Archives

Chapter 1 Multinational Financial Management: An Overview Lecture Outline Managing the MNC How Business Disciplines Are Used to Manage the MNC Agency Problems Management Structure of an MNC Why Firms Pursue International Business Theory of Comparative Advantage Imperfect Markets Theory […]

Name: Class: Date: chapter 1 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The Sarbanes-Oxley Act (SOX), which was enacted in 2002, required MNCs and other firms to implement an internal […]

Chapter 10 Measuring Exposure to Exchange Rate Fluctuations Lecture Outline Relevance of Exchange Rate Risk Transaction Exposure Estimating “Net” Cash Flows in Each Currency Transaction Exposure of an MNC’s Portfolio Transaction Exposure Based on Vale-at-Risk Economic Exposure Exposure to Foreign […]

Measuring Exposure to Exchange Rate Fluctuations ❖ 13 The demand for those appliances is not affected much by the local economy. Most of the firm’s appliances produced in Poland are typically invoiced in zloty and are purchased by consumers from […]

Name: Class: Date: chapter 10 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. A firm’s transaction exposure in any foreign currency is based solely on the size of its open position […]

Chapter 11 Managing Transaction Exposure Lecture Outline Policies for Hedging Transaction Exposure Hedging Most of the Exposure Selective Hedging Hedging Exposure to Payables Forward or Futures Hedge on Payables Money Market Hedge on Payables Call Option Hedge on Payables Comparison […]

Managing Transaction Exposure ❖ 19 The spot rate of the euro as of today is $1.10. Interest rate parity exists. Indiana Company uses the forward rate as a predictor of the future spot rate. The annual interest rate in the […]

Name: Class: Date: chapter 11 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Lagging refers to the delay of payment by a subsidiary if the currency denominating the payable is expected […]

Chapter 12 Managing Economic Exposure and Translation Exposure Lecture Outline Managing Economic Exposure Assessing Economic Exposure Restructuring to Reduce Economic Exposure Limitations of Restructuring Intended to Reduce Economic Exposure A Case Study on Hedging Economic Exposure Savor Co.’s Assessment of […]

Name: Class: Date: chapter 12 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The translation gain (or loss) is simply a paper gain (or loss). Conversely, the gain (or loss) resulting […]

Chapter 13 Direct Foreign Investment Lecture Outline Motives for Direct Foreign Investment (DFI) Revenue-Related Motives Cost-Related Motives Comparing Benefits of DFI Among Countries Benefits of International Diversification Diversification Analysis of International Projects Host Government Impact on DFI Incentives to Encourage […]

Name: Class: Date: chapter 13 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. In assessing the risk of an individual project, the expected correlation of the new project’s returns with those […]

Multinational Capital Budgeting ❖ 32 14. Before-Tax Earnings of Subsidiary = (7) – (13) in THB 000s 157,400 264,920 389,240 340,318 285,526 224,159 155,428 78,449 (7,768) (104,331) 15. Host Government Tax (25%) in THB 000s 39,350 66,230 97,310 85,080 71,382 […]

Multinational Capital Budgeting ❖ 1 Chapter 14 Multinational Capital Budgeting Lecture Outline Subsidiary versus Parent Perspective Tax Differentials Restrictions on Remitted Earnings Exchange Rate Movements Summary of Factors That Distinguish the Parent Perspective Input for Multinational Capital Budgeting Multinational Capital […]

Multinational Capital Budgeting ❖ 21 13. Net cash flow to subsidiary = (12)+(8) NZ$10,460,000 NZ$13,960,000 NZ$17,880,000 14. NZ$ remitted by sub. (100% of CF) NZ$10,460,000 NZ$13,960,000 NZ$17,880,000 15. Withholding tax imposed on remitted funds (10%) NZ$1,046,000 NZ$1,396,000 NZ$1,788,000 16. NZ$ […]

Name: Class: Date: chapter 14 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The required rate of return used to discount the relevant cash flows from a foreign project may differ […]

Chapter 15 International Corporate Governance and Control Lecture Outline International Corporate Governance Governance by Board Members Governance by Institutional Investors Governance by Shareholder Activists International Corporate Control Motives for International Acquisitions International Acquisition Process Barriers to International Corporate Control Model […]

Name: Class: Date: chapter 15 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. If partial financing is provided by the foreign subsidiary, including foreign interest payments in the cash flow analysis […]

Country Risk Analysis ❖ 12 22. Integrating Country Risk and Capital Budgeting. Tovar Co. is a U.S. firm that has been asked to provide consulting services to help Grecia Company (in Greece) improve its performance. Tovar would need to spend […]

Chapter 16 Country Risk Analysis Lecture Outline Country Risk Characteristics Political Risk Characteristics Financial Risk Characterisitcs Measuring Country Risk Techniques to Assess Country Risk Deriving a Country Risk Rating Incorporating Country Risk in Capital Budgeting Adjustment of the Discount Rate […]

Name: Class: Date: chapter 16 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The most reliable way for the capital budgeting analysis to capture country risk is to increase the discount […]

Chapter 17 Multinational Cost of Capital and Capital Structure Lecture Outline Components of Capital Retained Earnings Sources of Debt External Sources of Equity The MNC‘s Capital Structure Decision Influence of Corporate Characteristics Influence of Host Country Characteristics Response to Changing […]

Name: Class: Date: chapter 17 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Since the cost of funds can vary among markets, an MNC’s access to the international capital markets may […]

Chapter 18 Long-Term Debt Financing Lecture Outline Debt Denomination Decisions of Foreign Subsidiaries Foreign Subsidiary Borrows Its Local Currency Foreign Subsidiary Borrows Dollars Debt Denomination Analysis: A Case Study Analyzing Debt Denomination Alternatives How Currency Swaps and Parallel Loans Facilitate […]

Name: Class: Date: chapter 18 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. A U.S.-based MNC whose foreign subsidiary generates large earnings may be able to offset exposure to exchange rate […]

Chapter 19 Financing International Trade Lecture Outline Payment Methods for International Trade Prepayment Letters of Credit Drafts Consignment Open Account Impact of the Credit Crisis on Payment Methods Trade Finance Methods Accounts Receivable Financing Factoring Letters of Credit Banker’s Acceptances […]

Name: Class: Date: chapter 19 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. In an open account transaction, the exporter ships the products to the importer but retains title to the […]

Chapter 2 International Flow of Funds Lecture Outline Balance of Payments Current Account Financial Account Capital Account Growth in International Trade Events That Increased Trade Volume Impact of Outsourcing on Trade Trade Volume Among Countries Trend in U.S. Balance of […]

Name: Class: Date: chapter 2 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The value of financial assets transferred across country borders by people who move to a different country is […]

Chapter 20 Short-Term Financing Lecture Outline Sources of Foreign Financing Internal Short-term Financing External Short-term Financing Financing with a Foreign Currency Motivation for Financing with a Foreign Currency Potential Cost Savings from Financing with a Foreign Currency Risk of Financing […]

Name: Class: Date: chapter 20 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. To avoid exchange rate risk when borrowing a foreign currency, an MNC could hedge its position by using […]

International Cash Management ❖ 16 f. If any political situation causes friction between Mexico and the U.S., the demand for the service offered by your business would possibly decline. Chapter 2 Your business provides DVDs for free to customers who […]

Chapter 21 International Cash Management Lecture Outline Multinational Working Capital Management Subsidiary Expenses Subsidiary Revenue Subsidiary Dividend Payments Subsidiary Liquidity Management Centralized Cash Management Accommodating Cash Shortages Optimizing Cash Flows Accelerating Cash Inflows Minimizing Currency Conversion Costs Managing Blocked Funds […]

Name: Class: Date: chapter 21 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Preauthorized payment is an arrangement that allows a corporation to charge a customer’s bank account up to some […]

Chapter 3 International Financial Markets Lecture Outline Foreign Exchange Market History of Foreign Exchange Foreign Exchange Transactions Foreign Exchange Quotations Derivative Contracts in the Foreign Exchange Market International Money Market Dollar-denominated Bank Accounts in Europe and Asia Money Market Interest […]

Name: Class: Date: chapter 3 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. A cross exchange rate expresses the amount of one foreign currency per unit of another foreign currency. a. […]

Chapter 4 Exchange Rate Determination Lecture Outline Measuring Exchange Rate Movements Exchange Rate Equilibrium Demand for a Currency Supply of a Currency for Sale Equilibrium Exchange Rate Change in the Equilibrium Exchange Rate Factors that Influence Exchange Rates Relative Inflation […]

Name: Class: Date: chapter 4 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Expectations of a currency crisis may trigger actions by investors and speculators that make the crisis worse. a. […]

Currency Derivatives ❖ 16 Net profit per unit b. The plotted points should create an upside-down U shape that cuts through the horizontal (break- even) axis at $1.47 and $1.62. The peak of the upside-down U shape occurs at from […]

Name: Class: Date: chapter 5 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Currency options are only traded on exchanges. That is, there is no over-the-counter market for options. a. True […]

Chapter 5 Currency Derivatives Lecture Outline Forward Market How MNCs Use Forward Contracts Bank Quotations on Forward Rates Premium or Discount on Forward Rate Movements in the Forward Rate Over Time Offsetting a Forward Contract Using Forward Contracts for Swap […]

Name: Class: Date: chapter 5 Copyright Cengage Learning. Powered by Cognero. Page 16 b. out of the money. c. at the money. d. at a discount. 120. Which of the following is the most unlikely strategy for a U.S. firm […]

Chapter 6 Government Influence on Exchange Rates Lecture Outline Exchange Rate Systems Fixed Exchange Rate System Freely Floating Exchange Rate System Managed Float Exchange Rate System Pegged Exchange Rate System Dollarization Black Market for Currencies A Single European Currency Impact […]

Name: Class: Date: chapter 6 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. A currency peg is insulated from economic or political conditions, such that the exchange rate in the market […]

Name: Class: Date: chapter 6 Copyright Cengage Learning. Powered by Cognero. Page 12 a. Slovenia. b. the United Kingdom. c. Germany. d. France. 92. Which of the following is not true regarding Thailand before the Asian crisis? a. Thailand was […]

International Arbitrage and Interest Rate Parity ❖ 13 interest arbitrage, whether the investor would buy or sell euros forward, and how that affects the forward rate of the euro. ANSWER: U.S. investors will engage in covered interest arbitrage, which involves […]

Chapter 7 International Arbitrage and Interest Rate Parity Lecture Outline Locattional Arbitrage Gains from Locational Arbitrage Realignment Due to Locational Arbitrage Triangular Arbitrage Gains from Triangular Arbitrage Realignment due to Triangular Arbitrage Covered Interest Arbitrage Covered Interest Arbitrage Process Realignment […]

Name: Class: Date: chapter 7 Copyright Cengage Learning. Powered by Cognero. Page 12 Quoted Bid Price Quoted Ask Price Value of a British pound (£) in $ $1.61 $1.62 Value of a New Zealand dollar (NZ$) in $ $.55 $.56 […]

Name: Class: Date: chapter 7 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Assume locational arbitrage is possible and involves two different banks. The realignment that would occur due to market […]

Relationships Among Inflation, Interest Rates, and Exchange Rates ❖ 13 Ed is based in the U.S. and he attempts to speculate by purchasing Mexican pesos today, investing the pesos in a risk-free asset for a year, and then converting the […]

Chapter 8 Relationships Among Inflation, Interest Rates, and Exchange Rates Lecture Outline Purchasing Power Parity (PPP) Interpretations of PPP Derivation of PPP Using PPP to Estimate Exchange Rate Effects Graphic Analysis of PPP Testing the PPP Theory Why Deviations from […]

Name: Class: Date: chapter 8 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. The international Fisher effect (IFE) suggests that the currencies with relatively high interest rates will appreciate because those […]

Chapter 9 Forecasting Exchange Rates Lecture Outline Why Firms Forecast Exchange Rates Forecasting Techniques Technical Forecasting Fundamental Forecasting Market-Based Forecasting Mixed Forecasting Assessment of Forecast Performance Measurement of Forecast Error Forecast Errors Among Time Horizons Forecast Errors Among Currencies Comparing […]

Name: Class: Date: chapter 9 Copyright Cengage Learning. Powered by Cognero. Page 1 Indicate whether the statement is true or false. 1. Exchange rates one year in advance are typically forecasted with almost perfect accuracy for the major currencies, but […]