Importance of International Finance

International financial management also known as international finance is a popular concept which means management of finance in an international business environment, it implies, doing of trade and making money through the exchange of foreign currency.[1] The international financial activities help the organizations to connect with international dealings with overseas business partners- customers, suppliers, lenders etc. It is also used by government organization and non-profit institutions. International finance enables investors to asses and manage all the international risks they might encounter in their financial management process. The risks involved are political risk and foreign exchange risk, transaction exposure and economic exposure. Compared to national financial markets international markets have a different shape and analytics. Proper management of international finances can help the organization in achieving same efficiency and effectiveness in all markets, hence without IFM sustaining in the market can be difficult. Companies are motivated to invest capital in abroad for the following reasons

Efficiently produce products in foreign markets than that domestically. Obtain the essential raw materials needed for production.[3] Broaden markets and diversify Earn higher return

Foreign exchange terms

Bear (Bearish) Trader going short or advocating this action in the expectation of a depreciation of a currency.
Someone who believes the prices/market will decline.

Bull (Bullish) Trader going long or advocating this action in the expectation that the currency will appreciate. Book The summary of a trade eras or a desk as total positions. Bottom/ Bottomish
The lowest price reached for a given security over a given period of time. Opposite of top.

Fall out of bed

Sharp decline in the price of stock based on disappointing corporate news such as failed merger attempts or weak quarterly reports. For example, one fall out of bed scenario was when the price of Yahoo! stock declined in 2008 after a suggested merger between the company and Microsoft failed

Parity Is the term applied when the forward price of the purchase or sale of a currency is the same as the spot price. Position The netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought). Short Position/ covering To go 'short' is to have sold an instrument without actually owning it, and to hold a short position with expectations that the price will decline so it can be bought back in the future at a profit. Excess of sales over purchases or of foreign currency liabilities over assets. Technical Correction An adjustment to price not based on market sentiment but technical factors such as volume and charting.

Thin market
A market with few bid and ask offers. Characterized by low liquidity, high spreads and high volatility. Small changes in supply and/or demand can have a dramatic impact on market price. Also called narrow market. Opposite of liquid market.

Technical rally
Upward price movement powered by forces related only to the price movement of a particular security or market in contrast to external economic forces or fundamental factors affecting a company's business operations. Opposite of technical decline.

Thin Market A market in which trading volume is low and in which consequently bid and ask quotes are wide and the liquidity of the instrument traded is low. Upside potential
The difference between the current trading price of a security and the level to which it is most likely to rise in the short term.