International Finance

International finance plays a fundamental role in the global economy. Currency conversion rate changes are the most obvious risk of conducting business internationally. Foreign exchange rate is the amount of one currency needed to purchase one unit of another. (Brealey, Myers, and Marcus, 2003) When a company begins a transaction in a foreign currency, it accepts any economic risk due to fluctuating exchange rates. The globalization of the world economy and the devaluation of the U.S. dollar have allowed more American companies to enter the export/import markets. Additionally, many compani…