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Domestic Financial Management, Arbitrage, Risk, and Contracts

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1. What new problems and factors are encountered in international as opposed to domestic financial management?
2. What does the term arbitrage profits mean?
3. What can a firm do to reduce exchange risk?
4. What are the differences between a forward contract, a futures contract, and options?

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Solution Summary

Various financial concepts are defined and explained in detail.

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Question 1
New problems and factors encountered in international as opposed to domestic financial management are:
- Exchange rate parity between and among the countries the firm operates in which can significantly affect costs, income and sources of funds
- Interest rate parity between and among the countries the firm operates in which can significantly affect costs, income and ...

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