Name : Devi Nanda Bayti Rahma

SID : C1B018095
Subject : Financial Management

Chapter 2: International Flow of Fund

A. Balance of Payment
The balance of payments can be defined as the statistical record of a country’s int
ernational transactions over a certain period of time presented in the form of double-e
ntry bookkeeping. In the balance of payments, any transaction resulting in a receipt fr
om foreigners is recorded as a credit, with a positive sign, whereas any transaction res
ulting in a payment to foreigners is recorded as a debit, with a minus signs.
There are two kind of account from balance of payment. They are:
1. Current Account
a) Payments for merchandise and services
b) Factor income payments
c) Transfer payments
2. Capital and Financial Accounts
a) Direct foreign investment (DFI)
b) Portofolio investment
c) Other
d) Errors and Omissions and Reserves

B. International Trade Flows

1. Distribution of U.S. Exports and Imports
2. U.S. Balance of Trade (BOT) Trend
3. Should the U.S. be concerned about a Hue BOT Deficit?

C. International Trade Issues

1. Events that Increased International Trade
a. Removal of the Berlin Wall
b. Single European Act
c. NAFTA
d. Inception of the Euro
e. European Union Expansion
2. Trade Friction: Causes
a. Using the exchange rate as policy
b. Outsourcing
c. Using trade and foreign ownership policies for security
d. Using trade policies for political reasons

D. Factors Affecting International Trade Flows

1. Three Factors Affecting International Portofolio investment
a. Tax Rates on Interest or Dividends
b. Interest Rates
c. Exchange Rates

E. Correcting a Balance of Trade Deficit

1. Why a Weak Home Currency is Not a Perfect Solution
a. Counterpricing by Competitors
b. Impact of Other Weak Currencies
 c. Prearranged International Transactios: J-curve Effect

d. Intercompany Trade

F. International Capital Flows

1. Distribution of DFI by U.S. Firms
2. Distribution of DFI in the United States
3. Factors Affecting DFI
a. Changes in Restrictions
b. Privatization
c. Potential Economic Growth
d. Tax Rates
e. Exchange Rates
4. Impact of International Capital Flows

G. Agencies that Facilitate International Flows

1. International Monetary Funds
2. World Bank
3. World Trade Organization