International finance involves managing risks across borders from "summary" of How Finance Works by Mihir Desai
International finance involves managing risks across borders. When a company operates in multiple countries, it is exposed to risks that are specific to each country. These risks can come in many forms, including currency fluctuations, political instability, and regulatory changes. Managing these risks requires a deep understanding of the financial markets in each country, as well as the ability to hedge against potential losses. One of the key risks in international finance is currency risk. When a company operates in multiple countries, it is exposed to fluctuations in exchange rates. These fluctuations can have a significant impact on the company's profits, as they can affect the value of its assets and liabilities in different currencies. To manage this risk, companies often use financial instruments such as forward contracts and options to hedge against potential losses. ...
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