International Financial Management Assignment Example | Topics and Well Written Essays - 250 words - 1

International Financial Management - Assignment Example In the case of UVA Company, it can take the same measures (buy futures contract or buy at spot rates) but this time, it should take a long position in the Thai baht since this is the currency of reckoning (revenues and expenses are measured in baht). In the case of Albany Corporation, it should take a long position in Australian dollars by buying this currency either at spot rates or by using the futures contract by which it will lock in the Australian dollar price at a predetermined rate but undertake for its delivery by payment at a later date. Economies of scale pertain to the cost advantages obtained by a business enterprise due to its size, output volume, or scale of operations (using subsidiaries and joint ventures in foreign countries) and a large percentage of its annual revenues are earned from these foreign markets. When a multinational corporation restructures to reduce its economic (or operating) exposure, it will necessarily have to reduce or let go of some of its subsidiaries as these are the sources of its economic exposure mainly from unexpected currency exchange rate risks. Its economies of scale are lost once it draws back from foreign markets (Madura