Multinational Finance Evaluating Opportunities, Costs, and Risks of Operations

ISBN-10: 1118270126
ISBN-13: 9781118270127
Edition: 5th 2012
Authors: Kirt C. Butler
List price: $95.00 Buy it from $9.98
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Description: This book has modular structure that promotes flexibility in coverage. Chapter 4 on the international parity conditions extends the discounted cash flow algebra of the first course in finance to a multi-currency setting. In particular, it develops  More...

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Book details

List price: $95.00
Edition: 5th
Copyright year: 2012
Publisher: John Wiley & Sons, Incorporated
Publication date: 9/19/2012
Binding: Paperback
Pages: 704
Size: 7.00" wide x 10.00" long x 2.00" tall
Weight: 2.948
Language: English

This book has modular structure that promotes flexibility in coverage. Chapter 4 on the international parity conditions extends the discounted cash flow algebra of the first course in finance to a multi-currency setting. In particular, it develops and applies the algebra of moving cash flows over time and across currencies. Advanced material is placed in an appendix. Advanced material is placed in chapter appendices so that study can be tailored to each individual's objectives, interests, and level of preparation. In Multinational Finance, the chapter on Managing Transaction Exposure to Currency Risk provides an overview and comparison of the various derivative instruments and their use in risk hedging. This allows the more in- depth chapters on derivatives to be skipped without loss of continuity. Multinational Finance emphasizes the managerial aspects of multinational finance with graphs, figures, and a liberal use of real-world examples. The text presents an in-depth treatment of the international financial environment, including currency and Eurocurrency markets and the international parity conditions. The text includes detailed treatments of futures, options, and swaps and their use in currency risk management. Entire chapters are devoted to managing the multinational treasury, as well as to managing the multinational's exposures to transaction, operating, translation, and country risks. The valuation and structure of multinational operations. The heart of the text is the valuation and management of the multinational corporation's investments. The chapter on cross-border capital budgeting in the 4th (2008) edition is much more extensive than in competing texts, addressing valuation in disequilibrium conditions as well as special circumstances such as expropriation risk, subsidized financing, and blocked funds. The 5th edition (2012) will expand the treatment of parity disequilibria to include exchange rate expectations that differ from parity and the project's operating exposure to currency risk. (This work has already been completed and an article is under review at a major journal. The resulting treatment turns out to be both simpler and more general than the treatment in the 4th edition. No competing texts discuss these real-world issues.) Other chapters cover multinational financing, taxation, international investments as real options, and international corporate governance. Distinctive chapters on key topics. Distinctive chapters are devoted to topics of special interest to practitioners of multinational finance.

Preface
Acknowledgments
The International Financial Environment
An Introduction to Multinational Finance
Executive Summary
The Goals of the Multinational Corporation
The Challenges of Multinational Operations
The Opportunities of Multinational Operations
Financial Management of the Multinational Corporation
Summary
Key Terms
Conceptual Questions
World Trade and the International Monetary System
Executive Summary
Integration of the World's Markets
Balance-of-Payments Statistics
Exchange Rate Systems
A Brief History of the International Monetary System
The Global Financial Crisis of 2008
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Foreign Exchange and Eurocurrency Markets
Executive Summary
Characteristics of Financial Markets
The Eurocurrency Market
The Foreign Exchange Market
Foreign Exchange Rates and Quotations
The Empirical Behavior of Exchange Rates
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
The International Parity Conditions and Their Consequences
Executive Summary
The Law of One Price
Exchange Rate Equilibrium
Interest Rate Parity and Covered Interest Arbitrage
Less Reliable International Parity Conditions
The Real Exchange Rate
Exchange Rate Forecasting
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Appendix 4A: Continuous Compounding
Problems
Derivative Securities for Financial Risk Management
Currency Futures and Futures Markets
Executive Summary
Financial Futures Exchanges
The Operation of Futures Markets
Futures Contracts
Forward versus Futures Market Hedges
Futures Hedges Using Cross-Exchange Rates
Hedging with Currency Futures
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Currency Options and Options Markets
Executive Summary
What Is an Option?
Option Payoff Profiles
Currency Option Values Prior to Expiration
Hedging with Currency Options
Exchange Rate Volatility Revisited (Advanced)
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Appendix 6A: Currency Option Valuation
Key Terms
Problems
Suggested Readings
Currency Swaps and Swaps Markets
Executive Summary
The Growth of the Swaps Market
Swaps as Portfolios of Forward Contracts
Currency Swaps
Interest Rate Swaps
Other Types of Swaps
Hedging the Swap Bank's Exposure to Financial Price Risk
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Managing the Risks of Multinational Operations
Multinational Treasury Management
Executive Summary
Determining Financial Goals and Strategies
Managing the Corporation's International Trade
Financing the Corporation's International Trade
Managing the Multinational Corporation's Cash Flows
Currency Risk Management in the Multinational Corporation
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Appendix 8A: The Rationale for Hedging Currency Risk
Key Terms
Conceptual Questions
Problems
Suggested Readings
Managing Transaction Exposure to Currency Risk
Executive Summary
An Example of Transaction Exposure to Currency Risk
Managing Transaction Exposures Internally
Managing Transaction Exposure in Financial Markets
Treasury Management in Practice
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Managing Operating Exposure to Currency Risk
Executive Summary
Operating Exposures to Currency Risk
The Exposure of Shareholders' Equity
Managing Operating Exposure in the Financial Markets
Managing Operating Exposure through Operations
Pricing Strategy and the Firm's Competitive Environment
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Managing Translation Exposure and Accounting for Financial Transactions
Executive Summary
The Current Rate Method of Financial Accounting Standard No. 52
Corporate Hedging of Translation Exposure
Accounting for Financial Market Transactions
Accounting, Disclosure, and Corporate Hedging Activities
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Valuation and the Structure of Multinational Operations
Foreign Market Entry and Country Risk Management
Executive Summary
Strategic Entry into International Markets
Country Risk Assessment
Strategies for Managing Country Risk
Protecting the Multinational's Competitive Advantages
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Multinational Capital Budgeting
Executive Summary
The Algebra of Multinational Capital Budgeting
An Example: Wendy's Restaurant in Neverland
International Parity Disequilibria
Special Circumstances in Cross-Border Investments
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Multinational Capital Structure and Cost of Capital
Executive Summary
Capital Structure and the Cost of Capital
Project Valuation and the Cost of Capital
The Cost of Capital on Multinational Operations
Sources of Funds for Multinational Operations
The International Evidence on Capital Structure
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Taxes and Multinational Corporate Strategy
Executive Summary
The Objectives of National Tax Policy
Types of Taxation
U.S. Taxation of Foreign-Source Income
Taxes and Organizational Form
Transfer Pricing and Tax Planning
Taxes and the Location of Foreign Assets and Liabilities
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Real Options and Cross-Border Investment Strategy
Executive Summary
Real Options and the Theory and Practice of Investment
Market Entry as a Simple Real Option
Uncertainty and the Value of the Option to Invest
Market Entry as a Compound Real Option
The Real Option Approach as a Complement to Net Present Value
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
Corporate Governance and the International Market for Corporate Control
Executive Summary
Corporate Governance
The International Market for Corporate Control
The International Evidence on Mergers and Acquisitions
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
International Portfolio Investment and Asset Pricing
International Capital Markets
Executive Summary
Domestic and International Bond Markets
Domestic and International Stock Markets
International Investment Vehicles
Share Prices in International Markets
Asset Allocation Policy and Investment Style
Cross-Border Financial Statement Analysis
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
International Portfolio Diversification
Executive Summary
The Algebra of Portfolio Diversification
Returns on Foreign Investments
The Benefits of International Portfolio Diversification
Home Bias
Summary
Key Terms
Conceptual Questions
Problems
Suggested Readings
International Asset Pricing
Executive Summary
The International Capital Asset Pricing Model
Factor Models and Arbitrage Pricing Theory
Factor Models for International Assets
Momentum Strategies
Contemporary Asset Pricing Models
Summary
Key Terms
Conceptual Questions
Problems

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