International financial management

Table of Content

Part 1 The Global Financial Management Environment

1 Introduction to International Financial Management

1.1 The Rise of the International Company

1.2 The Internationalization of Business and Finance

1.3 International Financial Management: Theory and Practice

1.4 Outline of the Text

Appendix 1A The Origins and Consequences of International Trade



2 Exchange Rate Determination

2.1 Setting the Equilibrium Spot Exchange Rate

2.2 Expectations and the Asset Market Model of Exchange Rates

2.3 The Fundamentals of Central Bank Intervention

2.4 The Equilibrium Approach to Exchange Rates

2.5 Summary and Conclusions



3 The International Monetary System

3.1 Alternative Exchange Rate Systems

3.2 A Brief History of the International Monetary System

3.3 The European Monetary System and Monetary Union

3.4 Emerging Market Currency Crises

3.5 Summary and Conclusions



4 Currencies: Expectations, Parities and Forecasting

4.1 Arbitrage and the Law of One Price

4.2 Purchasing Power Parity

4.3 The Fisher Effect

4.4 The International Fisher Effect

4.5 Interest Rate Parity Theory

4.6 The Relationship Between the Forward Rate and the Future Spot Rate

4.7 Currency Forecasting

4.8 Summary and Conclusions



5 The International Monetary System and The Balance of Payments

5.1 Balance-of-Payments Categories

5.2 The International Flow of Goods, Services and Capital

5.3 Coping with the Current-Account Deficit

5.4 Summary and Conclusions



6 Country Risk

6.1 Measuring Political Risk

6.2 Economic and Political Factors Underlying Country Risk

6.3 Country Risk Analysis in International Lending

6.4 Summary and Conclusions



Part 2 Currency and Derivatives Markets

7 Currency Markets

7.1 Organization of the Foreign Exchange Market

7.2 The Spot Market

7.3 The Forward Market

7.4 Summary and Conclusions



8 Currency Derivatives

8.1 Futures Contracts

8.2 Currency Options

8.3 Reading Currency Futures and Options Prices

8.4 Summary and Conclusions

Appendix 8A Option Pricing Using Black-Scholes

Appendix 8B Put-Call Option Interest Rate Parity



9 Interest Rate Derivatives

9.1 Interest Rate and Currency Swaps

9.2 Interest Rate Forwards and Futures

9.3 Structured Notes

9.4 Credit Default Swaps

9.5 Summary and Conclusions



Part 3 Managing Currency Risks

10 Translation and Transaction Exposure

10.1 Alternative Measures of Foreign Exchange Exposure

10.2 Alternative Currency Translation Methods

10.3 Transaction Exposure

10.4 Designing a Hedging Strategy

10.5 Managing Translation Exposure

10.6 Managing Transaction Exposure

10.7 Summary and Conclusions

Appendix 10A Currency Translation in Practice



11 Economic Exposure

11.1 Foreign Exchange Risk and Economic Exposure

11.2 The Economic Consequences of Exchange Rate Changes

11.3 Identifying Economic Exposure

11.4 Calculating Economic Exposure

11.5 An Operational Measure of Exchange Risk

11.6 Managing Operating Exposure

11.7 Summary and Conclusions



Part 4 Financing International Operations

12 International And Domestic Capital Markets

12.1 Corporate Sources and Uses of Funds

12.2 Domestic Capital Markets as International Financial Centers

12.3 Development Banks

12.4 Project Finance

12.5 Summary and Conclusions

Designed for students taking courses in international finance, international financial management, multinational finance and multinational financial management, International Financial Management offers a variety of real-life examples, both numerical and institutional, that demonstrate the use of financial analysis and reasoning in solving international financial problems.