Question

Discuss the Following in a Single Initial Reply:

1) Organizations do not operate in a vacuum and are subject to governmental regulation. This is particularly true with publicly traded organizations. Based on business here in the United States - who can name a few regulatory bodies that directly relate to financial management?

2) What exactly is risk aversion and can it relate to cultural differences? Even if you have never been overseas - can you give an example of this here in the United States?

3) I believe that we all know what currency is - think about having a United States dollar in hand. From a financial management standpoint, why is it important to understand currency fluctuations? What are some of the key factors that cause fluctuation?

Answer 1

Answer:

1.

Yes, That is valid. Organizations have guideline over it, they can't work in vacuum, they need to adhere to rules and laws of doing business. With regards to public organizations, these laws get increasingly strict and tough.

A few administrative bodies in USA related to financial management:

SEC: Security and exchange commission ensures privileges of financial specialists in the stock markket.

Federal reserve board:The management of federal reserve framework is called FRB, it is dependable to make nation's financial strategy.

Federal deposit insurance corporation:It is a free body that is safeguarding stores if there should be an occurrence of banks' disappointment, it energizes steadiness in banking framework.

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2.

Risk aversion: It is the conduct of individuals to limit the risk. Risk is the future vulnerability. Individuals when invest their cash and get the comparable return in both the choices at that point pick the option with lower risk.

Cultural difference impacts risk avoidance. There are individuals who are more risk opposed people, they can face more challenge since they realize that; High risk, high gain. There are barely any individuals who take lower or no risk since they are consistently scared of losing their well deserved cash.

Example: In USA, numerous individuals invest into securities exchange since they can face challenge or risk while in different nations, less individuals invest into share market, they rather guard their cash with banks. In USA, 54% individuals put into securities exchange while in India, just 2% individuals put into stock market.

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3.

Understanding currency fluctuations: Currency changes or fluctuations and their causes are important to know since organizations work all inclusive, they do business in various currencies so fluctuation in monetary standards or currencies of various nations influence the incomes and profits of the organization.

Key factors that cause currency fluctuations are as following:

• Infation rate
• Fiscal strategy
• Financial conditions
• Political changes
• Government obligation
• Exchange balance
• Recession/Boom