Multinational financial management / Alan C. Shapiro.

Format:

Book

Author/Creator:

Shapiro, Alan C.

Contributor:

Alumni and Friends Memorial Book Fund.

Language:

English

Subjects (All):

International business enterprises--Finance.

International business enterprises.

Physical Description:

xix, 824 pages : illustrations ; 24 cm

Edition:

Sixth edition.

Place of Publication:

Upper Saddle River, NJ : Prentice Hall, [1999]

Summary:

International business activity is not new. The transfer of goods and services across national borders has been taking place for thousands of years, antedating even Joseph's advice to the rulers of Egypt to establish that nation as the granary of the Middle East. Since the end of World War II, however, international business has undergone a revolution out of which has emerged what is probably the most important economic phenomenon of the latter half of the 20th century: the multinational corporation.

The sixth edition of Multinational Financial Management provides the conceptual framework within which key financial decisions of the multinational firm can be analyzed. The emphasis throughout the book is on taking advantage of being a multinational corporation. Using real-world examples and illustrations of corporate practices, the text demonstrates to students the value of making judgments with a solid theoretical foundation. Beyond the traditional coverage of corporate finance, key elements including multiple currency, exchange rates, differing tax systems, and political risks such as nationalization and expropriation are explored.

Contents:

Chapter 1 Introduction: Multinational Enterprise and Multinational Financial Management 1

1.1 The Rise of the Multinational Corporation 2

1.2 The Process of Overseas Expansion 6

1.3 Multinational Financial Management: Theory and Practice 17

1.4 Outline of the Book 25

Questions 27

Appendix 1A The Origins and Consequences of International Trade 28

Appendix 1B Size and Scope of Multinational Corporations Abroad 33

Part 1 Environment of International Financial Management 47

Chapter 2 The Determination of Exchange Rates 49

2.1 Setting the Equilibrium Spot Exchange Rate 50

2.2 Expectations and the Asset Market Model of Exchange Rates 54

2.3 The Fundamentals of Central Bank Intervention 70

2.4 The Equilibrium Approach to Exchange Rates 76

Questions 80

Problems 83

Chapter 3 The International Monetary System 85

3.1 Alternative Exchange Rate Systems 86

3.2 A Brief History of the International Monetary System 91

3.3 The European Monetary System 101

Questions 114

Problems 115

Chapter 4 The Balance of Payments and International Economic Linkages 116

4.1 Balance-of-Payments Categories 117

4.2 The International Flow of Goods, Services, and Capital 122

4.3 Coping with the Current-Account Deficit 128

Questions 138

Problems 140

Chapter 5 The Foreign Exchange Market 142

5.1 Organization of the Foreign Exchange Market 143

5.2 The Spot Market 148

5.3 The Forward Market 157

5.4 Interest Rate Parity Theory 161

Questions 168

Problems 169

Chapter 6 Currency Futures and Options Markets 172

6.1 Futures Contracts 172

6.2 Currency Options 178

6.3 Reading Currency Futures and Options Prices 199

Questions 203

Problems 203

Chapter 7 Parity Conditions in International Finance and Currency Forecasting 206

7.1 Arbitrage and the Law of One Price 206

7.2 Purchasing Power Parity 210

7.3 The Fisher Effect 219

7.4 The International Fisher Effect 227

7.5 The Relationship Between the Forward Rate and the Future Spot Rate 231

7.6 Inflation Risk and Its Impact on Financial Markets 234

7.7 Currency Forecasting 236

Questions 246

Problems 248

Part 1 Case Studies

Case I.1 Oil Levies: The Economic Implications 250

Case I.2 President Carter Lectures the Foreign Exchange Markets 250

Case I.3 Rescuing the Indonesian Rupiah with a Currency Board 251

Case I.4 Brazil Fights a Real Battle 256

Part 2 Foreign Exchange Risk Management 263

Chapter 8 Measuring Accounting Exposure 265

8.1 Alternative Measures of Foreign Exchange Exposure 265

8.2 Alternative Currency Translation Methods 267

8.3 Statement of Financial Accounting Standards No. 8 269

8.4 Statement of Financial Accounting Standards No. 52 271

8.5 Transaction Exposure 276

8.6 Accounting Practice and Economic Reality 277

Questions 280

Problems 280

Chapter 9 Managing Accounting Exposure 282

9.1 Designing a Hedging Strategy 283

9.2 Managing Transaction Exposure 290

9.3 Managing Translation Exposure 307

9.4 Illustration: Managing Transaction Exposure for the Toronto Blue Jays 310

Questions 311

Problems 312

Chapter 10 Measuring Economic Exposure 316

10.1 Foreign Exchange Risk and Economic Exposure 317

10.2 The Economic Consequences of Exchange Rate Changes 324

10.3 Identifying Economic Exposure 329

10.4 Calculating Economic Exposure 332

10.5 An Operational Measure of Exchange Risk 337

10.6 Illustration: Laker Airways 338

Questions 340

Problems 341

Chapter 11 Managing Economic Exposure 344

11.1 An Overview of Operating Exposure Management 345

11.2 Marketing Management of Exchange Risk 346

11.3 Production Management of Exchange Risk 353

11.4 Financial Management of Exchange Risk 360

Questions 364

Problems 365

Part 2 Case Studies

Case II.1 British Materials Corporation 368

Case II.2 Euclides Engineering Ltd. 371

Case II.3 Rolls-Royce Limited 373

Case II.4 The Mexican Peso 374

Case II.5 Link Technologies 377

Case II.6 The Case of the Depreciating Indian Rupee 380

Part 3 Multinational Working Capital Management 389

Chapter 12 Financing Foreign Trade 391

12.1 Payments Terms in International Trade 392

12.2 Documents in International Trade 402

12.3 Financing Techniques in International Trade 403

12.4 Government Sources of Export Financing and Credit Insurance 409

12.5 Countertrade 415

Questions 419

Problems 419

Chapter 13 Current Asset Management and Short-Term Financing 421

13.1 International Cash Management 422

13.2 Accounts Receivable Management 436

13.3 Inventory Management 438

13.4 Short-Term Financing 440

13.5 Illustration: American Express 456

Questions 458

Problems 459

Chapter 14 Managing the Multinational Financial System 462

14.1 The Value of the Multinational Financial System 463

14.2 Intercompany Fund-Flow Mechanisms: Costs and Benefits 464

14.3 Designing a Global Remittance Policy 485

14.4 Illustration: Transfer Pricing and Tax Evasion 487

Questions 489

Problems 490

Appendix 14A Managing Blocked Currency Funds 493

Part 3 Case Study

Case III.1 Mobex Inc. 497

Part 4 Financing Foreign Operations 503

Chapter 15 International Financing and International Financial Markets 505

15.1 Corporate Sources and Uses of Funds 506

15.2 National Capital Markets as International Financial Centers 514

15.3 The Euromarkets 525

15.4 Development Banks 547

Questions 553

Problems 554

Chapter 16 Special Financing Vehicles 556

16.1 Interest Rate and Currency Swaps 556

16.2 Structured Notes 569

16.3 Interest Rate Forwards and Futures 571

16.4 International Leasing 575

16.5 LDC Debt-Equity Swaps 578

16.6 Valuing Low-Cost Financing Opportunities 581

Questions 586

Problems 586

Chapter 17 International Banking Trends and Strategies 589

17.1 Recent Patterns of International Banking Activities 590

17.2 Organizational Forms and Strategies in Bank Expansion Overseas 599

17.3 Value Creation in International Banking 607

17.5 Country Risk Analysis in International Banking 612

Questions 616

Problems 617

Chapter 18 The Cost of Capital for Foreign Investments 618

18.1 The Cost of Equity Capital 619

18.2 The Weighted Average Cost of Capital for Foreign Projects 620

18.3 The All-Equity Cost of Capital for Foreign Projects 622

18.4 Discount Rates for Foreign Investments 623

18.5 Establishing a Worldwide Capital Structure 630

18.6 Illustration: Nestle 636

18.7 Illustration: Internationalizing the Cost of Capital of Novo Industri 637

Questions 639

Problems 640

Appendix 18A Calculating Long-Term Debt Costs 642

Part 4 Case Studies

Case IV.1 Plano Cruzado 647

Case IV.2 Multinational Manufacturing, Inc. 647

Part 5 Foreign Investment Analysis 651

Chapter 19 International Portfolio Investment 653

19.1 The Benefits of International Equity Investing 653

19.2 International Bond Investing 669

19.3 Optimal International Asset Allocation 669

19.4 Measuring the Total Return from Foreign Portfolio Investing 670

19.5 Measuring Exchange Risk on Foreign Securities 672

Questions 674

Problems 675

Chapter 20 Corporate Strategy and Foreign Direct Investment 678

20.1 Theory of the Multinational Corporation 679

20.2 The Strategy of Multinational Enterprise 681

20.3 Designing a Global Expansion Strategy 691

20.4 Illustration: The Japanese Strategy for Global Expansion 694

Questions 699

Problems 701

Appendix 20A Corporate Strategy and Joint Ventures 702

Appendix 20B Strategic Implications of Europe 1992 710

Chapter 21 Capital Budgeting for the Multinational Corporation 718

21.1 Basics of Capital Budgeting 719

21.2 Issues in Foreign Investment Analysis 725

21.3 Foreign Project Appraisal: The Case of International Diesel Corporation 728

21.4 Political Risk

Analysis 738

21.5 Growth Options and Project Evaluation 740

Questions 745

Problems 746

Chapter 22 The Measurement and Management of Political Risk 747

22.1 Measuring Political Risk 748

22.2 Country Risk Analysis 755

22.3 Managing Political Risk 763

22.4 Illustration: Kennecott and Anaconda in Chile 772

Questions 774

Problems 774

Part 5 Case Studies

Case V.1 The International Machine Corporation 778

Case V.2 Euro Disneyland 780.

Notes:

Includes bibliographical references and index.

Local Notes:

Acquired for the Penn Libraries with assistance from the Alumni and Friends Memorial Book Fund.

ISBN:

0130101427

OCLC:

40251757