Treasury and Risk Management Assignment Example | Topics and Well Written Essays - 2750 words

Treasury and Risk Management - Assignment Example This form of funds can be termed as being subsidiary and the other fact remains that, multinational corporations are the major investments that are often affected by such foreign exchange risks and economic implications. Multinational corporations are firms that operate in more than one country. It is an enterprise that operates globally with several branches in different countries. The control of the activities and operations of these firms is done at the home country with subsidiary managers given fewer powers to make important decisions. Managers in Multinational Corporations get accessed to global knowledge and skills through training that are important for them in the process of carrying out their global duties. They are well trained in order to compete well in the global environment. These firms lead to transfer of knowledge and technology in several countries in the world especially a case where labour is recruited from the global environment (ENGEL, 2011). A floating exchange rate refers to the countrys exchange rate system whereby its nature of currency is largely set by foreign-exchange institutions through demand and for that specific currency being more comparative to others. Thus, such kinds of exchange rates often transforms freely with the main determinants being the aspect of FOREX trading (BARTH & WONG, 1994).   There is often an overall claim regarding the aspect of floating exchange rates being more preferable to  the fixed exchange rates. This is based on the fact that, floating exchange rates normally makes some automatic adjustments, hence enabling a given country or nation to dampen the effects of   foreign  business cycles and shocks, and the aspect of pre-empting the greater possibility of resulting into a  crisis regarding balance of payments (KLEIN & SHAMBAUGH, 2010).  On the other hand they work towards engendering unpredictability due to their dynamism. The main argument for such a