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| Preface | |
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| Introduction: Multinational Enterprise and Multinational Financial Management | |
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| The Rise of the Multinational Corporation | |
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| The Internationalization of Business and Finance | |
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| Multinational Financial Management: Theory and Practice | |
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| Outline of This Book | |
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| Questions | |
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| The Origins and Consequences of International Trade | |
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| Environment of International Financial Management | |
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| The Determination of Exchange Rates | |
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| Setting the Equilibrium Spot Exchange Rate | |
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| Expectations and the Asset-Market Model of Exchange Rates | |
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| Fundamentals of Central Bank Intervention | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| The International Monetary System | |
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| Alternative Exchange Rate Systems | |
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| A Brief History of the International Monetary System | |
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| The European Monetary System and Monetary Union | |
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| Emerging Market Currency Crises | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| The Balance of Payments and International Economic Linkages | |
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| Balance-of-Payments Categories | |
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| The International Flow of Goods, Services, and Capital | |
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| Coping with the Current-Account Deficit | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Country Risk Analysis | |
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| Measuring Political Risk | |
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| Economic and Political Factors Underlying Country Risk | |
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| Country Risk Analysis in International Banking | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| The Foreign Exchange Market | |
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| Organization of the Foreign Exchange Market | |
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| The Spot Market | |
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| The Forward Market | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Currency Futures and Options Markets | |
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| Futures Contracts | |
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| Currency Options | |
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| Reading Currency Futures and Options Prices | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Parity Conditions in International Finance and Currency Forecasting | |
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| Arbitrage and the Law of One Price | |
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| Purchasing Power Parity | |
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| The Fisher Effect | |
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| The International Fisher Effect | |
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| Interest Rate Parity Theory | |
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| The Relationship Between the Forward Rate and the Future Spot Rate | |
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| Currency Forecasting | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Part I Case Studies | |
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| Oil Levies: The Economic Implications | |
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| President Carter Lectures the Foreign Exchange Markets | |
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| Rescuing the Indonesian Rupiah with a Currency Board | |
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| Brazil Fights a Real Battle | |
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| Foreign Exchange Risk Management | |
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| Measuring Accounting Exposure | |
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| Alternative Measures of Foreign Exchange Exposure | |
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| Alternative Currency Translation Methods | |
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| Statement of Financial Accounting Standards No. 8 | |
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| Statement of Financial Accounting Standards No. 52 | |
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| Transaction Exposure | |
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| Accounting Practice and Economic Reality | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Managing Accounting Exposure | |
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| Designing a Hedging Strategy | |
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| Managing Transaction Exposure | |
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| Managing Translation Exposure | |
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| Illustration: Managing Transaction Exposure for the Toronto Blue Jays | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Measuring and Managing Economic Exposure | |
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| Foreign Exchange Risk and Economic Exposure | |
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| The Economic Consequences of Exchange Rate Changes | |
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| Identifying Economic Exposure | |
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| Calculating Economic Exposure | |
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| Managing Operating Exposure | |
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| Illustration: Avon Is Calling in Asia | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Part II Case Studies | |
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| Rolls-Royce Limited | |
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| The Mexican Peso | |
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| Financing Foreign Operations | |
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| International Financing and International Financial Markets | |
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| Corporate Sources and Uses of Funds | |
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| National Capital Markets as International Financial Centers | |
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| The Euromarkets | |
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| Development Banks | |
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| Project Finance | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Special Financing and Interest Rate Risk Management Vehicles | |
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| Interest Rate and Currency Swaps | |
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| Interest Rate Forwards and Futures | |
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| Valuing Low-Cost Financing Opportunities | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| The Cost of Capital for Foreign Investments | |
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| The Cost of Equity Capital | |
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| The Weighted Cost of Capital for Foreign Projects | |
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| Discount Rates for Foreign Investments | |
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| The Cost of Debt Capital | |
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| Establishing a Worldwide Capital Structure | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Part III Case Studies | |
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| Plano Cruzado | |
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| Multinational Manufacturing, Inc. | |
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| Foreign Investment Analysis | |
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| International Portfolio Investment | |
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| The Benefits of International Equity Investing | |
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| International Bond Investing | |
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| Optimal International Asset Allocation | |
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| Measuring the Total Return from Foreign Portfolio Investing | |
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| Measuring Exchange Risk on Foreign Securities | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Corporate Strategy and Foreign Direct Investment | |
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| The Process of Overseas Expansion | |
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| Theory of the Multinational Corporation | |
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| The Strategy of Multinational Enterprise | |
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| Designing a Global Expansion Strategy | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Capital Budgeting for the Multinational Corporation | |
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| Basics of Capital Budgeting | |
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| Issues in Foreign Investment Analysis | |
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| Foreign Project Appraisal: The Case of International Diesel Corporation | |
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| Political Risk Analysis | |
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| Growth Options and Project Evaluation | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Managing Political Risk | |
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| Part IV Case Studies | |
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| The International Machine Corporation | |
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| Euro Disneyland | |
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| Multinational Working Capital Management | |
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| Financing Foreign Trade | |
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| Payment Terms in International Trade | |
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| Documents in International Trade | |
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| Financing Techniques in International Trade | |
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| Government Sources of Export Financing and Credit Insurance | |
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| Countertrade | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Current Asset Management and Short-Term Financing | |
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| International Cash Management | |
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| Accounts Receivable Management | |
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| Inventory Management | |
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| Short-term Financing | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Managing the Multinational Financial System | |
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| The Value of the Multinational Financial System | |
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| Intercompany Fund Flow Mechanisms: Costs and Benefits | |
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| Designing a Global Remittance Policy | |
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| Summary and Conclusions | |
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| Questions | |
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| Problems | |
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| Bibliography | |
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| Glossary | |
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| Index | |