International Financial Management

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Cengage Learning EMEA, 2007 - Business & Economics - 758 pages
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International Financial Management provides a strong foundation for students? first encounter with the subject of international finance. As multinational corporations (MNCs) continue to expand their operations globally they must not only be properly managed to apply their comparative advantages in foreign countries, but must also manage their exposure to many forms and sources of risk. Those MNCs that are most capable of responding to changes in the international financial environment will be rewarded. The same can be said for today?s students who become the MNC managers of the future. International Financial Management combines a strong foundation in international finance theory with current, practical applications. It provides thorough, up-to-date treatment of cutting-edge international finance issues along with traditional treatment of international financial management. This book, although it presumes an understanding of basic corporate finance, is renowned for its readability and clear explanation as well as its extensive use of hands-on, real-world applications and student-oriented pedagogy. It is suitable for both final-year undergraduate and master?s level courses. The European edition replaces the majority of US examples in the text and questions with alternative UK and European examples. The default currency quoted in general examples is now Sterling or the euro rather than the US dollar. More-advanced topics have been added to extend the discussion, as well as specifically European issues such as the euro, European financial integration and the history of exchange rates.
 

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Contents

PARTI
1
an overview
2
Theories of international business
9
International opportunities
16
Overview of an MNCs cash flows
22
conditions on value
28
Blades plc case study 456
35
International flow of funds
37
Assessment of exchange rate
387
Managing transaction exposure
388
Limitations of hedging
409
Calculating the optimal size of a cross
425
Managing economic exposure and translation exposure
436
A case study in hedging economic exposure
443
Managing translation exposure
450
Hedging the Sports Exports
458

International trade flows
43
Factors affecting international trade flows
51
International capital flows
57
How international trade affects an MNCs value
62
International financial markets
68
International money market
84
International bond market
90
How financial markets affect an MNCs value
99
Investing in international financial
106
Exchange rate determination
122
Summary
137
Currency derivatives
143
Currency futures market
150
Currency options market
159
Currency put options
167
Self test
177
Use of currency futures
184
Integrative problem
202
EXCHANGE RATE BEHAVIOUR
205
Government influence on exchange rates
206
A brief history of exchange rates
223
Summary
238
Economic considerations of the euro
244
International arbitrage and interest rate parity
249
International arbitrage
250
Comparison of arbitrage effects
261
Critical debate
274
Questions and applications
275
Relationships among inflation interest rates and exchange rates
280
Purchasing power parity PPP
281
Summary
304
Small business dilemma
312
Essaysdiscussion and academic articles
318
EXCHANGE RATE RISK MANAGEMENT
321
Forecasting exchange rates
322
Forecasting techniques
326
Forecasting services
337
Exchange rate volatility
347
Blades plc case study
355
Measuring exposure to exchange rate fluctuations
357
Transaction exposure
360
Economic exposure
370
Translation exposure
377
LONGTERM ASSET AND LIABILITY MANAGEMENT
461
Foreign direct investment
463
Motives for foreign direct investment
464
Decisions subsequent to FDI
474
Foreign direct investment
481
Multinational capital budgeting
482
Summary
506
Multinational capital budgeting
515
Multinational restructuring
523
Example of the valuation process
529
Why valuations of a target may vary among
533
Summary
541
Multinational restructuring
547
Country risk analysis
548
Financial risk factors
557
Summary
574
Country risk analysis at
580
Multinational cost of capital and capital structure
581
The International Capital Asset Pricing Model
587
Using the cost of capital for assessing foreign
596
The MNCs capital structure decision
601
Summary
609
Multinational capital structure
615
Longterm financing
616
Reducing exchange rate risk
625
Summary
640
Integrative problem
646
SHORTTERM ASSET AND LIABILITY MANAGEMENT
649
Financing international trade
650
Trade finance methods
653
Summary
665
Questions and applications
666
Shortterm financing
669
Actual results from foreign financing
682
Summary
688
International cash management
694
Summary
713
Essaysdiscussion and academic articles
720
Concluding comments
721
Appendix A Answers to selftest questions
724
Appendix B Maths and statistics support
740
Index
753
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