Finance relating to each other in a global context
Economic and financial flows in a globalized worldtext
Transfer pricing
The balance of payments tracks transactions between entities and the rest of the world during a certain period of time.
The current account tracks payments for trade in goods and services, incomes, and transfers of money to and from abroad made by individuals.
The capital account: The capital account records transfers of capital to and from abroad, such as when a company builds a factory in another country.
The financial account tracks inflows and outflows, including direct and portfolio investments, reserve assets, and claims on non-residents.
Foreign direct investments: Foreign investment made by companies, for example plants and offices abroad
International finance
competition: tax haven: creating inequalities ❌
Arm-length principle
Two companies part of the same multinational group trade with each other
Illegal ❌
Two unrelated companies trade with each other: genuine negotiation: dealing with transfer mispricing. : ✅
The foreign exchange market
Demand for pounds from abroad
The more price elastic the demand for a product, the more price the demand for pounds
Supply of pounds to the foreign currency market
The value of pounds increases means more purchasing power
Reaching equilibrium in the currency market
Free market: Quantity supplied equals the quantity demanded :
The McBurger index
Helpful to identity value, to see if a currency is over or undervalued.
The euro
Official currency of sixteen countries in the EU.
Impact the competitiveness of a business
Government intervention in the foreign currency markets
Stabilize the value of its currency and fix its value. “fixed or pegged exchange rate. It is buying and selling currency using the interest rate.
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