Question

1. What would be considered risks of investing in international bonds?

Identify four ways an MNC can engage in international business

Answer 1

There could be different risk associated with investment into two international bonds . They are as follows-

1. Credit risks associated with the bonds of the international company.

2. Exchange rate risks associated with the currency of that country in which the international companiy is situated.

3. Change in monetary policies of international country that could impact the bonds severely.

4. Change in political policies as well as other cultural and local policies which can impact the the existence and survival of the international company leading to risk on redemption of bond.

There are four ways in which a multinational company can engage in international business they are as follows-

1. Importing-multinational company can enter into foreign market through importing different kind of material from other foreign markets.

2. Exporting- multinational companies can also export their goods and services to different countries

3. Franchising -multinational companies can sell their franchise at different prices in different country and gain from it

4. Licensing-multinational company can also sale the licence for its products in different foreign markets