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Essay / Research Paper Abstract
This 8 page paper looks at the risks that may be faced by a company when considering an international investment. Based in a case study supplied by the student, issues such as increased taxes, disposable income, interest rates and exchange rates are all considered, along with the potential for the country to join a single currency area. The bibliography cites 5 sources.
Page Count:
8 pages (~225 words per page)
File: TS14_TErurita.rtf
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Unformatted sample text from the term paper:
risk posed to the investing company. For the case provided by the student the risks may appear limited. There is a stable political background, the growth rate of the
economy is 3% very the rate of inflation, indicating a growing economy and even if the opposition get into power, which is possible as the current government only have a
7% lead in the poles, they are also committed to democracy. However, there are still many risks that the company may face which focus on financial issues. When a
company decides to make a capital investment there are many different risk factors. Some are easier to measure than others. These may such as the changing tax environment which may
be in place in a different country nd to which the investment may be liable to (Bhattacharya, 1999). The current state of the economy and potential growth of
that economy will also be a potential risk (Dailami, 1998). The amount of this risk may also be seen in conjunction with the amount of the investment as a comparison
for the overall rate of return, for example setting up a capital investment in a third world, or developing country may take a lower amount of investment, but may also
carry higher risks (Dailami, 1998). There is also the aspect of the political environment and stability of the country (Butler et al, 1998).
There is also the aspect of the political environment and stability of the country (Butler et al, 1998). There may, in some economies, be a fear of nationalisation, or more
likely the possible introduction of restrictive legislation or regulations and them more direct impact of economic policy which will influence local interest rates and inflation (Butler et al, 1998).
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