, 2009).

The International Investment Bank should look to invest stocks and bonds as it will help International Investment Bank to increase the profitability of assets in which the bank invests, lower costs that society has, reduce the fiscal impact, defer payment of taxes, freedom of choice when making capital gains and protection against high volatility.

The management International Investment Bank should do a research service and investment analysts, dedicated exclusively to manage investment funds which will include;

Diversification of Investments. Affect the Fund Capital allows carrying out a diversified management and thus provide a high degree of investment security.

Control. Exercised by the National Securities Market. Both the Manager and the Fund are audited periodically by independent auditors.

Liquidity. The participant may repay all or part of their shares immediately.

Taxation. Investment funds enjoy significant tax benefits that enhance their performance relative to other products financial.

Volatility of Investment

The volatility measured from zero, the deviation of the return of a fund that is the fluctuations experienced by the value of participation for a specified period. As this indicator grows away from zero volatility; this index serves as a scale to detect the level of stability of the portfolios, analyze the ...