BAC 406: International Financial Management Notes

Institution: Kenyatta University

Course: Bachelor of Commerce

Posted By: chobotiso

Document Type: PDF

Number of Pages: 63

Price: KES 150

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Financial management is mainly concerned with how to optimally make various corporate
financial decisions, such as those pertaining to
i) Investment
ii) Financing
iii) Dividend policy and
iv) Working capital management
The goal of a firm of maximizing shareholders wealth does not change whether a firm is
operating in domestic or foreign markets. In fact many firms have expanded their international
business as a means of enhancing their value. We are now living in a highly globalized and
integrated world economy, thus essential for financial managers to fully understand vital
dimensions of financial management.
International finance is special from the domestic finance in various aspects. They include;
i) Foreign exchange and political risks
ii) Market imperfections
iii) Expanded opportunity set
When firms and individuals are engaged in cross-border transactions, they are potentially
exposed to foreign exchange risk that they would not normally encounter in purely domestic
transactions. Currently, the exchange rates among such major currencies as the U.S.A dollar,
Japanese Yen, British pound and euro fluctuate continuously in an unpredictable manner.

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