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- Accounting
- Marketing
- Distribution
- Logistics
- Financial markets - Corporate governance
- Other business conventions
(legal, accounting, taxation, regulation, etc.)
Multinational Finance
by Kirt C. Butler
I Overview and Background II The International Financial Environment III Derivative Securities for Hedging Currency Risk IV Managing the Risks of Multinational Operations V Valuation and the Structure of Multinational
1-5
Multinational financial management
➢ Multinational finance is interdisciplinary within the field of finance
➢ Multinational financial managers must be familiar with
1-3
Vivé la difference
Cross-border differences can affect all areas of business, particularly through differences in
- Language & culture - Human resource management
1-6
The approach of the book
Everything should be made as simple as possible, but not simpler. Albert Einstein
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The MNC’s opportunities Value = St [E[CFt] / (1+it)t]
➢ Multinational investment policy
- Higher returns from existing investments - New investment opportunities
➢ Multinational financial policy
- Reduced capital costs through access to international capital markets
- Foreign exchange and Eurocurrency markets - Derivatives securities - International financial (debt & equity) markets - International markets for real assets - International portfolio investment
➢ Rational investors with equal access to markets and information ensure informational efficiency - That is, a market in which prices reflect all relevant information
➢ We’ll develop a framework for evaluating the opportunities, costs and risks of operating in the world’s markets for goods, services, and financial assets and liabilities
1-4
…where the art resides
The notes I handle no better than many pianists, but the pauses between the notes – ah, that is where the art resides. Arthur Schnabel
1-2
Challenges facing the multinational manager
The gentle reader will never, never know what a consummate ass he can become, until he goes abroad.
Mark Twain
➢ Rational investors ➢ Equal access to costless information ➢ Equal access to market prices
1-9
Market efficiency
➢ Frictionless markets ensure operational efficiency
Operations VI International Portfolio Investment
and AssLeabharlann Baidut Pricing
1-1
Chapter 1
An Introduction to Multinational Finance
➢ Multinational financial management is financial management conducted in more than one cultural, social, economic, or political environment
1-8
Perfect financial market assumptions
Financial opportunities often involve a violation of one of these assumptions
➢ Frictionless markets - No government intervention or taxes - No transactions, agency, or bankruptcy costs
