Lesson 3: International Finance vs Domestic Finance

Question 1

What are the points of difference when comparing International Finance vs Domestic Finance?

Answer 1

(1) Exposure to Foreign Exchange
(2) Macro Business Environment
(3) Legal and Tax Requirement
(4) Stakeholder’s group
(5) Foreign Exchange Derivatives
(6) Standards of Reporting
(7) Capital Management

Question 2

Exposure to Foreign Exchange

Answer 2

• International Finance - have impact
• Domestic Finance - have no impact

Question 3

Macro Business Environment

Answer 3

• International Finance - exposure to DIFFERENT economic and political environment.
• Domestic Finance - exposure to SAME economic and political environment.

Question 4

Legal and Tax Environment

Answer 4

• International Finance - exposure to DIFFERENT tax laws and regulations.
• Domestic Finance - exposure to SAME tax laws and regulations

Question 5

Stakeholder’s group

Answer 5

• International Finance - Stakeholders with DIFFERENT cultures, beliefs, languages, etc.
• Domestic Finance - Stakeholders with SIMILAR cultures, beliefs, and languages, etc.

Question 6

Foreign Exchange Derivatives

Answer 6

• International Finance - Knowledge of forwards, futures, options and swaps are required.
• Domestic Finance - Knowledge of forwards, futures, options and swaps are not required.

Question 7

Standards of Reporting

Answer 7

• International Finance - Books of accounts need to be maintained as per GAAP and AS.
• Domestic Finance - No need to maintain separate books.

Question 8

Capital Management

Answer 8

• International Finance - Ample options of financing create challenges in selection
• Domestic Finance - Limited options are available, hence no such challenge.