Multinational Business Finance

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  • Edition: 12th
  • Format: Hardcover
  • Copyright: 2010-01-01
  • Publisher: Prentice Hall
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Renowned for its authoritative, comprehensive coverage of contemporary international finance, this market-leading text trains the leaders of tomorrow's multinational enterprises to recognize and capitalize on the unique characteristics of global markets. Because the job of a manager is to make financial decisions that increase firm value, the authors have embedded real-world mini-cases throughout to apply chapter concepts to the types of situations managers of multinational firms face.

Globalization and the Multinational Enterprise; Financial Goals & Governance; The International Monetary System; The Balance of Payments; Current Multinational Financial Challenges: Crisis; The Foreign Exchange Market

International Parity Conditions; Foreign Currency Derivatives; Interest Rate and Cross Currency Swaps; Foreign Exchange Rate Determination & Forecasting; Transaction Exposure; Operating Exposure; Translation Exposure; The Global Cost and Availability of Capital; Sourcing Equity Globally; Sourcing Debt Globally; International Portfolio Theory & Investment; Foreign Direct Investment Theory & Strategy; Multinational Capital Budgeting; Multinational Tax Management; Working Capital Management; International Trade Finance

MARKET: For the leaders of tomorrow’s multinational enterprises who will recognize and capitalize on the unique characteristics of global markets.

Table of Contents

Global Financial Environmentp. 1
Globalization and the Multinational Enterprisep. 2
Globalization and Creating Value in the Multinational Enterprisep. 3
The Theory of Comparative Advantagep. 4
What Is Different about Global Financial Management?p. 7
Market Imperfections: A Rationale for the Existence of the Multinational Firmp. 8
The Globalization Processp. 9
Summary Pointsp. 13
Porsche Changes Tackp. 13
Questions, Problems, Internet Exercisesp. 19
Financial Goals and Corporate Governancep. 22
Who Owns the Business?p. 22
What Is the Goal of Management?p. 24
Corporate Governancep. 28
Summary Pointsp. 40
Governance Failure at Enronp. 41
Questions, Problems, Internet Exercisesp. 45
The International Monetary Systemp. 50
History of the International Monetary Systemp. 50
Contemporary Currency Regimesp. 56
Emerging Markets and Regime Choicesp. 62
The Birth of a European Currency: The Europ. 64
Exchange Rate Regimes: What Lies Ahead?p. 69
Summary Pointsp. 70
The Revaluation of the Chinese Yuanp. 71
Questions, Problems, Internet Exercisesp. 74
The Balance of Paymentsp. 78
Typical Balance of Payments Transactionsp. 79
Fundamentals of Balance of Payments Accountingp. 80
The Accounts of the Balance of Paymentsp. 81
The Capital and Financial Accountsp. 83
The Balance of Payments in Totalp. 88
The Balance of Payments Interaction with Key Macroeconomic Variablesp. 91
Trade Balances and Exchange Ratesp. 93
Capital Mobilityp. 96
Summary Pointsp. 99
Turkey's Kriz (A): Deteriorating Balance of Paymentsp. 99
Questions, Problems, Internet Exercisesp. 101
Current Multinational Financial Challenges: The Credit Crisis of 2007-2009p. 106
The Seeds of Crisis: Subprime Debtp. 106
The Transmission Mechanism: Securitization and Derivatives of Securitized Debtp. 109
The Fallout: The Crisis of 2007 and 2008p. 120
The Remedy: Prescriptions for an Infected Global Financial Organismp. 129
Summary Pointsp. 131
Letting Go of Lehaman Brothersp. 132
Questions, Problems, Internet Exercisesp. 134
Foreign Exchange Theory and Marketsp. 137
The Foreign Exchange Marketp. 138
Geographical Extent of the Foreign Exchange Marketp. 138
Functions of the Foreign Exchange Marketp. 139
Market Participantsp. 140
Transactions in the Interbank Marketp. 142
Foreign Exchange Rates and Quotationsp. 148
Summary Pointsp. 156
The Venezuelan Bolivar Black Marketp. 157
Questions, Problems, Internet Exercisesp. 160
International Parity Conditionsp. 164
Prices and Exchange Ratesp. 164
Interest Rates and Exchange Ratesp. 172
Forward Rate as an Unbiased Predictor of the Future Spot Ratep. 181
Prices, Interest Rates, and Exchange Rates in Equilibriump. 183
Summary Pointsp. 184
Currency Pass-Through at Porschep. 185
Questions, Problems, Internet Exercisesp. 186
An Algebraic Primer to International Parity Conditionsp. 193
Foreign Currency Derivativesp. 197
Foreign Currency Futuresp. 198
Currency Optionsp. 201
Foreign Currency Speculationp. 203
Option Pricing and Valuationp. 210
Currency Option Pricing Sensitivityp. 213
Prudence in Practicep. 221
Summary Pointsp. 222
Warren Buffett's Love-Hate Relationship with Derivativesp. 223
Questions, Problems, Internet Exercisesp. 226
Currency Option Pricing Theoryp. 230
Interest Rate and Currency Swapsp. 234
Defining Interest Rate Riskp. 234
Management of Interest Rate Riskp. 237
Trident Corporation: Swapping to Fixed Ratesp. 245
Currency Swapsp. 246
Trident Corporation: Swapping Floating Dollars into Fixed Rate Swiss Francsp. 247
Counterparty Riskp. 249
Summary Pointsp. 250
McDonald's Corporation's British Pound Exposurep. 251
Questions, Problems, Internet Exercisesp. 252
Foreign Exchange Rate Determination and Forecastingp. 256
Exchange Rate Determination: The Theoretical Threadp. 257
The Asset Market Approach to Forecastingp. 260
Disequilibrium: Exchange Rates in Emerging Marketsp. 262
Illustrative Case: The Asian Crisisp. 262
Illustrative Case: The Argentine Crisis of 2002p. 265
Forecasting in Practicep. 270
Summary Pointsp. 274
JPMorgan Chase's Forecasting Accuracyp. 274
Questions, Problems, Internet Exercisesp. 276
Foreign Exchange Exposurep. 281
Transaction Exposurep. 282
Types of Foreign Exchange Exposurep. 282
Why Hedge?p. 284
Measurement of Transaction Exposurep. 287
Trident's Transaction Exposurep. 289
Management of an Account Payablep. 297
Risk Management in Practicep. 299
Summary Pointsp. 300
Xian-Janssen Pharmaceutical (China) and the Europ. 301
Questions, Problems, Internet Exercisesp. 303
Complex Optionsp. 312
Operating Exposurep. 320
Attributes of Operating Exposurep. 320
Illustrating Operating Exposure: Tridentp. 322
Strategic Management of Operating Exposurep. 326
Proactive Management of Operating Exposurep. 329
Contractual Approaches: Hedging the Unhedgeablep. 336
Summary Pointsp. 337
Toyota's European Operating Exposurep. 338
Questions, Problems, Internet Exercisesp. 340
Translation Exposurep. 344
Overview of Translationp. 344
Translation Methodsp. 347
Translation Example: Trident Europep. 350
Comparing Translation Exposure with Operating Exposurep. 355
Managing Translation Exposurep. 355
Summary Pointsp. 359
LaJolla Engineering Servicesp. 360
Questions, Problems, Internet Exercisesp. 362
Financing the Global Firmp. 365
The Global Cost and Availability of Captialp. 366
Weighted Average Cost of Capitalp. 368
The Demand for Foreign Securities: The Role of International Portfolio Investorsp. 373
The Cost of Capital for MNEs Compared to Domestic Firmsp. 379
Solving a Riddle: Is the Weighted Average Cost of Capital for MNEs Really Higher Than for Their Domestic Counterparts?p. 380
Summary Pointsp. 382
Novo Industri A/S (Novo)p. 383
Questions, Problems, Internet Exercisesp. 387
Sourcing Equity Globallyp. 391
Designing a Strategy to Source Equity Globallyp. 392
Foreign Equity Listing and Issuancep. 395
Effect of Cross-Listing and Equity Issuance on Share Pricep. 397
Barriers to Cross-Listing and Selling Equity Abroadp. 399
Alternative Instruments to Source Equity in Global Marketsp. 400
Summary Pointsp. 404
Petrobrás of Brazil and the Cost of Capitalp. 404
Questions, Problems, Internet Exercisesp. 408
Sourcing Debt Globallyp. 410
Optimal Financial Structurep. 410
Optimal Financial Structure and the MNEp. 411
Financial Structure of Foreign Subsidiariesp. 414
International Debt Marketsp. 418
Summary Pointsp. 424
Tirstrup BioMechanics (Denmark): Raising Dollar Debtp. 424
Questions, Problems, Internet Exercisesp. 426
Foreign Investment Decisionsp. 431
International Portfolio Theory and Diversificationp. 432
International Diversification and Riskp. 432
Internationalizing the Domestic Portfoliop. 435
National Markets and Asset Performancep. 441
Summary Pointsp. 446
Is Modern Portfolio Theory Outdated?p. 447
Questions, Problems, Internet Exercisesp. 448
Foreign Direct Investment Theory and Political Riskp. 452
Sustaining and Transferring Competitive Advantagep. 452
The OLI Paradigm and Internalizationp. 455
Deciding Where to Investp. 457
How to Invest Abroad: Modes of Foreign Involvementp. 458
Foreign Direct Investment Originating in Developing Countriesp. 462
Foreign Direct Investment and Political Riskp. 464
Assessing Political Riskp. 465
Firm-Specific Risksp. 466
Country-Specific Risks: Transfer Riskp. 469
Country-Specific Risks: Cultural and Institutional Risksp. 472
Global-Specific Risksp. 476
Summary Pointsp. 479
Mattel's Chinese Sourcing Crisis of 2007p. 480
Questions, Problems, Internet Exercisesp. 483
Multinational Capital Budgetingp. 487
Complexities of Budgeting for a Foreign Projectp. 488
Project versus Parent Valuationp. 489
Illustrative Case: Cemex Enters Indonesiap. 490
Real Option Analysisp. 502
Project Financingp. 503
Summary Pointsp. 505
Trident's Chinese Market Entry-An Application of Real Option Analysisp. 505
Questions, Problems, Internet Exercisesp. 507
Managing Multinational Operationsp. 513
Multinational Tax Managementp. 514
Tax Principlesp. 514
Transfer Pricingp. 522
Tax Management at Tridentp. 524
Tax Haven Subsidiaries and International Offshore Financial Centersp. 525
Summary Pointsp. 527
Stanley Works and Corporate Inversionp. 527
Questions, Problems, Internet Exercisesp. 531
Working Capital Managementp. 535
Trident Brazil's Operating Cyclep. 535
Trident's Repositioning Decisionsp. 537
Constraints on Respositioning Fundsp. 539
Conduits for Moving Funds by Unbundling Themp. 539
International Dividend Remittancesp. 540
Net Working Capitalp. 542
International Cash Managementp. 548
Financing Working Capitalp. 552
Summary Pointsp. 556
Honeywell and Pakistan International Airwaysp. 557
Questions, Problems, Internet Exercisesp. 559
International Trade Financep. 565
The Trade Relationshipp. 565
The Trade Dilemmap. 567
Benefits of the Systemp. 568
Letter of Credit (L/C)p. 570
Draftp. 572
Bill of Lading (B/L)p. 573
Example: Documentation in a Typical Trade Transactionp. 574
Government Programs to Help Finance Exportsp. 576
Trade Financing Alternativesp. 578
Forfaiting: Medium- and Long-Term Financingp. 580
Summary Pointsp. 582
Crosswell International's Precious Ultra-Thin Diapersp. 583
Questions, Problems, Internet Exercisesp. 587
Answers to Selected Problemsp. 590
Glossaryp. 593
Indexp. 608
Creditsp. 628
Table of Contents provided by Ingram. All Rights Reserved.

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Customer Reviews

If you really want to learn International Finance, this is the best! July 30, 2011
I found the textbook excellent, mostly because I wanted to learn in depth both the theory and practice of international finance. A lot of other books I looked at were overly theoretical, and while this one covers the theory well, it also provides a lot of insights into the way multinational companies actually make these decisions and manage these risks. I would highly recommend it. The textbook was in very good condition and it was fast delivery. I would definitely order from this seller again.
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Multinational Business Finance: 5 out of 5 stars based on 1 user reviews.

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