İŞLETME FİNANSI II

The main business risk for a multinational corporation is foreign exchange
rate risk.

A licensing agreement gives a firm in a host country the right to produce and sell a product for a specified period in return for a fee.

IJV involves a much higher level of investment and therefore of risk than the other entry strategies mentioned.

More than 60% of the reserves held by the world´s central banks are denominated in USD.

The world’s major banks, and other financial institutions make up the interbank market that act as the wholesale part ofthe forex market where banks manage inventories of currencies.

Economic risk reflects basically the risk to the firm’s present value of future operatingcash flows from exchange rate movements. In essence, economic risk concerns the effect of exchange rate changes on revenues (domestic sales and exports) and operating expenses (cost of domestic inputs and imports).

A forex swap transaction (swap) is a combination of a spot transaction and a forward transaction. A swap is the simultaneous purchase and sale of identical amounts of one currency for another at a later date.

The risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies or securities is referred to as hedging.

Eurobond market is an offshore market where borrowers and lenders meet because of its lower costs and lack of regulation. It is just one segment of the so-called Euromarket, which also includes Euro currency, Euro notes, Euro commercial paper, and Euro equity markets. Euro markets are offshore capital markets, in the sense that the currency of denomination is not the official currency of the country where the transaction takes place.

The credit rating which gives an indication about the risk level associated with investing in a particular country is called soverign credit rating.