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Essay / Research Paper Abstract
This 12 page report discusses the introduction of the Europe’s new Euro and its implications for the world’s financial systems. Although the Euro is undoubtedly changing the world market, for companies and investors in the United States the greatest impact will be more gradual and have its greatest impact in the future. Corporate hedging, impacts on multi-national companies, expansion and debt financing are also discussed. Bibliography lists 11 sources.
Page Count:
12 pages (~225 words per page)
File: D0_BWhedge.rtf
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Unformatted sample text from the term paper:
citizens. Now the question is what the ramifications will be for the rest of the worlds economy. The Euro has the potential to cause a major shift in
the status of the dollar, and, by proxy, the status of U.S. interest rates and stock prices as well as international financial markets. The eleven countries that adopted the Euro
last January make no secret of their hope that it will quickly rival the dollar. Its most enthusiastic supporters argue it will fundamentally end the advantages the United States reaps
from having the worlds only reserve currency-such as steering the international monetary system and running unlimited trade deficits. The stakes in a
successful transition to the Euro throughout the nations of Europe are extremely high: The United States and Europe have created a $1-trillion transatlantic relationship. For example, according to Iritani (1998),
in 1996, Europe accounted for 59.1% of all direct foreign investment in this country, and the United States accounted for 43.7% of investment in Europe. The two regions purchase about
20% of each others merchandise exports. It is important for corporations in the United States and investors to be well aware that there are myriad short-term pitfalls for U.S.
firms that have not adequately prepared for during the advent of the Euro. Numerous economic forecasters and business theorists are saying that American corporations are leaving their firms vulnerable to
a crisis that could throw financial systems into disarray and jeopardize potential and already existing deals. The Euro has already begun to rearrange
the economic playing field in Europe, pushing nations closer to a single trading and financial market, reducing the cost of cross-border transactions, and increasing competition. Although the Euro is
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