Ppt Financial Derivatives Essay Example for Free

Ppt Financial Derivatives EssayGLOBAL EDITIONMULTINATIONAL strain FINANCE12TH EDITIONDavid K.Arthur I.Michael H.EITEMANUniversity of California, Los AngelesSTONEHILLOregon State University and the University of Hawaii at ManoaMOFFETTThunderbird School of Global focussingBoston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai capital of the United Kingdom Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei TokyoContents offend I G l o b a l Financial E n v i r o n m e n t 1 Chapter 1 Globalization and the MyBtiBnatiomaO Enterprise 2 Globalization and Creating Value in the Multinational Enterprise 3 The theory of Comparative Advantage 4 What Is Different about Global Financial charge? 7 market Imperfections A Rationale for the Existence of the Multinational Firm 8 The Globalization Process 9 abridgment Points 13 MINI-CASE Porsche Changes Tack 13 Questions Problems mesh Exercises 19Chapter 2 Financial Goals and Corporate brass Who Owns the argument? 22 What Is the Goal of Management? 24 Corporate Governance 28 unofficial Points 40MINI-CASE Governance Failure at Enron 41 Questions n Problems n meshwork Exercises 4522Chapter 3 IDie planetary Monetary System History of the external Monetary System 50 Contemporary notes Regimes 56 Emerging foodstuffs and Regime Choices 62 The Birth of a europiuman capital The Euro 64 Exchange mark Regimes What Lies Ahead? 69 Summary Points 70 MINI-CASE The Revaluation of the Chinese Yuan 71 Questions Problems Internet Exercises 7450Chapter 4 International Business consummations The BaBance of Payments Typical Balance of Payments Transactions China 79 Fundamentals of Balance of Payments Accounting 80 The Accounts of the Balance of Payments 81 The large(p) and Financial Account 83 The Balance of Payments in Total 89 The Balance of Payments Interaction with Key Macroeconomic Variables 91 hand Balances and Exchange regulates 94 swell Mobility 97 Summary Points 99 MINI-CASE Turkeys Kriz (A) Deteriorating Balance of Payments 100 Questions Problems D Internet Exercises 10278Chapter 5Current Multinational Financial Challenges The Credit Crisis of 2007-2009 106 The Seeds of Crisis Subprime Debt 106 The Transmission Mechanism Securitization and Derivatives of Securitized Debt 109 The side effect The Crisis of 2007 and 2008 120xivContentsxvThe Remedy Prescriptions for an Infected Global Financial Organism 129 Summary Points 131 MINI-CASE Letting Go of Lehman Brothers 132 Questions D Problems Internet Exercises 134PART II alien Exchange Theory and Markets Chapter The external Exchange Market 138137Geographical Extent of the Foreign Exchange Market 138 Functions of the Foreign Exchange Market 139 Market Participants 140 Transactions in the Interbank Market 142 Foreign Exchange grade and Quotations 148 Summary Points 156 MINI-CASE The Venezuelan Bolivar Black Market 157 Questions D Problems a Inte rnet Exercises 160Chapter? InternationaB Parity Conditions 164 Prices and Exchange Rates 164 matter to Rates and Exchange Rates 172 Forward Rate as an Unbiased Predictor of the Future severalize Rate 181 Prices, Interest Rates, and Exchange Rates in Equilibrium 183 Summary Points 184 MINI-CASE Currency Pass-Through at Porsche 185 Questions Problems Internet Exercises 186 Appendix An Algebraic Primer to International Parity Conditions 193Chapter 8 Foreign Currency ierivatoves Foreign Currency Futures 198 Currency plectrons 201 Foreign Currency Speculation 203 pick determine and Valuation 210 Currency Option Pricing Sensitivity 213 Prudence in approach pattern 221197Summary Points 222 MINI-CASE Warren Buffetts Love-Hate Relationship with Derivatives 223 Questions Problems Internet Exercises 226 Appendix Currency Option Pricing Theory 230Chapter 9 Interest Rate and Currency Swaps 234 Defining Interest Rate attempt 234 Management of Interest Rate Risk 237 Trident jackpot Swa pping to Fixed Rates 245 Currency Swaps 246 Trident Corporation Swapping Floating Dollars into Fixed Rate Swiss Francs 247 Counterparty Risk 249 Summary Points 250 MINI-CASE McDonalds Corporations British Pound impression 251 Questions n Problems Internet Exercises 252Chapter 10 Foreign Exchange Rate finish and Forecasting Exchange Rate Determination The Theoretical Thread 257 The Asset Market Approach to Forecasting 2602S6XVIContentsDisequilibrium Exchange Rates in Emerging Markets 262 Illustrative Case The Asian Crisis 262 Illustrative Case The Argentine Crisis of 2002 265 Forecasting in Practice 270 Summary Points 274 MINI-CASE JPMorgan Chases Forecasting Accuracy 274 Questions Problems Internet Exercises 276PART IIIForeign Exchange Exposure281Chapter 11 Transaction Exposure 282 Types of Foreign Exchange Exposure 282 Why Hedge? 284 Measurement of Transaction Exposure 287 Tridents Transaction Exposure 289 Management of an Account Payable 297 Risk Management in Practice 299 Su mmary Points 300 MINI-CASE Xian-Janssen Pharmaceutical (China) and the Euro 301 Questions D Problems D Internet Exercises 303 Appendix Complex Options 312Chapter 12 operating(a) Exposure 320 Attributes of Operating Exposure 320 Illustrating Operating Exposure Trident 322 Strategic Management of Operating Exposure 326 proactive Management of Operating Exposure 329 Contractual Approaches Hedging the Unhedgeable 336 Summary Points 337 MINI-CASE Toyotas European Operating Exposure 338 Questions a Problems a Internet Exercises 340Chapter 13 Translation Exposure Overview of Translation 344 Translation Methods 347 Translation Example Trident Europe 350 Comparing Translation Exposure with Operating Exposure 355 Managing Translation Exposure 355 Summary Points 359 MINI-CASE LaJolla Engineering run 360 Questions H Problems Internet Exercises 362PART IVFinancing the Global Firm365Chapter 14 The Global appeal and Availability of Capita 36 Weighted Average Cost of Capital 368 The Demand for F oreign Securities The Role of International Portfolio Investors 373 The Cost of Capital for MNEs Compared to home(prenominal) Firms 379 Solving a Riddle Is the Weighted Average Cost of Capital for MNEs Really Higher Than for Their Domestic Counterparts? 380 Summary Points 382 MINI-CASE Novo Industri A/S (Novo) 383 Questions D Problems Internet Exercises 387Contents xviiChapter 15 Sourcang Equity Globally 391 Designing a Strategy to Source Equity Globally 392 Foreign Equity Listing and Issuance 395 Effect of Cross-Listing and Equity Issuance on Share Price 397 Barriers to Cross-Listing and sellingEquity Abroad 399 Alternative Instruments to Source Equity in Global Markets 400 Summary Points 404 MINI-CASE Petrobras of brazil-nut tree and the Cost of Capital 404 Questions Problems a Internet Exercises 408Optimal Financial social structure 410 Optimal Financial Structure and the MNE 411 Financial Structure of Foreign Subsidiaries 414 International Debt Markets 418 Summary Points 4 24 MINI-CASE Tirstrup BioMechanics (Denmark) Raising Dollar Debt 424 Questions Problems o Internet Exercises 426PART VForeign Investment Decisions Chapter 17431International Portfolio Theory and Diversificationi. 432International Diversification and Risk 432 Internationalizing the Domestic Portfolio 435 National Markets and Asset Performance 441 Summary Points 446 MINI-CASE Is Modern Portfolio Theory Outdated? 447 Questions a Problems Internet Exercises 448Chapter 18 Foreign Direct Investment Theory and Political Risk Sustaining and Transferring Competitive Advantage 452 The OLI Paradigm and internalization 455 Deciding Where to Invest 457 How to Invest Abroad Modes of Foreign Involvement 458 Foreign Direct Investment Originating in Developing Countries 462 Foreign Direct Investment and Political Risk 464 Assessing Political Risk 465 Firm-Specific Risks 466 Country-Specific Risks Transfer Risk 469 Country-Specific Risks Cultural and Institutional Risks 472 Global-Specific Risk s 476 Summary Points 479 MINI-CASE Mattels Chinese Sourcing Crisis of 2007 480 Questions a Problems a Internet Exercises 483452Chapter 19 Multinational Capital Budgeting 487 Complexities of Budgeting fora Foreign Project 488 Project versus Parent Valuation 489 Illustrative Case Cemex Enters Indonesia 490 Real Option Analysis 502 Project Financing 503 Summary Points 505 MINI-CASE Tridents Chinese Market EntryAn Application of Real Option Analysis 505 Questions n Problems Internet Exercises 507xviiiContentsPART VIManaging Multinational Operations Chapter 20 Multinational measure Management513 514 taxation Principles 514 Transfer Pricing 522 Tax Management at Trident 524 Tax Haven Subsidiaries and International Offshore Financial Centers 525 Summary Points 527 MINI-CASE Stanley Works and Corporate Inversion 527 Questions Problems n Internet Exercises 531Chapter 21 Working Capital Management 535 Trident Brazils Operating Cycle 535 Tridents Repositioning Decisions 537 Constraints on R epositioning finances 539 Conduits for Moving Funds by Unbundling Them 539 International Dividend Remittances 540 Net Working Capital 542 International Cash Management 548 Financing Working Capital 552 Summary Points 556 MINI-CASE Honeywell and Pakistan International Airways 557 Questions Problems n Internet Exercises 559Chapter 22 Global vegetable oil Development Fiscal Regimes and Funding Financing Petroleum Development 566 Fiscal Regimes 566 Development Agreements 566 Concessions 569 Royalty/Tax Systems 570 Production Sharing Agreements 572 Service Agreements 574 Added Contractual Features 576 Top-Line Risks 578 Petroleum Prices 579 A Hypothetical Sub-Saharan prostate specific antigen 581 PSA Evolution 584 Funding Petroleum Development 587 Summary Points 590 MINI-CASE Petroleum Development and the Curse of Oil 590 Questions Problems o InternetExercises 593565Answers to Selected Problems Glossary Index 598 610595Credits 627