International financial management

Cover
Title
Copyright
Contents in Brief
Contents
PART ONE: Foundations of International Financial Management
	CHAPTER 1 Globalization and the Multinational Firm
		What's Special about International Finance?
			Foreign Exchange and Political Risks
			Market Imperfections
			Expanded Opportunity Set
		Goals for International Financial Management
		Globalization of the World Economy: Major Trends and Developments
			Emergence of Globalized Financial Markets
			Emergence of the Euro as a Global Currency
			Europe's Sovereign Debt Crisis of 2010
			Trade Liberalization and Economic Integration
			Privatization
			Global Financial Crisis of 2008–2009
		Multinational Corporations
		Summary
		MINI CASE: Nike and Sweatshop Labor
		APPENDIX 1A: Gain from Trade: The Theory of Comparative Advantage
	CHAPTER 2 International Monetary System
		Evolution of the International Monetary System
		Bimetallism: Before 1875
		Classical Gold Standard: 1875–1914
		Interwar Period: 1915–1944
		Bretton Woods System: 1945–1972
		The Flexible Exchange Rate Regime: 1973–Present
		The Current Exchange Rate Arrangements
		European Monetary System
		The Euro and the European Monetary Union
			A Brief History of the Euro
			What Are the Benefits of Monetary Union?
			Costs of Monetary Union
			Prospects of the Euro: Some Critical Questions
		INTERNATIONAL FINANCE IN PRACTICE: Mundell Wins Nobel Prize in Economics
		The Mexican Peso Crisis
		The Asian Currency Crisis
			Origins of the Asian Currency Crisis
			Lessons from the Asian Currency Crisis
		The Argentine Peso Crisis
		Fixed versus Flexible Exchange Rate Regimes
		Summary
		MINI CASE: Grexit or Not?
	CHAPTER 3 Balance of Payments
		Balance-of-Payments Accounting
		Balance-of-Payments Accounts
			The Current Account
			The Capital Account
			Statistical Discrepancy
			Official Reserve Account
		The Balance-of-Payments Identity
		Balance-of-Payments Trends in Major Countries
		INTERNATIONAL FINANCE IN PRACTICE: The Dollar and the Deficit
		Summary
		MINI CASE: Mexico's Balance-of-Payments Problem
		APPENDIX 3A: The Relationship Between Balance of Payments and National Income Accounting
	CHAPTER 4 Corporate Governance Around the World
		Governance of the Public Corporation: Key Issues
		The Agency Problem
		Remedies for the Agency Problem
			Board of Directors
			Incentive Contracts
		INTERNATIONAL FINANCE IN PRACTICE: When Boards Are All in the Family
			Concentrated Ownership
			Accounting Transparency
			Debt
			Overseas Stock Listings
			Market for Corporate Control
		Law and Corporate Governance
		Consequences of Law
			Ownership and Control Pattern
			Private Benefits of Control
			Capital Markets and Valuation
		Corporate Governance Reform
			Objectives of Reform
			Political Dynamics
			The Sarbanes-Oxley Act
			The Cadbury Code of Best Practice
			The Dodd-Frank Act
		Summary
		MINI CASE: Parmalat: Europe's Enron
PART TWO: The Foreign Exchange Market, Exchange Rate Determination, and Currency Derivatives
	CHAPTER 5 The Market for Foreign Exchange
		Function and Structure of the FX Market
		INTERNATIONAL FINANCE IN PRACTICE: The Mouse Takes Over the Floor
			FX Market Participants
			Correspondent Banking Relationships
		The Spot Market
			Spot Rate Quotations
		INTERNATIONAL FINANCE IN PRACTICE: Where Money Talks Very Loudly
			Cross-Exchange Rate Quotations
			Alternative Expressions for the Cross-Exchange Rate
			The Bid-Ask Spread
			Spot FX Trading
			The Cross-Rate Trading Desk
			Triangular Arbitrage
			Spot Foreign Exchange Market Microstructure
		The Forward Market
			Forward Rate Quotations
			Long and Short Forward Positions
			Non-Deliverable Forward Contracts
			Forward Cross-Exchange Rates
			Forward Premium
			Swap Transactions
		Exchange-Traded Currency Funds
		Summary
		MINI CASE: Shrewsbury Herbal Products, Ltd.
	CHAPTER 6 International Parity Relationships and Forecasting Foreign Exchange Rates
		Interest Rate Parity
			Covered Interest Arbitrage
			Interest Rate Parity and Exchange Rate Determination
			Currency Carry Trade
			Reasons for Deviations from Interest Rate Parity
		Purchasing Power Parity
			PPP Deviations and the Real Exchange Rate
			Evidence on Purchasing Power Parity
		INTERNATIONAL FINANCE IN PRACTICE: McCurrencies
		Fisher Effects
		Forecasting Exchange Rates
			Efficient Market Approach
			Fundamental Approach
			Technical Approach
			Performance of the Forecasters
		Summary
		MINI CASE: Turkish Lira and Purchasing Power Parity
		APPENDIX 6A: Purchasing Power Parity and Exchange Rate Determination
	CHAPTER 7 Futures and Options on Foreign Exchange
		Futures Contracts: Some Preliminaries
		Currency Futures Markets
		INTERNATIONAL FINANCE IN PRACTICE: FX Market Volumes Surge
		Basic Currency Futures Relationships
		Options Contracts: Some Preliminaries
		Currency Options Markets
		Currency Futures Options
		Basic Option-Pricing Relationships at Expiration
		American Option-Pricing Relationships
		European Option-Pricing Relationships
		Binomial Option-Pricing Model
		European Option-Pricing Formula
		Empirical Tests of Currency Options
		Summary
		MINI CASE: The Options Speculator
PART THREE: Foreign Exchange Exposure and Management
	CHAPTER 8 Management of Transaction Exposure
		Three Types of Exposure
		Forward Market Hedge
		Money Market Hedge
		Options Market Hedge
		Hedging Foreign Currency Payables
			Forward Contracts
			Money Market Instruments
			Currency Options Contracts
		Cross-Hedging Minor Currency Exposure
		Hedging Contingent Exposure
		Hedging Recurrent Exposure with Swap Contracts
		Hedging through Invoice Currency
		Hedging via Lead and Lag
		Exposure Netting
		Should the Firm Hedge?
		What Risk Management Products Do Firms Use?
		Summary
		MINI CASE: Airbus' Dollar Exposure
		CASE APPLICATION: Richard May's Options
	CHAPTER 9 Management of Economic Exposure
		How to Measure Economic Exposure
		Operating Exposure: Definition
		Illustration of Operating Exposure
		Determinants of Operating Exposure
		Managing Operating Exposure
			Selecting Low-Cost Production Sites
			Flexible Sourcing Policy
			Diversification of the Market
			R&D Efforts and Product Differentiation
			Financial Hedging
		CASE APPLICATION: Exchange Risk Management at Merck
		Summary
		MINI CASE: Economic Exposure of Albion Computers PLC
	CHAPTER 10 Management of Translation Exposure
		Translation Methods
			Current/Noncurrent Method
			Monetary/Nonmonetary Method
			Temporal Method
			Current Rate Method
		Financial Accounting Standards Board Statement 8
		Financial Accounting Standards Board Statement 52
			The Mechanics of the FASB 52 Translation Process
			Highly Inflationary Economies
		International Accounting Standards
		CASE APPLICATION: Consolidation of Accounts according to FASB 52: The Centralia Corporation
		Management of Translation Exposure
			Translation Exposure versus Transaction Exposure
			Hedging Translation Exposure
			Balance Sheet Hedge
			Derivatives Hedge
			Translation Exposure versus Operating Exposure
		Empirical Analysis of the Change from FASB 8 to FASB 52
		Summary
		MINI CASE: Sundance Sporting Goods, Inc.
PART FOUR: World Financial Markets and Institutions
	CHAPTER 11 International Banking and Money Market
		International Banking Services
			The World's Largest Banks
		Reasons for International Banking
		Types of International Banking Offices
			Correspondent Bank
			Representative Offices
			Foreign Branches
			Subsidiary and Affiliate Banks
			Edge Act Banks
			Offshore Banking Centers
			International Banking Facilities
		Capital Adequacy Standards
		International Money Market
			Eurocurrency Market
			ICE LIBOR
			Eurocredits
		INTERNATIONAL FINANCE IN PRACTICE: The Rotten Heart of Finance
			Forward Rate Agreements
			Euronotes
			Eurocommercial Paper
			Eurodollar Interest Rate Futures Contracts
		International Debt Crisis
			History
			Debt-for-Equity Swaps
			The Solution: Brady Bonds
		The Asian Crisis
		Global Financial Crisis
			The Credit Crunch
			Impact of the Financial Crisis
			Economic Stimulus
			The Aftermath
		Summary
		MINI CASE: Detroit Motors' Latin American Expansion
		APPENDIX 11A: Eurocurrency Creation
	CHAPTER 12 International Bond Market
		The World's Bond Markets: A Statistical Perspective
		Foreign Bonds and Eurobonds
			Bearer Bonds and Registered Bonds
			National Security Regulations
			Withholding Taxes
			Security Regulations that Ease Bond Issuance
			Global Bonds
		Types of Instruments
		INTERNATIONAL FINANCE IN PRACTICE: SOX and Bonds
			Straight Fixed-Rate Issues
			Euro-Medium-Term Notes
			Floating-Rate Notes
			Equity-Related Bonds
			Dual-Currency Bonds
		Currency Distribution, Nationality, and Type of Issuer
		International Bond Market Credit Ratings
		INTERNATIONAL FINANCE IN PRACTICE: Heineken Refreshes Euromarket with Spectacular Unrated Bonds
		Eurobond Market Structure and Practices
			Primary Market
			Secondary Market
			Clearing Procedures
		International Bond Market Indexes
		Summary
		MINI CASE: Sara Lee Corporation's Eurobonds
	CHAPTER 13 International Equity Markets
		A Statistical Perspective
			Market Capitalization
			Measure of Liquidity
		Market Structure, Trading Practices, and Costs
			Market Consolidations and Mergers
		Trading in International Equities
			Cross-Listing of Shares
			Yankee Stock Offerings
			American Depository Receipts
			Global Registered Shares
			Empirical Findings on Cross-Listing and ADRs
		International Equity Market Benchmarks
		iShares MSCI
		Factors Affecting International Equity Returns
			Macroeconomic Factors
		INTERNATIONAL FINANCE IN PRACTICE: Foreign Interest in South Africa Takes Off
			Exchange Rates
			Industrial Structure
		Summary
		MINI CASE: San Pico's New Stock Exchange
	CHAPTER 14 Interest Rate and Currency Swaps
		Types of Swaps
		INTERNATIONAL FINANCE IN PRACTICE: The World Bank's First Currency Swap
		Size of the Swap Market
		The Swap Bank
		Swap Market Quotations
		INTERNATIONAL FINANCE IN PRACTICE: Double-Crossed
		Interest Rate Swaps
			Basic Interest Rate Swap
			Pricing the Basic Interest Rate Swap
		Currency Swaps
			Basic Currency Swap
			Equivalency of Currency Swap Debt Service Obligations
			Pricing the Basic Currency Swap
			A Basic Currency Swap Reconsidered
		Variations of Basic Interest Rate and Currency Swaps
		Risks of Interest Rate and Currency Swaps
		Is the Swap Market Efficient?
		Summary
		MINI CASE: The Centralia Corporation's Currency Swap
	CHAPTER 15 International Portfolio Investment
		International Correlation Structure and Risk Diversification
		Optimal International Portfolio Selection
		Effects of Changes in the Exchange Rate
		International Bond Investment
		International Mutual Funds: A Performance Evaluation
		International Diversification through Country Funds
		International Diversification with ADRs
		International Diversification with Exchange-Traded Funds
		International Diversification with Hedge Funds
		Why Home Bias in Portfolio Holdings?
		International Diversification with Small-Cap Stocks
		Summary
		MINI CASE: Solving for the Optimal International Portfolio
		APPENDIX 15A: International Investment with Exchange Risk Hedging
		APPENDIX 15B: Solving for the Optimal Portfolio
PART FIVE: Financial Management of the Multinational Firm
	CHAPTER 16 Foreign Direct Investment and Cross-Border Acquisitions
		Global Trends in FDI
		Why Do Firms Invest Overseas?
			Trade Barriers
			Imperfect Labor Market
			Intangible Assets
			Vertical Integration
		INTERNATIONAL FINANCE IN PRACTICE: Linear Sequence in Manufacturing: Singer & Company
			Product Life Cycle
			Shareholder Diversification Services
		Cross-Border Mergers and Acquisitions
		Political Risk and FDI
		Summary
		MINI CASE: Enron versus Bombay Politicians
	CHAPTER 17 International Capital Structure and the Cost of Capital
		Cost of Capital
		Cost of Capital in Segmented versus Integrated Markets
		Does the Cost of Capital Differ among Countries?
		CASE APPLICATION: Novo Industri
		Cross-Border Listings of Stocks
		Capital Asset Pricing under Cross-Listings
		The Effect of Foreign Equity Ownership Restrictions
			Pricing-to-Market Phenomenon
		CASE APPLICATION: Nestlé
			Asset Pricing under Foreign Ownership Restrictions
		The Financial Structure of Subsidiaries
		Summary
		APPENDIX 17A: Pricing of Nontradable Assets: Numerical Simulations
	CHAPTER 18 International Capital Budgeting
		Review of Domestic Capital Budgeting
		The Adjusted Present Value Model
		Capital Budgeting from the Parent Firm's Perspective
			Generality of the APV Model
			Estimating the Future Expected Exchange Rate
		CASE APPLICATION: The Centralia Corporation
		Risk Adjustment in the Capital Budgeting Analysis
		Sensitivity Analysis
		Purchasing Power Parity Assumption
		Real Options
		Summary
		MINI CASE 1: Dorchester, Ltd.
		MINI CASE 2: Strik-it-Rich Gold Mining Company
	CHAPTER 19 Multinational Cash Management
		The Management of International Cash Balances
		CASE APPLICATION: Teltrex's Cash Management System
		Bilateral Netting of Internal and External Net Cash Flows
		Reduction in Precautionary Cash Balances
		Cash Management Systems in Practice
		Summary
		MINI CASE 1: Efficient Funds Flow at Eastern Trading Company
		MINI CASE 2: Eastern Trading Company's New MBA
	CHAPTER 20 International Trade Finance
		A Typical Foreign Trade Transaction
		Forfaiting
		Government Assistance in Exporting
		INTERNATIONAL FINANCE IN PRACTICE: First Islamic For faiting Fund Set Up
			The Export-Import Bank and Affiliated Organizations
		Countertrade
			Forms of Countertrade
		INTERNATIONAL FINANCE IN PRACTICE: Armed Forces Tops in Countertrade List
			Some Generalizations about Countertrade
		Summary
		MINI CASE: American Machine Tools, Inc.
	CHAPTER 21 International Tax Environment and Transfer Pricing
		The Objectives of Taxation
			Tax Neutrality
			Tax Equity
		Types of Taxation
			Income Tax
			Withholding Tax
			Value-Added Tax
		National Tax Environments
			Worldwide Taxation
			Territorial Taxation
			Foreign Tax Credits
		Organizational Structures
			Branch and Subsidiary Income
			Tax Havens
			Controlled Foreign Corporation
			Tax Inversion
		INTERNATIONAL FINANCE IN PRACTICE: On or Off? It's a Matter of Degree
		Transfer Pricing and Related Issues
		CASE APPLICATION: Mintel Products Transfer Pricing Strategy
		INTERNATIONAL FINANCE IN PRACTICE: Transfer Pricing: An Important International Tax Issue
			Miscellaneous Factors
		INTERNATIONAL FINANCE IN PRACTICE: Wake Up and Smell the Coffee
			Advance Pricing Agreement
		Blocked Funds
		Summary
		MINI CASE 1: Sigma Corp.'s Location Decision
		MINI CASE 2: Eastern Trading Company's Optimal Transfer Pricing Strategy
Glossary
	A
	B
	C
	D
	E
	F
	G
	H
	I
	J
	L
	M
	N
	O
	P
	R
	S
	T
	U
	V
	W
Index
	A
	B
	C
	D
	E
	F
	G
	H
	I
	J
	K
	L
	M
	N
	O
	P
	Q
	R
	S
	T
	U
	V
	W
	X
	Y
	Z