StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

New Parity Concepts to Address Globalised Economy - Assignment Example

Cite this document
Summary
In the paper “New Parity Concepts to Address Globalised Economy” the author looks at the complex, intracontinental and diversified global business scenario, which has necessitated a more comprehensive approach in international business and accounting…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.1% of users find it useful
New Parity Concepts to Address Globalised Economy
Read Text Preview

Extract of sample "New Parity Concepts to Address Globalised Economy"

Download file to see previous pages

Financial institutions, pension funds, and institutional investors are reaching out to the developing and most prospective markets such as China, India and other Asian markets with a lot of investments. In this scenario, there has been a need for proper management of rate fluctuation, risk, and exchange rate, which allows the estimation of investment yields and global risk premiums. The important issue is hedging of specific international risks through currency overlay strategies, derivatives and credit risk management models.

In this highly globalized business scenario, issues in international business such as trade disputes, exchange rates, inflation and currency crises have necessitated more focus on international financial management. Some new approaches for this are characterized by high analytical rigor, substantial attention to empirical evidence, and integration of functional areas (including finance, economics, strategy, and accounting/taxation). (Reid W. Click, Joshua D. Coval, The Theory and Practice of International Financial Management, Prentice Hall; 1st edition) Global flows of funds have caused a substantial change in the international financial markets and foreign currency markets.

  These issues have a potential impact on currency values. Purchasing Power Parity (PPP), Interest Rate Parity, International Fisher Effect, Fisher Effect, and Forward Rates are some of the major theories on exchange rates.Regarding the parity issue, there are analytical problems with the standard comparisons based on market exchange rates existed in developing countries in the global economy. Purchasing Power Parity measures of Global Domestic Product of countries are popularly used for international comparisons.

In PPP measures as standard comparisons of GDPs across countries convert national currency aggregates to a common currency-the US dollar exchange rate. Purchasing Power Parity (PPP) is a theory of exchange rate determination and a way to compare the average costs of goods and services between countries. PPP has two versions, absolute PPP and relative PPP. The absolute version stands for an equal real price for a commodity in all countries. The relative PPP says that the exchange rate between the two countries will adjust to reflect changes in the price levels of the same countries.

(Solnik, International Investments, Adisson Wesley Longman, Inc, New York, 2000)However, interest rate parity thesis envisages as a relationship that holds between spot interest rates of two countries if there is to be no arbitrage opportunity. The relationship depends on the spot and forward exchange rates between the currencies. (http://www.riskglossary.com/link/interest_rate_parity.htm)The generalized version of the Fisher Effect states that real returns are equalized worldwide through arbitrage.

It says that many factors such as Psychological barriers, legal constraints, transaction costs, taxes, political risks, and currency risks have a direct bearing.

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(New Parity Concepts to Address Globalised Economy Assignment, n.d.)
New Parity Concepts to Address Globalised Economy Assignment. https://studentshare.org/sociology/1520286-new-parity-concepts-to-address-globalised-economy
(New Parity Concepts to Address Globalised Economy Assignment)
New Parity Concepts to Address Globalised Economy Assignment. https://studentshare.org/sociology/1520286-new-parity-concepts-to-address-globalised-economy.
“New Parity Concepts to Address Globalised Economy Assignment”. https://studentshare.org/sociology/1520286-new-parity-concepts-to-address-globalised-economy.
  • Cited: 0 times

CHECK THESE SAMPLES OF New Parity Concepts to Address Globalised Economy

Globalisation - Opportunity For Cigarette Companies

As a result, diversity in business has been created and players in the different sectors of the economy have embraced operational dynamism as provided for by globalisation.... Moreover, globalisation has forced many economies around the world to adopt the free market economy system, thereby giving domestic and foreign firms an opportunity to expand, grow, and develop both locally and internationally (Jain, 2011, p.... Cigarette companies are at the forefront when it comes to reaping the benefits of a globalised world....
8 Pages (2000 words) Coursework

CAP Expenditure and CAP Reform Path

Introduction  This policy paper is for the attention of the Agricultural Commissioner, EU and is designed to explore whether the CAP should be reformed, and if so then in what way it should be modified to address the current issues.... It will look into various perspectives on proposed reforms and the available choices to address environmental issues....
12 Pages (3000 words) Essay

What do you consider to be the core concepts of socialism as an ideology

This technique often adopts the social ownership means of producing goods and services while engaging in cooperative management for the benefit of the economy.... On that note, socialism tackles different forms of economy under the concept of the economic system to find a balance with a capitalist state that usually fleeces its citizens through serious competitive machinations.... There is the planned economy where the means of production is mixed with public ownership to permit distribution and coordination and also facilitate economic planning....
5 Pages (1250 words) Essay

Emerging New HR Concepts

It is considered that high skilled labour, highly professional management team, low cost work environment, best management and HR practices, innovation, understanding of the industry and security measures are the major strengths of the organization in the globalised world.... The new global business scenario has been demanding a flexible strategy for maintain profitability and increase reach.... Companies are compelled to enter into new territories and market....
10 Pages (2500 words) Essay

The Dignity of Difference by Jonathan Sacks

Every Jew, no matter how insignificant, is engaged in some decisive and immediate pursuit of a goal … It is the most perpetual people on the earth ….... ?? – Johann Wolfgang von Goethe In an age of abhorrence and disinclination fuelled… religious extremism an overwhelming desire for qualities such as forbearance, mutual respect and peaceful co – existence amongst the human race irrespective of their religious or cultural backgrounds has increased considerably....
10 Pages (2500 words) Essay

Contribute to Shaping Aspects of the Business within the Context of a Globalised Economy

nbsp;  In the course of assessing these objectives, the research will consider an illustration of keywords such as service and systems of innovation, competitiveness, industrial dynamics, competitive advantage, innovation process, geographical locations, global economy, knowledge transfer, social implication, and policy recommendation.... The research will contribute towards informing and shaping every aspect of the business and management within the context of a globalized economy....
12 Pages (3000 words) Research Proposal

Is a Green-Left Vision of a Localised Economy Without TNCs Achievable

This paper "Is a Green-Left Vision of a Localised economy Without TNCs Achievable?... In this context, the paper addresses the question - Is a green left vision of a localized economy without TNCs achievable?... To counter the by-products of globalisation, the focus must be given on strengthening of the local economy.... According to Richardson and Rootes (1995), Green Left (in Dutch – 'Groen Links') is a new political formation that took birth during the 1989 Dutch national election....
8 Pages (2000 words) Case Study

The Media as a Process of Communication

There was no state control about entry and exit of new firms into the market since they were not to serve the interests of the state.... The paper "The Media as a Process of Communication" discusses that the group establishes coalitions that are aimed at helping it in achieving its agenda....
5 Pages (1250 words) Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us