International Financial Management

Cover
Brief Contents
Contents
About the Authors
Preface
Part I: The International Financial Environment
Chapter 1: Multinational Financial Management: An Overview
Understanding the Context
Goal of the MNC
Conflicts with the MNC Goal
International Business Methods
Exposure to International Risk
Overview of an MNC's Cash Flows
Host Country MNC Relationships
MNC Valuation
Organization of the Text
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Decision to Expand Internationally
Small Business Dilemma: Developing a Multinational Sporting Goods Industry
Chapter 2: International Trade and Investment: Measurement and Theories
Balance of Payments
International Trade and Investment Flows
Factors Affecting International Trade Flows
Correcting a Balance of Trade Deficit
International Capital Flows
Economic Theories of International Trade and Investment
Agencies That Facilitate International Flows
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Exposure to International Flow of Funds
Small Business Dilemma: Developing a Multinational Sporting Goods Industry
Chapter 3: International Financial Markets and Portfolio Investment
Functions of a Financial Market
Motives for Using International Financial Markets
Foreign Exchange Market
Understanding the Exchange Rate
International Money Market
International Credit Market
International Bond Market
Comparing Interest Rates between Currencies
International Stock Markets
International Financial Markets and the MNC
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Decisions to Use International Financial Markets
Small Business Dilemma: Developing a Multinational Sporting Goods Industry
Appendix 3: Portfolio Investment
Chapter 4: International Ethical Concerns: The Green Movement, Islamic Finance and Globalization
What Are Ethics?
The Importance of Ethical Issues
The Green Movement
Islamic Finance
Globalization and Its Discontents
International Corporate Governance
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Ethical Debate
Small Business Dilemma: Obtaining Finance
Part I: Integrative Problem
Part I: Essays/Discussion and Academic Articles
Part II: Exchange Rate Behaviour
Chapter 5: Exchange Rate Changes
Measuring Exchange Rate Movements
Exchange Rate Movements - An Overview
Factors That Influence Exchange Rates
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Assessment of Future Exchange Rate Movements
Small Business Dilemma: Assessment by the Sports Exports Company of Factors That Affect the British Pound's Value
Chapter 6: Exchange Rate History and the Role of Governments
Exchange Rate Systems
Government Intervention - The Process
Exchange Rate Target Zones
Intervention as a Policy Tool
The Trilemma of Government Policy Choice
A Brief History of Exchange Rates
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Assessment of Government Influence on Exchange Rates
Small Business Dilemma: Assessment of Central Bank Intervention by the Sports Exports Company
Chapter 7: Forecasting Exchange Rates
Why Firms Forecast Exchange Rates
Forecasting Techniques
Forecasting Services
Evaluation of Forecast Performance
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Forecasting Exchange Rates
Small Business Dilemma: Exchange Rate Forecasting by the Sports Exports Company
Chapter 8: International Arbitrage and Covered Interest Rate Parity
International Arbitrage
Interest Rate Parity (IRP)
Summary
Critical Debate
Self Test
Questions and Exercises
Endnote
Blades PLC Case Study: Assessment of Potential Arbitrage Opportunities
Small Business Dilemma: Assessment of Prevailing Spot and Forward Rates by the Sports Exports Company
Chapter 9: Relationships between Inflation, Interest Rates and Exchange Rates
Purchasing Power Parity (PPP)
International Fisher Effect (IFE)
Comparison of the IRP, PPP and IFE Theories
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Assessment of Purchasing Power Parity
Small Business Dilemma: Assessment of the IFE by the Sports Exports Company
Appendix 9*: Further Notes on Exchange Rate Models
Part II: Integrative Problem
Part II: Essays/Discussion and Academic Articles
Part III: Exchange Rate Risk Management
Chapter 10: Measuring Exposure to Exchange Rate Fluctuations
Is Exchange Rate Risk Relevant?
Types of Exposure
Transaction Exposure
Economic Exposure
Translation Exposure
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: Assessment of Exchange Rate Exposure
Small Business Dilemma: Assessment of Exchange Rate Exposure by the Sports Exports Company
Chapter 11: Market Insurance: Currency Derivatives
Overview
Forward Market
Currency Futures Market
Currency Swap Market
Currency Options Market
Currency Call Options
Currency Put Options
Contingency Graphs for Currency Options
Lowering the Cost of Options: Conditional and Barrier Options and Collars
Option Types
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Use of Currency Derivative Instruments
Small Business Dilemma: Use of Currency Futures and Options by the Sports Exports Company
Appendix 11A*: Currency Option Pricing
Appendix 11B: Currency Option Combinations
Chapter 12: Non-Market Methods of Transaction Management
Transaction Exposure
Non-Market Methods for Reducing Transaction Exposure
Market Methods for Reducing Transaction Exposure
Limitations of Hedging
Hedging Long-Term Transaction Exposure
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: Management of Transaction Exposure
Small Business Dilemma: Hedging Decisions by the Sports Exports Company
Appendix 12: Calculating the Optimal Size of a Cross-Currency Hedge: The Hedge Ratio
Chapter 13: Economic and Translation Exposure Management
Economic Exposure
A Case Study in Hedging Economic Exposure
Hedging Exposure to Fixed Assets
Managing Translation Exposure
Summary
Critical Debate
Self Test
Questions and Exercises
Endnote
Blades PLC Case Study: Assessment of Economic Exposure
Small Business Dilemma: Hedging the Sports Exports Company's Economic Exposure to Exchange Rate Risk
Part III: Integrative Problem
Part III: Essays/Discussion and Academic Articles
Part IV: Long-Term Asset and Liability Management
Chapter 14: Foreign Direct Investment
The Big Picture
Investment Appraisal - The Modern Approach
Motives for Foreign Direct Investment
Benefits of International Diversification
Host Government Views of Foreign Direct Investment
Investment Agreements
Subsidiary versus Parent Perspective
Empirical Studies
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Consideration of Foreign Direct Investment
Small Business Dilemma: Foreign Direct Investment Decision by the Sports Exports Company
Appendix 14: Incorporating International Tax Laws in the Investment Decision
Chapter 15: Country Risk Analysis
Why Country Risk Analysis Is Important
Political Risk Factors
Financial Risk Factors
Techniques to Assess Country Risk
Measuring Country Risk
Comparing Risk Ratings among Countries
Market Approach to Country Risk Rating
Incorporating Country Risk in Capital Budgeting
Reducing Exposure to Host Government Takeovers
Summary
Critical Debate
Self Test
Questions and Exercises
Endnotes
Blades PLC Case Study: Country Risk Assessment
Small Business Dilemma: Country Risk Analysis at the Sports Exports Company
Chapter 16: Long-Term Financing
Long-Term Financing Decision
Cost of Debt Financing
Assessing the Exchange Rate Risk of Debt Financing
Reducing Exchange Rate Risk
Market Methods
Interest Rate Risk from Debt Financing
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: Use of Long-Term Foreign Financing
Small Business Dilemma: Long-Term Financing Decision by the Sports Exports Company
Part IV: Integrative Problem
Part IV: Essays/Discussion and Academic Articles
Part V: Short-Term Asset and Liability Management
Chapter 17: Financing International Trade
Payment Methods for International Trade
Trade Finance Methods
Government Agencies for International Trade
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: Assessment of International Trade financing in Thailand
Small Business Dilemma: Ensuring Payment for Products Exported by the Sports Exports Company
Chapter 18: Short-Term Financing
Sources of Short-Term Financing
Internal Financing by MNCs
Why MNCs Consider Foreign Financing
Determining the Effective Financing Rate
Criteria Considered for Foreign Financing
Actual Foreign Financing
Financing with a Portfolio of Currencies
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: Use of Foreign Short-Term Financing
Small Business Dilemma: Short-Term Financing by the Sports Exports Company
Chapter 19: International Cash Management
Cash Flow Analysis - Subsidiary Perspective
Subsidiary Liquidity Management
Centralized Cash Management
Techniques to Optimize Cash Flows
Complications in Optimizing Cash Flow
Investing Excess Cash
Summary
Critical Debate
Self Test
Questions and Exercises
Blades PLC Case Study: International Cash Management
Small Business Dilemma: Cash Management at the Sports Exports Company
Part V: Integrative Problem
Part V: Essays/Discussion and Academic Articles
Chapter 20: Concluding Comments
The Significance of International Financial Management
Summary of the Book
Advances
Remaining Issues
Endnotes
Appendix A: Answers to Self-Test Questions
Appendix B: Statistics and Project Support
Glossary
Index