International Trade, Finance & Investment - Assignment (2024)

INTERNATIONALTRADE, FINANCE &INVESTMENT

TABLE OF CONTENTSExecutive Summary.........................................................................................................................1TASK...............................................................................................................................................1Background of financial markets............................................................................................1Capital allocation within domestic economy.........................................................................2Capital allocation within international markets......................................................................4Evaluation of emerging economy...........................................................................................5Evaluation of challenges that country faces due to industrialisation and trade policies........6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................9

Executive SummaryAll companies which are working on global level will always need finance andinvestment for trading with other companies of world. International trade financing is required toget the funds in way of carrying out the trade operations depending upon the transactionsglobally (Antras and Foley, 2015). With the support of this process company will build theirimage or high position in marketplace better than another. This report is based on financialmarkets and capital allocation system that in the growth of domestic economy of UK. Itemphasizes background of financial markets and also discusses importance or role of capitalallocation in international markets. Furthermore, it will discuss one of the emerging economy orcountry and challenges which they are facing due to trade policies and industrialization thatmake barriers in it developed procedure. TASKBackground of financial marketsFinancial market is a marketplace where people trade financial derivatives and securitiessuch as futures and options at less transaction costs. Securities include bonds and stocks andprecious metals. It is a wide term that describe any marketplace where trading of securityincludes bonds, equities and currencies. Some fiscal markets are midget with few activities,while some of like New York stock exchange trade trillions of dollars of securities every day.Financial markets are basically defined by having transparent prices, costs and fees, basicregulations on trading and market forces determine prices of safety that trade. This is as sort ofmarket which help in bringing people together through buying and selling of securities or capital.There are number of financial assets which could be traded into financial markets like shares,bonds and foreign exchange as well. It creates a regulated and open program for organizations toacquire huge amounts of capital, which is done through bond and stock markets. They permitbusinesses to offset risk and they carry this with foreign exchange present and future contracts,commodities and other derivatives. Capital markets, commodity, futures, spot etc, are the typesof financial markets (Foley and Manova, 2015). The main purpose of this markets is to facilitatetransfer of economic assets from lenders to eventual borrowers. It plays important role incontribution to efficiency and health of any countries' economy. There are the strong positiverelation between economic growth and financial market development. For example, Legal &General is British Financial Services Company that provide life assurance, pensions, general1

insurance and investment management services. They operate their business in US and UK withinvesting management businesses in Asia, Gulf and Europe. Organization is the one of thebiggest investment management company in the world by AUM. In this term money market istermed to as short term loan between bank and financial institutions which are traded intomarketplace. These are having higher liquidity and short term maturities as are used forborrowing and lending short term securities. Some of the examples are like that of commercialpapers, US T bills and banker’s acceptance. Capital market on the other hand is termed to as thatmarket which is used for long term especially over a year tradable securities (Badarinza,Campbell and Ramadorai, 2016). These are the channels for wealth saver who are putting moneyon long term productive use like that of governments and investments. While derivatives marketwill be known to as financial market for future contracts and options as well. These are otherform of assets which are dealt by companies or individuals in 2 types like over-the-counter andtreaded derivatives. There are majorly 4 principal market into UK which are operated by LondonStock Exchange (LSE) whose work is to list securities.In UK there are many institutions and organizations in private and public sectors are sellsecurities on capital market in order to raise profit or funds that help to run their business.Financial market costs not point out true intrinsic value of stock due to small economic forceslike taxes. It found in every nation in the world where small only few participants have. Capital,money, spot or cash market and derivatives market are the types of financial market. Capitalmarket is one in which institutions and individuals trade financial securities. Any corporation andgovernment needed funds to finance its management and operations that help to gain profits. Todo this process any organization raise its funds through sale of securities- bonds and stocks infirm name. Capital allocation within domestic economyCapital allocation is a program of distributing funds or financial assets to different sectorsin UK or other countries to increase efficiency and maximize probability more than others. It is agoal of any management to modify capital allotment so that it brings as much profit as possiblefor its shareholders. It is very complicated system that effect on organization functions andactivities. There are many options to consider that need evaluation of each feasible and its impacton all over firm. When organizations realize higher profits more than expectation, management2