Multinational Business Finance, Global Edition [Paperback] [Jan 01, 2016] David K. Eiteman; Michael H. Moffett; Arthur I. Stonehill

Renowned for its authoritative, comprehensive coverage of contemporary international finance, Multinational Business Finance 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. The Fourteenth Edition , now with MyFinanceLab, attempts to capture the rapid evolution of our global marketplace, taking a closer look at the types of organizations that permeate the widespread arena, competition and opportunities in emerging markets, and how financial leadership can integrate the strategic and financial challenges that global businesses face today. KEY TOPICS: Multinational Financial Management: Challenges and Opportunities; The International Monetary System; The Balance of Payments; Financial Goals and Corporate Governance; The Foreign Exchange Market; International Parity Conditions; Foreign Currency Futures and Options; Interest Rate Derivatives and Swaps; Exchange Rate Determination and Forecasting; Transaction Exposure; Translation Exposure; Operating Exposure; The Global Cost and Availability of Capital; Raising Equity and Debt Globally; Multinational Tax Management; International Trade Finance; Foreign Direct Investment and Political Risk; Multinational Capital Budgeting and Cross-Border Acquisitions MARKET: For the leaders of tomorrow's multinational enterprises who will recognize and capitalize on the unique characteristics of global markets. Cover......Page 1 Title Page......Page 8 Copyright Page......Page 9 Preface......Page 10 Acknowledgments......Page 14 About the Authors......Page 17 Contents......Page 20 PART 1 Global Financial Environment......Page 26 Chapter 1 Multinational Financial Management: Opportunities and Challenges......Page 27 Financial Globalization and Risk......Page 28 The Global Financial Marketplace......Page 29 The Theory of Comparative Advantage......Page 36 What Is Different about International Financial Management?......Page 38 Market Imperfections: A Rationale for the Existence of the Multinational Firm......Page 39 The Globalization Process......Page 40 MINI-CASE: Crowdfunding Kenya......Page 44 Questions......Page 47 Problems......Page 48 Internet Exercises......Page 52 Chapter 2 The International Monetary System......Page 53 History of the International Monetary System......Page 54 IMF Classification of Currency Regimes......Page 58 Fixed versus Flexible Exchange Rates......Page 62 A Single Currency for Europe: The Euro......Page 64 Emerging Markets and Regime Choices......Page 67 Globalizing the Chinese Renminbi......Page 69 Summary Points......Page 73 MINI-CASE: Iceland—A Small Country in a Global Crisis......Page 74 Questions......Page 79 Problems......Page 80 Internet Exercises......Page 81 Chapter 3 The Balance of Payments......Page 82 Fundamentals of BOP Accounting......Page 83 The Accounts of the Balance of Payments......Page 85 BOP Impacts on Key Macroeconomic Rates......Page 93 Trade Balances and Exchange Rates......Page 95 Capital Mobility......Page 97 Summary Points......Page 102 MINI-CASE: Global Remittances......Page 103 Questions......Page 107 Problems......Page 108 Internet Exercises......Page 111 Who Owns the Business?......Page 112 The Goal of Management......Page 115 Publicly Traded versus Privately Held: The Global Shift......Page 121 Corporate Governance......Page 124 Summary Points......Page 132 MINI-CASE: Luxury Wars—LVMH vs. Hermès......Page 133 Questions......Page 137 Problems......Page 138 Internet Exercises......Page 141 PART 2 Foreign Exchange Theory and Markets......Page 142 Chapter 5 The Foreign Exchange Market......Page 143 Structure of the Foreign Exchange Market......Page 144 Transactions in the Foreign Exchange Market......Page 148 Size of the Foreign Exchange Market......Page 151 Foreign Exchange Rates and Quotations......Page 154 Summary Points......Page 163 MINI-CASE: The Venezuelan Bolivar Black Market......Page 164 Problems......Page 167 Internet Exercises......Page 170 Chapter 6 International Parity Conditions......Page 172 Prices and Exchange Rates......Page 173 Interest Rates and Exchange Rates......Page 180 Forward Rate as an Unbiased Predictor of the Future Spot Rate......Page 189 Prices, Interest Rates, and Exchange Rates in Equilibrium......Page 190 MINI-CASE: Mrs. Watanabe and the Japanese Yen Carry Trade......Page 192 Questions......Page 195 Problems......Page 196 Internet Exercises......Page 200 Appendix: An Algebraic Primer to International Parity Conditions......Page 202 Chapter 7 Foreign Currency Derivatives: Futures and Options......Page 206 Foreign Currency Futures......Page 207 Currency Options......Page 209 Option Pricing and Valuation......Page 217 Advanced Topic: Currency Option Pricing Sensitivity......Page 218 MINI-CASE: KiKos and the South Korean Won......Page 225 Questions......Page 228 Problems......Page 229 Internet Exercises......Page 231 Appendix: Currency Option Pricing Theory......Page 232 Chapter 8 Interest Rate Risk and Swaps......Page 234 Interest Rate Foundations......Page 235 Interest Rate Risk......Page 242 Interest Rate Futures and FRAs......Page 245 Interest Rate Swaps......Page 247 Cross-Currency Swaps......Page 251 Summary Points......Page 255 MINI-CASE: Argentina and the Vulture Funds......Page 256 Problems......Page 261 Internet Exercises......Page 265 Chapter 9 Foreign Exchange Rate Determination......Page 266 Exchange Rate Determination: The Theoretical Thread......Page 267 Currency Market Intervention......Page 272 Disequilibrium: Exchange Rates in Emerging Markets......Page 278 Forecasting in Practice......Page 283 MINI-CASE: Russian Ruble Roulette......Page 288 Questions......Page 291 Problems......Page 292 Internet Exercises......Page 296 PART 3 Foreign Exchange Exposure......Page 298 Types of Foreign Exchange Exposure......Page 299 Why Hedge?......Page 300 Ganado’s Transaction Exposure......Page 305 Risk Management in Practice......Page 314 Advanced Topics in Hedging......Page 315 MINI-CASE: China Noah Corporation......Page 317 Questions......Page 323 Problems......Page 324 Internet Exercises......Page 329 Appendix: Complex Option Hedges......Page 330 Chapter 11 Translation Exposure......Page 338 Overview of Translation......Page 339 Translation Methods......Page 340 Ganado Corporation’s Translation Exposure......Page 343 Managing Translation Exposure......Page 347 MINI-CASE: McDonald’s, Hoover Hedges, and Cross-Currency Swaps......Page 350 Questions......Page 352 Problems......Page 353 Internet Exercises......Page 355 A Multinational’s Operating Exposure......Page 356 Measuring Operating Exposure: Ganado Germany......Page 361 Strategic Management of Operating Exposure......Page 366 Proactive Management of Operating Exposure......Page 369 MINI-CASE: Toyota’s European Operating Exposure......Page 375 Problems......Page 378 Internet Exercises......Page 381 PART 4 Financing the Global Firm......Page 382 Financial Globalization and Strategy......Page 383 International Portfolio Theory and Diversification......Page 386 The Demand for Foreign Securities: The Role of International Portfolio Investors......Page 392 The Cost of Capital for MNEs Compared to Domestic Firms......Page 397 Summary Points......Page 400 MINI-CASE: Novo Industri A/S (Novo)......Page 401 Questions......Page 404 Problems......Page 405 Internet Exercises......Page 408 Chapter 14 Raising Equity and Debt Globally......Page 409 Designing a Strategy to Source Capital Globally......Page 410 Optimal Financial Structure......Page 411 Optimal Financial Structure and the Multinational......Page 412 Raising Equity Globally......Page 414 Depositary Receipts......Page 418 Private Placement......Page 424 Foreign Equity Listing and Issuance......Page 425 Raising Debt Globally......Page 428 Summary Points......Page 433 MINI-CASE: Petrobrás of Brazil and the Cost of Capital......Page 434 Questions......Page 437 Problems......Page 438 Internet Exercises......Page 441 Appendix: Financial Structure of Foreign Subsidiaries......Page 442 Chapter 15 Multinational Tax Management......Page 446 Tax Principles......Page 447 Multinational Tax Management......Page 454 Tax Havens and International Offshore Financial Centers......Page 460 Google: An Illustrative Case of Profit Repositioning......Page 462 Corporate Inversion......Page 464 Summary Points......Page 465 MINI-CASE: Apple’s Global iTax Strategy......Page 466 Questions......Page 470 Problems......Page 471 Internet Exercises......Page 473 The Trade Relationship......Page 475 Benefits of the System......Page 478 Key Documents......Page 480 Government Programs to Help Finance Exports......Page 487 Trade Financing Alternatives......Page 488 Forfaiting: Medium- and Long-Term Financing......Page 491 Summary Points......Page 493 MINI-CASE: Crosswell International and Brazil......Page 494 Problems......Page 497 Internet Exercises......Page 500 PART 5 Foreign Investments and Investment Analysis......Page 502 Chapter 17 Foreign Direct Investment and Political Risk......Page 503 Sustaining and Transferring Competitive Advantage......Page 504 The OLI Paradigm and Internationalization......Page 506 Deciding Where to Invest......Page 508 Modes of Foreign Investment......Page 509 Illustrative Case: Corporate Competition from the Emerging Markets......Page 513 Predicting Political Risk......Page 515 Country-Specific Risk: Transfer Risk......Page 521 Country-Specific Risk: Cultural and Institutional Risk......Page 524 Global-Specific Risk......Page 527 Summary Points......Page 530 MINI-CASE: Strategic Portfolio Theory, Black Swans, and [Avoiding] Being the Turkey......Page 531 Questions......Page 533 Internet Exercises......Page 534 Chapter 18 Multinational Capital Budgeting and Cross-Border Acquisitions......Page 535 Complexities of Budgeting for a Foreign Project......Page 536 Illustrative Case: Cemex Enters Indonesia......Page 539 Real Option Analysis......Page 552 Project Financing......Page 553 Cross-Border Mergers and Acquisitions......Page 554 MINI-CASE: Elan and Royalty Pharma......Page 560 Questions......Page 564 Problems......Page 565 Internet Exercises......Page 569 Answers to Selected End-of-Chapter Problems......Page 570 B......Page 574 C......Page 575 D......Page 578 F......Page 579 H......Page 581 I......Page 582 M......Page 583 O......Page 584 R......Page 585 S......Page 586 T......Page 587 U......Page 588 Y......Page 589 A......Page 590 B......Page 591 C......Page 592 D......Page 595 E......Page 596 F......Page 598 G......Page 600 I......Page 601 M......Page 604 O......Page 606 P......Page 607 R......Page 609 S......Page 610 T......Page 611 V......Page 613 Z......Page 614 For courses in International Finance. Authoritative, Comprehensive Coverage of Contemporary International FinanceRenowned for its authoritative, comprehensive coverage of contemporary international finance, Multinational Business Finance 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. The Fourteenth Edition, now with MyFinanceLab, attempts to capture the rapid evolution of our global marketplace, taking a closer look at the types of organizations that permeate the widespread arena, competition and opportunities in emerging markets, and how financial leadership can integrate the strategic and financial challenges that global businesses face today. MyFinanceLab® not included. Students, if MyFinanceLab is a recommended/mandatory component of the course, please ask your instructor for the correct ISBN and course ID. MyFinanceLab should only be purchased when required by an instructor. Instructors, contact your Pearson representative for more information.MyFinanceLab is an online homework, tutorial, and assessment product designed to personalize learning and improve results. With a wide range of interactive, engaging, and assignable activities, students are encouraged to actively learn and retain tough course concepts. Please note that the product you are purchasing does not include MyFinanceLab. MyFinanceLab Join over 11 million students benefiting from Pearson MyLabs.This title can be supported by MyfinanceLab, an online homework and tutorial system designed to test and build your understanding. Would you like to use the power of MyfinanceLab to accelerate your learning? You need both an access card and a course ID to access MyfinanceLab. These are the steps you need to take: 1. Make sure that your lecturer is already using the system Ask your lecturer before purchasing a MyLab product as you will need a course ID from them before you can gain access to the system.2. Check whether an access card has been included with the book at a reduced cost If it has, it will be on the inside back cover of the book.3. If you have a course ID but no access code, you can benefit from MyfinanceLab at a reduced price by purchasing a pack containing a copy of the book and an access code for MyfinanceLab (ISBN:9781292097985)4. If your lecturer is using the MyLab and you would like to purchase the product...Go to www.myfinancelab.com to buy access to this interactive study programme. For educator access, contact your Pearson representative. To find out who your Pearson representative is, visit www.pearsoned.co.uk/replocator Authoritative, Comprehensive Coverage of Contemporary International Finance Renowned for its authoritative, comprehensive coverage of contemporary international finance, Multinational Business Finance 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. The Fourteenth Edition attempts to capture the rapid evolution of our global marketplace, taking a closer look at the types of organizations that permeate the widespread arena, competition and opportunities in emerging markets, and how financial leadership can integrate the strategic and financial challenges that global businesses face today