Respond to the following in a minimum of 175 words. Remember toin-text cite and then reference materials where required. As a note, initial responses require demonstrated research. Discuss the Following in a Single Initial Response: 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? There are several well-known regulatory agencies that directly relate to financial management such as the Federal Reserve Board (FRB), Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC). Maverick (2021), "FRB is responsible for influencing liquidity, credit conditions, and open market operations that control the buying and selling of U.S. Treasury and federal agency securities." (para. 3) In short, FRB regulates the banking system and its financial stability. FDIC is responsible for analyzing and supervising the safety and stability of financial institutions. They help protect depositors at bank by providing deposit insurance on the deposited funds. Lastly, SEC is an agency that enforces federal securities laws in the stock markets. It also protects investors from fraud and manipulative practices in the markets. Risk Aversion is a concept for investors who prefer liquid investments over higher return of their investments. They avoid losses over making a gain on their money. A good example of risk aversion is putting the funds in an account with minimal and conservative interest rate.
It's important to understand currency fluctuations because it affects the economy's stability. It impacts the consumers and businesses. If the economy is stable, consumers buy more. As for businesses that export or import supplies is affected by currency fluctuations in international trades. Strong currency can reduce exports and make imports cheaper which helps the trade deficit. The biggest cause of fluctuations in currency today is inflation and increasing government debt. In my opinion, it will take a miracle to get us out from under it within a year or two.
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