公司财务管理与财务知识分析（英文版）.pptVIP

CHAPTER 19Multinational Financial Management Multinational vs. domestic financial management Exchange rates and trading in foreign exchange International monetary system International money and capital markets A corporation that operates in two or more countries. 1. To seek new markets. 2. To seek raw materials. 3. To seek new technology. 4. To seek production efficiency. 5. To avoid political and regulatory hurdles. 6. To diversify. 1. Different currency denominations. 2. Economic and legal ramifications. 3. Language differences. 4. Cultural differences. 5. Role of governments. 6. Political risk. Are these currency prices direct or indirect quotations? Since they are prices of foreign currencies expressed in dollars, they are direct quotations. The number of units of foreign currency needed to purchase one U. S. dollar, or the reciprocal of a direct quotation. The exchange rate between any two currencies. Cross rates are actually calculated on the basis of various currencies relative to the U. S. dollar. Cross rate = x = 111.11 x 0.650 = 72.22 yen/A. dollar. Cross rate = x = 1.5385 x 0.009 = 0.0138 A. dollars/yen. The two cross rates are reciprocals of one another. They can be calculated by dividing either the direct or indirect quotations. Price = (1.75)(1.50)(111.11) = 291.66 yen. 250 yen = 250(0.0138) = 3.45 A. dollars. 6 – 3.45 = 2.55 Australian dollar profit. 1.5385 A. dollars = 1 U. S. dollar. Dollar profit = 2.55/1.5385 = $1.66. The risk that the value of a cash flow in one currency translated to another currency will decline due to a change in exchange rates. For example, in the last slide, a weakening Australian dollar (strengthening dollar) would lower the dollar profit. The current system is a floating rate system. Prior to 1971, a fixed exchange rate system was in effect. The U.S. dollar was tied to gold. Other currencies were tied to the dollar. A currency is convertible when