Preface
Acknowledgments
About the Author
Part One: The International Financial Environment
Chapter 1: An Introduction to Multinational Finance
1.1 The Goals of the Multinational Corporation
1.2 The Challenges of Multinational Operations
1.3 The Opportunities of Multinational Operations
1.4 Financial Management of the Multinational CorporationCORPORATION
1.5 Summary
Chapter 2: World Trade and the International Monetary System
2.1 Integration of the Worlds Markets
2.2 Balance-of-Payments Statistics
2.3 Exchange Rate Systems
2.4 A Brief History of the International Monetary System
2.5 Summary
Chapter 3: Foreign Exchange and Eurocurrency Markets
3.1 Characteristics of Financial Markets
3.2 The Eurocurrency Market
3.3 The Foreign Exchange Market
3.4 Foreign Exchange Rates and Quotations
3.5 Hedging with Currency Forwards
3.6 The Empirical Behavior of Exchange Rates
3.7 Summary
Chapter 4: The International Parity Conditions and Their Consequences
4.1 The Law of One Price
4.2 Exchange Rate Equilibrium
4.3 Covered Interest Arbitrage and Interest Rate Parity
4.4 Less Reliable International Parity Conditions
4.5 The Real Exchange Rate
4.6 Exchange Rate Forecasting
4.7 Summary
Appendix 4A: Continuous Compounding
Part Two: Derivative Securities for Financial Risk Management
Chapter 5: Currency Futures and Futures Markets
5.1 The Evolution of Futures Markets
5.2 Futures Contracts
5.3 Forward Versus Futures Market Hedges
5.4 Hedging with Currency Futures
5.5 Summary
Chapter 6: Currency Options and Options Markets
6.1 What Is an Option?
6.2 Option Payoff Profiles
6.3 Currency Option Values Prior to Expiration
6.4 Hedging with Currency Options
6.5 Exchange Rate Volatility Revisited
6.6 Summary
Appendix 6A: Currency Option Valuation
Chapter 7: Currency Swaps and Swaps Markets
7.1 The Growth of the Swaps Market
7.2 Swaps as Portfolios of Forward Contracts
7.3 Currency Swaps
7.4 Interest Rate Swaps
7.5 Other Types of Swaps
7.6 Hedging the Swap Banks Exposure to Financial Price Risk
7.7 Summary
Part Three: Managing the Risks of Multinational Operations
Chapter 8: Multinational Treasury Management
8.1 Determining Financial Goals and Strategies
8.2 Managing International Trade
8.3 Payment Methods and Financing for International Trade
8.4 Managing Cash Flows
8.5 Managing Exposures to Currency Risk
8.6 Summary
Appendix 8A: The Rationale for Hedging Currency Risk
Chapter 9: Managing Transaction Exposure to Currency Risk
9.1 Transaction Exposure to Currency Risk
9.2 Managing Transaction Exposures Internally
9.3 Managing Transaction Exposures in the Financial Markets
9.4 Treasury Management in Practice
9.5 Summary
Chapter 10: Managing Operating Exposure to Currency Risk
10.1 Operating Exposures to Currency Risk
10.2 The Exposure of Shareholders Equity
10.3 Managing Operating Exposures in the Financial Markets
10.4 Managing Operating Exposures Through Operations
10.5 Pricing Strategy and the Competitive Environment
10.6 Summary
Chapter 11: Managing Translation Exposure and Accounting for Financial Transactions
11.1 Financial Accounting and Reporting Standards
11.2 The Current Rate Method of IAS 21 and ASC 830-30
11.3 Corporate Hedging of Translation Exposure
11.4 Accounting for Financial Market Instruments
11.5 Accounting, Disclosure, and Corporate Hedging Activities
11.6 Summary
Part Four: Valuation and the Structure of Multinational Operations
Chapter 12: Foreign Market Entry and Country Risk Management
12.1 Strategic Entry into International Markets
12.2 Country Risk Assessment
12.3 Strategies for Managing Country Risk
12.4 Protecting the Multinationals Competitive Advantages
12.5 Summary
Chapter 13: Multinational Capital Budgeting
13.1 The Algebra of Multinational Capital Budgeting
13.2 An Example: Wendys Restaurant in Neverland
13.3 International Parity Disequilibria
13.4 Special Circumstances in Cross-Border Investments
13.5 Summary
Chapter 14: Multinational Capital Structure and Cost of Capital
14.1 Capital Structure and the Cost of Capital
14.2 Valuation of a Foreign Project with the WACC
14.3 The Cost of Capital on Multinational Operations
14.4 Sources of Funds for Multinational Operations
14.5 The International Evidence of Capital Structure
14.6 Summary
Chapter 15: Taxes and Multinational Corporate Strategy
15.1 The Objectives of National Tax Policy
15.2 Types of Taxation
15.3 Taxes and Organization Form
15.4 U.S. Taxation of Foreign-Source Income
15.5 Transfer Pricing and Tax Planning
15.6 Taxes and the Location of Foreign Assets and Liabilities
15.7 Summary
Chapter 16: Real Options and Cross-Border Investment Strategy
16.1 Real Options and the Theory and Practice of Investment
16.2 Market Entry as a Simple Real Option
16.3 Uncertainty and the Value of the Option to Invest
16.4 Market Entry as a Compound Real Option
16.5 The Real Option Approach as Complement to NPV
16.6 Summary
Chapter 17: Corporate Governance and the International Market for Corporate Control
17.1 Corporate Governance
17.2 The International Market for Corporate Control
17.3 The International Evidence on Mergers and Acquisitions
17.4 Summary
Part Five: International Portfolio Investment and Asset Pricing
Chapter 18: International Capital Markets
18.1 Domestic and International Capital Markets
18.2 International Investment Vehicles
18.3 Cross-Border Financial Statement Analysis
18.4 Summary
Chapter 19: International Portfolio Diversification
19.1 The Algebra of Portfolio Diversification
19.2 Returns on Foreign Investments
19.3 The Benefits of International Portfolio Diversification
19.4 Home Bias
19.5 Summary
Chapter 20: International Asset Pricing
20.1 The International Capital Asset Pricing Model (IAPM)
20.2 Factor Models of Expected and Required Return
20.3 Contemporary Asset Pricing Models
20.4 Summary
Appendix: Useful Rules and Formulas
Glossary
Index
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