What is an offshore financial center? Differentiate between an ...

[evelyn o bentley]

What is an offshore financial center? Differentiate between an operational center and a booking center, providing examples for each.
 
  What will be an ideal response?

Question 2

The practice of insuring against potential losses that result from adverse changes in exchange rates is called currency arbitrage.
 
  Indicate whether the statement is true or false

Question 3

During which stage of the international product life cycle theory does demand rise and remain sustained for a fairly lengthy period of time?
 
  A) product decline stage
  B) new product stage
  C) maturing product stage
  D) standardized product stage

[adf223]

Answer to Question 1

An offshore financial center is a country or territory whose financial sector features very few regulations and few, if any, taxes. These centers tend to be economically and politically stable and provide access to the international capital market through an excellent telecommunications infrastructure. Most governments protect their own currencies by restricting the amount of activity that domestic companies can conduct in foreign currencies. So companies can find it hard to borrow funds in foreign currencies and thus turn to offshore centers, which offer large amounts of funding in many currencies. In short, offshore centers are sources of (usually cheaper) funding for companies with multinational operations.
Offshore financial centers fall into two categories:
Operational centers see a great deal of financial activity. Prominent operational centers include London (which does a good deal of currency trading) and Switzerland (which supplies a great deal of investment capital to other nations).
Booking centers are usually located on small island nations or territories with favorable tax and/or secrecy laws. Little financial activity takes place here. Rather, funds simply pass through on their way to large operational centers. Booking centers are typically home to offshore branches of domestic banks that use them merely as bookkeeping facilities to record tax and currency-exchange information. Some important booking centers are the Cayman Islands and the Bahamas in the Caribbean; Gibraltar, Monaco, and the Channel Islands in Europe; Bahrain and Dubai in the Middle East; and Singapore in Southeast Asia.

Answer to Question 2

I appreciate you answering this question. Great community

Answer to Question 3

C

[evelyn o bentley]

Thank you

[adf223]

No problemo