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INTERNATIONAL FINANCIAL TRANSACTIONS & COMPONENTS OF IFS

Presented By Dheeraj

INTERNATIONAL MONEY

INTRODUCTION
International Financial Management also known as International Finance is a popular concept which means management of finance in an international business environment, it implies, doing of trade and making money through the exchange of foreign currency. The International Financial activities help the organizations to connect with international dealings with overseas business partners- customers, suppliers, lenders etc. It is also used by Government organization and Nonprofit institutions.

INTERNATIONAL FINANCIAL

TRANSACTIONS

Compared to national financial markets international markets have a

different shape and analytics.

Proper management of international finances can help the organization

in achieving same efficiency and effectiveness in all markets, hence without IFM sustaining in the market can be difficult. reasons

Companies are motivated to invest capital in abroad for the following


Efficiently produce products in foreign markets than that domestically.

Obtain the essential raw materials needed for production.


Broaden markets and diversify Earn higher returns

WHAT IS INTERNATIONAL FINANCIAL SYSTEM?


In finance, the financial system is the system that allows the transfer of money between savers (and investors) and borrowers. A financial system can operate on a global, regional or firm specific level. "a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions."

COMPONENTS OF INTERNATIONAL FINANCIAL SYSTEMS


1. Money.

2. Banking and Financial Institutions.


3. Financial Instruments. 4. Financial Markets. 5. Central Banks.

MONEY
Money is defined as anything

that is generally accepted in payment for goods and services or in the repayment of debt. the money supply to changes in aggregate economic activity and the price level.

Monetary theory ties changes in

BANKING AND FINANCIAL


INSTITUTIONS
Financial Intermediaries are institutions that

channel funds from individuals with surplus funds to those desiring funds but have shortage of it.
to earn a decent return on their money while at the same time avoiding risk; e.g., banks, insurance companies, finance companies, investment banks, mutual funds, brokerage houses,

Among other services, they allow individuals

FINANCIAL INSTRUMENTS
Securities is a name that commonly refers to financial instruments

that are traded on financial markets.

A security (financial instrument) is a formal obligation that entitles

one party to receive payments and/or a share of assets from another party; e.g., loans, stocks, bonds.

Even an ordinary bank loan is a financial instrument.

FINANCIAL MARKETS

Financial markets are mechanisms that allows people to easily buy

and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect;

e.g., Bahrain Stock Exchange, New York Stock Exchange, U.S.

Treasury's online auction site for its bonds.

i) Overdrafts and loans. The security for these is the documents of title to the goods, and evidence that goods have been consigned to, or to the order of, a bank overseas. ii) Negotiations of outward collections Financing by a bank of export documents is normally on the understanding that the transaction is with recourse to the exporter, in the event of a default. Banks tend to ask for irrevocable authorization enabling them to dispose of the goods and retain the sale proceeds. iii) Documentary letters of credit. In some cases there may be provision for pre-shipment finance. By having a "red clause" inserted in a credit a beneficiary is able to receive advance payments. Acceptance and discount facilities are also available.

CENTRAL BANKS

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