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 to multinational business
4. Examine how international financial management differs from domestic financial
management
5. Discover the steps and stages of the globalization process
◼ Chapter Outline
I. Financial Globalization and Risk
II. The Global Financial Market Place
A. Assets, Institutions, and Linkages
Securities
Institutions
Interbank Linkages
B. The Market for Currencies
Currency Symbols
Exchange Rate Quotations and Terminology
Quotation Conventions
C. Percentage Change in Spot Rates
Foreign Currency Terms
Home Currency Terms
2015 Fall of the Argentine Peso
D. Eurocurrencies and Eurocurrency Interest Rates
Eurocurrencies
Eurocurrency Interest Rates
© 2018 Pearson Education, Inc.
2. Globalization and the Multinational Enterprise (MNE). The term globalization has
become widely used in recent years. How would you define it?
3. Assets, Institutions, and Linkages. Which assets play the most critical role in linking the
major institutions that make up the global financial marketplace?
4. Currencies and Symbols. What technological innovation is changing the symbols we use
in the representation of different country currencies?
5. Eurocurrencies and LIBOR. Why have eurocurrencies and LIBOR remained the
centerpiece of the global financial marketplace for so long?
© 2018 Pearson Education, Inc.
8. International Financial Management. What is different about international financial
© 2018 Pearson Education, Inc.
9. Ganado’s Globalization. After reading the chapter’s description of Ganado’s globalization
process, how would you explain the distinctions between international, multinational, and
10. Ganado, the MNE. At what point in the globalization process did Ganado become a
multinational enterprise (MNE)?
© 2018 Pearson Education, Inc.
11. Role of Market Imperfections. What is the role of market imperfections in the creation of
12. Why Go? Why do firms become multinational?
13. Multinational Versus International. What is the difference between an international firm
and a multinational firm?
