Multinational Business Finance, 15th Edition PDF by David K Eiteman, Arthur I Stonehill and Michael H Moffett

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Multinational Business Finance, Fifteenth Edition

By David K Eiteman, Arthur I Stonehill and Michael H Moffett

Multinational Business Finance, 15th Edition

Contents:

PART 1 Global Financial Environment 21

Chapter 1 Multinational Financial Management:

Opportunities and Challenges 22

1.1 The Global Financial Marketplace 23

1.2 The Theory of Comparative Advantage 31

1.3 What Is Different about International Financial Management? 32

1.4 The Globalization Process 35

Summary Points 40

Mini-Case Crowdfunding Kenya 40

Questions ■ Problems ■ Internet Exercises 43

Chapter 2 The International Monetary System 49

2.1 History of the International Monetary System 50

2.2 Fixed Versus Flexible Exchange Rates 59

2.3 The Impossible Trinity 59

2.4 A Single Currency for Europe: The Euro 61

2.5 Emerging Markets and Regime Choices 64

Summary Points 69

Mini-Case The Internationalization (or Not) of the Chinese Renminbi 69

Questions ■ Problems ■ Internet Exercises 72

Chapter 3 The Balance of Payments 77

3.1 Fundamentals of BOP Accounting 78

3.2 The Accounts of the Balance of Payments 80

3.3 BOP Impacts on Key Macroeconomic Rates 88

3.4 Trade Balances and Exchange Rates 90

3.5 Capital Mobility 93

Summary Points 99

Mini-Case Global Remittances 99

Questions ■ Problems ■ Internet Exercises 104

Chapter 4 Financial Goals and Corporate Governance 109

4.1 Business Ownership 110

4.2 Publicly Traded Versus Privately Held: The Global Shift 118

4.3 Corporate Governance 121

Summary Points 129

Mini-Case Volkswagen’s Defeat Devices and Stakeholder Control 130

Questions ■ Problems ■ Internet Exercises 134

PART 2 Foreign Exchange Theory and Markets 139

Chapter 5 The Foreign Exchange Market 140

5.1 Functions of the Foreign Exchange Market 140

5.2 Structure of the Foreign Exchange Market 141

5.3 Transactions in the Foreign Exchange Market 149

5.4 Foreign Exchange Rates and Quotations 155

Summary Points 162

Mini-Case The Venezuelan Bolivar Black Market 163

Questions ■ Problems ■ Internet Exercises 166

Chapter 6 International Parity Conditions 171

6.1 Prices and Exchange Rates 172

6.2 Interest Rates and Exchange Rates 179

6.3 Forward Rate as an Unbiased Predictor of the Future Spot Rate 189

6.4 Prices, Interest Rates, and Exchange Rates in Equilibrium 190

Summary Points 192

Mini-Case Mrs. Watanabe and the Japanese Yen Carry Trade 192

Questions ■ Problems ■ Internet Exercises 195

Appendix: An Algebraic Primer to International Parity Conditions 202

Chapter 7 Foreign Currency Derivatives: Futures and Options 206

7.1 Foreign Currency Futures 207

7.2 Foreign Currency Options 209

7.3 Option Pricing and Valuation 217

7.4 Currency Option Pricing Sensitivity 218

Summary Points 225

Mini-Case KiKos and the South Korean Won 225

Questions ■ Problems ■ Internet Exercises 228

Appendix: Currency Option Pricing Theory 233

Chapter 8 Interest Rate Risk and Swaps 235

8.1 Interest Rate Foundations 236

8.2 The Cost of Debt 239

8.3 Interest Rate Risk 244

8.4 Interest Rate Futures and FRAs 247

8.5 Interest Rate Swaps 248

Summary Points 257

Mini-Case Argentina and the Vulture Funds 257

Questions ■ Problems ■ Internet Exercises 262

Chapter 9 Foreign Exchange Rate Determination and Intervention 268

9.1 Exchange Rate Determination: The Theoretical Thread 269

9.2 Currency Market Intervention 273

9.3 Disequilibrium: Exchange Rates in Emerging Markets 279

9.4 Currency Forecasting in Practice 284

Summary Points 289

Mini-Case Iceland—A Small Country in a Global Crisis 289

Questions ■ Problems ■ Internet Exercises 294

PART 3 Foreign Exchange Exposure 301

Chapter 10 Transaction Exposure 302

10.1 Types of Foreign Exchange Exposure 302

10.2 Why Hedge? 304

10.3 Transaction Exposure 306

10.4 Transaction Exposure Management 308

10.5 Transaction Exposure Management in Practice 317

Summary Points 321

Mini-Case China Noah Corporation 321

Questions ■ Problems ■ Internet Exercises 327

Appendix A: Complex Option Hedges 334

Appendix B: The Optimal Hedge Ratio and Hedge Effectiveness 342

Chapter 11 Translation Exposure 344

11.1 Overview of Translation 345

11.2 Translation Methods 348

11.3 Aidan Corporation’s Translation Exposure 351

11.4 Managing Translation Exposure 356

Summary Points 361

Mini-Case Electrolux of Sweden’s Currency Management 361

Questions ■ Problems ■ Internet Exercises 367

Chapter 12 Operating Exposure 370

12.1 A Multinational’s Operating Exposure 371

12.2 Measuring Operating Exposure: Aidan Turkey 375

12.3 Strategic Management of Operating Exposure 380

12.4 Proactive Management of Operating Exposure 382

Summary Points 388

Mini-Case Brexit and Rolls-Royce 389

Questions ■ Problems ■ Internet Exercises 393

PART 4 Financing the Global Firm 399

Chapter 13 Global Cost and Availability of Capital 400

13.1 Financial Globalization and Strategy 400

13.2 International Portfolio Theory and Diversification 404

13.3 The Role of International Portfolio Investors 410

13.4 The Cost of Capital for MNEs Compared to Domestic Firms 414

13.5 Illustrative Case: Novo Industri A/S (Novo) 418

Summary Points 422

Mini-Case Ferrari’s IPO—The Potential of the Prancing Horse 423

Questions ■ Problems ■ Internet Exercises 431

Chapter 14 Funding the Multinational Firm 437

14.1 Designing a Strategy to Source Capital Globally 438

14.2 Optimal Financial Structure 439

14.3 Raising Equity Globally 442

14.4 Depositary Receipts 445

14.5 Private Placement 450

14.6 Raising Debt Globally 452

14.7 Financing Foreign Subsidiaries 455

Summary Points 459

Mini-Case CEMEX’s Debt Dilemma 460

Questions ■ Problems ■ Internet Exercises 466

Chapter 15 Multinational Tax Management 471

15.1 Tax Principles and Practices 472

15.2 Multinational Tax Management 479

15.3 Google: An Illustrative Case of Profit Repositioning 489

15.4 Global Tax Competitiveness 492

15.5 U.S. Tax Law Change in 2017 494

Summary Points 496

Mini-Case Apple’s Global iTax Strategy 496

Questions ■ Problems ■ Internet Exercises 501

Chapter 16 International Trade Finance 505

16.1 The Trade Relationship 505

16.2 Key Documents 510

16.3 Government Programs to Help Finance Exports 517

16.4 Trade Financing Alternatives 518

16.5 Forfaiting 521

Summary Points 523

Mini-Case Crosswell International and Brazil 524

Questions ■ Problems ■ Internet Exercises 527

PART 5 Foreign Investments and Investment Analysis 531

Chapter 17 Foreign Direct Investment and Political Risk 532

17.1 The Foreign Direct Investment Decision 532

17.2 Structural Choices for Foreign Market Entry 534

17.3 Political Risk: Definition and Classification 539

17.4 Financial Impacts of Political Risk 540

17.5 Political Risk Mitigation 545

Summary Points 551

Mini-Case Tengiz—The Definition of Political Risk 551

Questions ■ Internet Exercises 555

Chapter 18 Multinational Capital Budgeting and

Cross-Border Acquisitions 558

18.1 Complexities of Budgeting for a Foreign Project 559

18.2 Illustrative Case: Cemex Enters Indonesia 562

18.3 Real Option Analysis 574

18.4 Project Financing 575

18.5 Cross-Border Mergers and Acquisitions 576

Summary Points 582

Mini-Case Elan and Royalty Pharma 583

Questions ■ Problems ■ Internet Exercises 587

Answers to Selected End-of-Chapter Problems 592

Glossary 596

Index 614

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