3 Capital Sources of International Investment & Global Risk Factors
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What are three primary capital sources available for international investments? What are the requirements for each one? What are the pros and cons for each option?
What are some examples of global risk factors? What risk factors are most prevalent in today's market? How can one modify their investment strategies to account for these risks?
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Solution Summary
The cited solution presents a discussion about types of capital sources including a longer list than three. Five global risk factors are listed. 566 words.
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GLOBAL FINANCE
What are three primary capital sources available for international investments? What are the requirements for each one? What are the pros and cons for each option?
The primary capital sources available for international investments include internal, external, and other financing. Research shows that, "firms must secure sufficient capital to fund promising projects. Whether funds come from internal sources or external ones, firms want to minimize the worldwide cost of capital, foreign exchange risk, political risk, and their global tax burden.
Internal Sources:
PROS: One source of investment capital is the cash that a firm generates internally. A firm can use the cash flow generated by any subsidiary to fund the investment projects of any other subsidiary, subject to legal constraints.
CONS: There are two legal constraints that could affect the parent's ability to shift funds between its various affiliates. First, in cases where the subsidiary is not wholly owned the rights of other shareholders ...
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