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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 | |