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978-0134472133 Chapter 01
Chapter 1 Multinational Financial Management: Opportunities and Challenges ◼ Learning Objectives 1. Understand how financial globalization alters the risks of multinational business 2. Explore the structures of the global financial marketplace 3. Consider how the theory of comparative advantage applies […]
978-0134472133 Chapter 02
Chapter 2 The International Monetary System ◼ Learning Objectives 1. Explore how the international monetary system has evolved from the days of the gold standard to today’s eclectic currency arrangement 2. Examine how the choice of fixed versus flexible exchange […]
978-0134472133 Chapter 03
Chapter 3 The Balance of Payments ◼ Learning Objectives 1. Explore the fundamentals of balance of payments accounting, how nations measure their own levels of international economic activity and cross-border payments 2. Examine the two fundamental accounts of balance of […]
978-0134472133 Chapter 04
Chapter 4 Financial Goals and Corporate Governance ◼ Learning Objectives 1. Examine the different ownership structures for businesses globally, and how this impacts the separation between ownership and management—the agency problem 2. Explore how financial management differs between the publicly […]
978-0134472133 Chapter 05
Chapter 5 The Foreign Exchange Market ◼ Learning Objectives 1. Explore the multitude of functions of the foreign exchange market 2. Detail how the structure of the global foreign exchange market has evolved 3. Describe the financial and operational transactions […]
978-0134472133 Chapter 06
Chapter 6 International Parity Conditions ◼ Learning Objectives 1. Examine how price levels and price level changes (inflation) in countries determine the exchange rate at which their currencies are traded 2. Show how interest rates reflect inflationary forces within each […]
978-0134472133 Chapter 07
Chapter 7 Foreign Currency Derivatives: Futures and Options ◼ Learning Objectives 1. Explain how foreign currency futures are quoted, valued, and used for speculation purposes 2. Explore the buying and writing of foreign currency options in terms of risk and […]
978-0134472133 Chapter 08
Chapter 8 Interest Rate Risk and Swaps ◼ Learning Objectives 1. Explain interest rate fundamentals, including basic floating rates of interest and fixed rates of interest 2. Define corporate interest rate risk and examine a variety of methods for its […]
978-0134472133 Chapter 09
Chapter 9 Foreign Exchange Rate Determination and Intervention ◼ Learning Objectives 1. Explore how the three major approaches to exchange rate determination 2. Detail how and why direct and indirect foreign exchange market intervention is conducted by central banks 3. […]
978-0134472133 Chapter 10
Chapter 10 Transaction Exposure ◼ Learning Objectives 1. Examine the three major foreign exchange exposures experienced by firms 2. Explore why firms hedge foreign exchange exposure 3. Detail how transaction exposure is defined and measured 4. Describe how one company […]
978-0134472133 Chapter 11
Chapter 11 Translation Exposure ◼ Learning Objectives 1. Describe how the consolidation of a multinational firm’s foreign entities creates translation exposure 2. Examine the two major methods of translation, including their theoretical and practical differences 3. Understand how translation can […]
978-0134472133 Chapter 12
Chapter 12 Operating Exposure ◼ Learning Objectives 1. Examine how operating exposure arises in a multinational firm through unexpected changes in corporate cash flows 2. Analyze how to measure operating exposure’s impact on a business unit through the sequence of […]
978-0134472133 Chapter 13
Chapter 13 Global Cost and Availability of Capital ◼ Learning Objectives 1. Explore the evolution of how corporate strategy and financial globalization may align 2. Examine how international portfolio theory and diversification alter the global cost of capital 3. Describe […]
978-0134472133 Chapter 14
Chapter 14 Funding the Multinational Firm ◼ Learning Objectives 1. Design a strategy to source capital equity globally 2. Examine the differences in the optimal financial structure of the multinational firm compared to that of the domestic firm 3. Describe […]
978-0134472133 Chapter 15
Chapter 15 Multinational Tax Management ◼ Learning Objectives 1. Explore the tax principals and practice employed by governments around the globe 2. Examine how multinational firms manage their global tax liabilities 3. Analyze how Google has creatively repositioned its global […]
978-0134472133 Chapter 16
Chapter 16 International Trade Finance ◼ Learning Objectives 1. Discover the key elements of an import or export business transaction that define the trade relationship 2. Explore how the three key documents in import/export combine to finance both the transaction […]
978-0134472133 Chapter 17
Chapter 17 Foreign Direct Investment and Political Risk ◼ Learning Objectives 1. Demonstrate how key competitive advantages support a strategy to sustain direct foreign investment 2. Explore the decision process of the multinational in its choices of markets and structural […]
978-0134472133 Chapter 18
Chapter 18 Multinational Capital Budgeting and Cross-Border Acquisitions ◼ Learning Objectives 1. Explore the complexities of budgeting for a foreign project 2. Illustrate multinational capital budgeting with the case of Cemex entering Indonesia 3. Describe the use of real option […]
978-0134472133 Excel Chapter 01 Part 1
Assumptions Value US dollar funds for expenses in Rio de Janeiro $15,000.00 Average exchange rate for the month (BRL = 1.00 USD): January BRL 4.0553 February BRL 3.9651 March BRL 3.6984 April BRL 3.5639 May BRL 3.5416 June BRL 3.4236 […]
978-0134472133 Excel Chapter 01 Part 2
Vitro’s U.S. Sales Percent Annual Avg Rate Vitro’s U.S. Sales Percent Year (millions of USD) Change MXN = 1 USD (millions of MXN) Change 2011 USD 820 MXN 12.80 MXN 10,496 2012 USD 842 2.7% MXN 13.30 MXN 11,199 6.7% […]
978-0134472133 Excel Chapter 02
Assumptions Values Buy a US dollar in Bologna for (€/$) 0.9000 Which is equivalent, the reciprocal ($/€) $1.1111 Buy a euro in Chicago for ($/€) $1.1000 Which is equivalent, the reciprocal (€/$) 0.9091 There is an obvious minor difference between […]
978-0134472133 Excel Chapter 03
Australia’s Current Account Australia’s Current Account Use the following data from the International Monetary Fund to answer questions 3.1 through 3.4. Assumptions (million US$) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3.1 What is Australia’s balance […]
978-0134472133 Excel Chapter 04
Assumptions Value Share price, P1 12.00$ Share price, P2 15.00$ Dividend paid, D2 –$ a. If the company paid no dividend (plugging zero in for the dividend): Return = ( D2 / P1 ) + ( P2 – P1 ) […]
978-0134472133 Excel Chapter 05
Assumptions Values Singapore dollars to be exchanged SGD 1,000.00 Spot rate (SGD = 1.00 USD) 1.3400 Spot rate (USD = 1.00 AUD) 0.7640 a. What is the SGD per AUD cross rate? 1.0238 SGD per AUD = SGD/USD x USD/SGD […]
978-0134472133 Excel Chapter 06 Part 1
a. How many dollars might Theresa expect to need one year hence to pay for her 30-day vacation? b. By what percent has the dollar cost gone up? Why? Assumptions Value Charge for suite plus meals in Malaysian ringgit (RM) […]
978-0134472133 Excel Chapter 06 Part 2
Value SFr. Equivalent Arbitrage funds available $1,000,000 SFr. 1,339,200 Spot exchange rate (SFr./$) 1.3392 3-month forward rate (SFr./$) 1.3286 U.S. dollar 3-month interest rate 4.750% Swiss franc3-month interest rate 3.625% Difference in interest rates ( i SFr. – i $) […]
978-0134472133 Excel Chapter 07
British Pound Futures, US$/pound (CME) Contract = 62,500 pounds Open Maturity Open High Low Settle Change High Interest March 1.4246 1.4268 1.4214 1.4228 0.0032 1.4700 25,605 June 1.4164 1.4188 1.4146 1.4162 0.0030 1.4550 809 a. If Tony buys 5 June […]
978-0134472133 Excel Chapter 08
Assumptions 3-Month T-Bill 6-Month T-Bill Treasury bill, face value $10,000.00 $10,000.00 Price at sale $9,993.93 $9,976.74 a. Discount on sale $6.07 $23.26 b. Simple yield 0.0607% 0.2331% c. Annualized yield 0.2432% 0.4668% The interest yields on U.S. Treasury securities in […]
978-0134472133 Excel Chapter 09
Assumptions Rate Values Initial spot rate, 1999 (Sucre/$) S1 5,000 Ending spot rate, 1999 (Sucre/$) S2 25,000 Calculation of percentage change: Percentage change in the sucre versus the dollar -80.00% Percent change = ( S1 – S2 ) ÷ ( […]
978-0134472133 Excel Chapter 10 Part 1
Spot rate, ¥/$ ¥111.40/$ 30-day forward rate, ¥/$ ¥111.00/$ 90-day forward rate, ¥/$ ¥110.40/$ 180-day forward rate, ¥/$ ¥109.20/$ Numata’s WACC 8.850% BioTron Medical’s WACC 9.200% Assumptions Values BioTron’s 30-day account receivable, Japanese yen 12,500,000 Spot rate, ¥/$ 111.40 30-day […]
978-0134472133 Excel Chapter 10 Part 2
Current spot rate ($/€) $1.4158 Credit Suisse 90-day forward rate ($/€) $1.4172 Barclays 90-day forward rate ($/€) $1.4195 Mattel Toys WACC ($) 9.600% 90-day eurodollar interest rate 4.000% 90-day euro interest rate 3.885% 90-day eurodollar borrowing rate 5.000% 90-day euro […]
978-0134472133 Excel Chapter 11
Translated Translated Euros Exchange Rate Accounts Exchange Rate Accounts Assets Statement (US$/euro) US dollars (US$/euro) US dollars Cash 1,600,000 1.2000 1,920,000$ 0.9000 1,440,000$ Accounts receivable 3,200,000 1.2000 3,840,000 0.9000 2,880,000 Inventory 2,400,000 1.2000 2,880,000 0.9000 2,160,000 Net plant & equipment […]
978-0134472133 Excel Chapter 12
a. How much should Mauna Loa borrow in yen? Mauna Loa receives cash collections of one hundred million yen per month. This is the source of repayment of any balance sheet hedge. If Mauna Loa wants to be covered for […]
978-0134472133 Excel Chapter 13
a. What is Electrolux’s cost of debt, after-tax, in SEK? b. What is Electrolux’s cost of equity in SEK? c. What is the Electrolux’s market capitalization? d. What is Electrolux’s total value of equity outstanding? e. What proportion of Electrolux’s […]
978-0134472133 Excel Chapter 14
a. What is the dollar cost of this debt if the pound depreciates from $2.0260/£ to $1.9460/£ over the year? b. What is the dollar cost of this debt if the pound appreciates from $2.0260/£ to $2.1640/£ over the year? […]
978-0134472133 Excel Chapter 15
Baseline Values Case 1 Case 2 a Foreign corporate income tax rate 28% 45% b U.S. corporate income tax rate 35% 35% c Foreign dividend witholding tax rate 15% 0% d U.S. ownership in foreign firm 100% 100% e Dividend […]
978-0134472133 Excel Chapter 16
Assumptions Values Face amount of sale € 700,000 Maturity, days 90 Trade acceptance fee, per annum 1.000% Discount rate on sale of acceptance, per annum 4.000% All-in-Cost of Trade Acceptance Face amount of the receivable € 700,000 Less trade acceptance […]
978-0134472133 Excel Chapter 18
Assumptions Values Expected free cash flow in 2003 13,000,000 Expected growth rate in free cash flow 8.00% Assumed sale multiple of FCF in year 3 10 Spot exchange rate, Lempiras/$ (2002) 14.80 US dollar inflation rate 2.0% Honduran lempira inflation […]
978-0134472133 Test Bank Chapter 1
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 1 Multinational Financial Management: Opportunities and Challenges 1.1 Financial Globalization and Risk 1) Financial globalization has not resulted in: A) continuing imbalances of balance of payments. B) an increase in […]
978-0134472133 Test Bank Chapter 10
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 10 Transaction Exposure 10.1 Types of Foreign Exchange Exposure 1) ________ exposure deals with cash flows that result from existing contractual obligations. A) Operating B) Transaction C) Translation D) Economic […]
978-0134472133 Test Bank Chapter 11
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 11 Translation Exposure 11.1 Overview of Translation 1) Translation exposure may also be called ________ exposure. A) transaction B) operating C) accounting D) currency Answer: C Diff: 1 L.O.: 11.1 Overview […]
978-0134472133 Test Bank Chapter 12
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 12 Operating Exposure 12.1 A Multinationalʹs Operating Exposure 1) Another name for operating exposure is ________ exposure. A) economic B) competitive C) strategic D) all of the above Answer: D Diff: […]
978-0134472133 Test Bank Chapter 13 Part 1
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 13 The Global Cost and Availability of Capital 13.1 Financial Globalization and Strategy 1) If a firm lies within a country with ________ or ________ domestic capital markets, it can achieve […]
978-0134472133 Test Bank Chapter 13 Part 2
14) Use of the International CAPM (ICAPM) assures that the WACC will be lower than if a purely domestic market portfolio had been used in the estimation of the cost of equity. Answer: FALSE Diff: 2 L.O.: 13.2 International Portfolio […]
978-0134472133 Test Bank Chapter 14 Part 1
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 14 Raising Equity and Debt Globally 14.1 Designing a Strategy to Source Capital Globally 1) The choice of when and how to source capital globally is usually aided early on by […]
978-0134472133 Test Bank Chapter 14 Part 2
5) ADRs that are created at the request of a foreign firm wanting its shares traded in the United States are: A) facilitated. B) unfacilitated. C) sponsored. D) unsponsored. Answer: C Diff: 2 L.O.: 14.4 Depositary Receipts Skill: Recognition AACSB: […]
978-0134472133 Test Bank Chapter 15
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 15 Multinational Tax Management 15.1 Tax Principles 1) The issue of ethics in the reporting of income and the payment of taxes is a considerable one. The authors state that most […]
978-0134472133 Test Bank Chapter 16
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 16 International Trade Finance 16.1 The Trade Relationship 1) The exporter-importer relationship to a corporation of a foreign importer that has not previously conducted business with the firm would be an: […]
978-0134472133 Test Bank Chapter 17
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 17 Foreign Direct Investment and Political Risk 17.1 The Foreign Direct Investment Decision 1) An example of economies of scale in financing include: A) being able to access the Euroequity, Eurobond, […]
978-0134472133 Test Bank Chapter 18
Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 18 Multinational Capital Budgeting and Cross-Border Acquisitions 18.1 Complexities of Budgeting for a Foreign Project 1) The traditional financial analysis applied to foreign or domestic projects, to determine the project’s value […]
978-0134472133 Test Bank Chapter 2
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 2 The International Monetary System 2.1 History of the International Monetary System 1) Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold […]
978-0134472133 Test Bank Chapter 3 Part 1
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 3 The Balance of Payments 3.1 Fundamentals of BOP Accounting 1) Which of the following is NOT a major subaccount of the Balance of Payments? A) the financial account B) […]
978-0134472133 Test Bank Chapter 3 Part 2
13 27) The biggest problem that China faces in maintaining a stable value for their currency, the yuan, is their lack of foreign exchange reserves. Answer: FALSE Diff: 1 L.O.: 3.2 The Accounts of the Balance of Payments Skill: Recognition […]
978-0134472133 Test Bank Chapter 4
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 4 Financial Goals and Corporate Governance 4.1 Who Owns the Business? 1) Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms. Which of the […]
978-0134472133 Test Bank Chapter 5
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 5 The Foreign Exchange Market 5.1 Functions of the Foreign Exchange Market 1) Which of the following is NOT true regarding the market for foreign exchange? A) The market provides […]
978-0134472133 Test Bank Chapter 6
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 6 International Parity Conditions 6.1 Prices and Exchange Rates 1) If an identical product can be sold in two different markets, and no restrictions exist on the sale or transportation […]
978-0134472133 Test Bank Chapter 7 Part 1
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 7 Foreign Currency Derivatives: Futures and Options 7.1 Foreign Currency Futures 1) Financial derivatives are powerful tools that can be used by management for purposes of: A) speculation. B) hedging. […]
978-0134472133 Test Bank Chapter 7 Part 2
13 23) The buyer (long) of a put option: A) has a maximum loss equal to the premium paid. B) has a gain equal to but opposite in sign to the writer of the option. C) has maximum gain potential […]
978-0134472133 Test Bank Chapter 8
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 8 Interest Risk and Swaps 8.1 Interest Rate Derivatives 1) ________ is the possibility that the borrower’s creditworthiness is reclassified by the lender at the time of renewing credit. ________ […]
978-0134472133 Test Bank Chapter 9
1 Fundamentals of Multinational Finance, 6e (Moffett et al.) Chapter 9 Foreign Exchange Rate Determination 9.1 Exchange Rate Determination: The Theoretical Thread 1) An important thing to remember about foreign exchange rate determination is that parity conditions, asset approach, and […]