International Corporate Finance - Value Creation With Currency Derivatives in Global Capital Markets +

A thorough introduction to corporate finance from a renowned professor of finance and banking

As globalization redefines the field of corporate finance, international and domestic finance have become almost inseparably intertwined. It's increasingly difficult to understand what is happening in capital markets without a firm grasp of currency markets, the investment strategies of sovereign wealth funds, carry trade, and foreign exchange derivatives products. International Corporate Finance offers thorough coverage of the international monetary climate, including Islamic finance, Asian banking, and cross-border mergers and acquisitions. Additionally, the book offers keen insight on global capital markets, equity markets, and bond markets, as well as foreign exchange risk management and how to forecast exchange rates.
Offers a comprehensive discussion of the current state of international corporate finance
Provides simple rules and pragmatic answers to key managerial questions and issues
Includes case studies and real-world decision-making situations

For anyone who wants to understand how finance works in today's hyper-connected global economy, International Corporate Finance is an insightful, practical guide to this complex subject.

List of contents

Preface xvii

Acknowledgments xxiii

About the Author xxv

Chapter 1 What Is International Corporate Finance? 1

The Uneven Reach of Globalization 2

The Rise of the Multinational Corporation 3

What Is Different about International Corporate Finance? 6

Risks in the Wonderland of International Finance 8

Internationalization and the Locus of the Finance Function 12

The International Control Conundrum 15

Exploiting the Multinational Enterprise System 16

Summary 18

Questions for Discussion 19

References 19

PART one The International Monetary Environment 21

Chapter 2 Exchange Rates Regimes 23

Some First Principles about Exchange Rate Determination 24

World Map of Exchange Rate Regimes: The Flexibility × Convertibility Space 29

Floating Exchange Rates 31

Stabilized or Pegged Exchange Rates 38

Controlled Exchange Rates 44

Summary 49

Appendix 2A: The Purchasing Power Parity Hypothesis 49

Questions for Discussion 58

Problems 58

References 61

Chapter 3 Yesterday and Yesteryear: A Brief History of the International Monetary System 63

Chronology of the International Monetary System 64

The Gold Standard (1878.1914, 1925.1931) 67

The Bretton Woods System (1944.1971) 69

Managed Floating Exchange Rates (1973.) 73
European Monetary System and the European Currency Unit (1979.1999) 74

Emerging Markets Currency Regimes and Crises 78

European Monetary Union and the Birth of the Euro (1999.Present) 81

Today and Tomorrow: The Current Map of Exchange Rates 85

Summary 88

Questions for Discussion 89

Problems 90

References 92

Chapter 4 The Balance of Payments 93

Fundamentals of Balance of International Payments Accounting 94

Current Account 99

Capital Account 101

Official Reserve Account 102

Statistical Discrepancies: Errors and Omissions 103

Balance of Payments and the Foreign Exchange Market 103

Debtor versus Creditor Nations 107

Linking the Balance of Payments to National Income 109

Summary 111

Questions for Discussion 112

Problems 113

References 115

PART TWO The Foreign Exchange Market and Currency Derivatives 117

Chapter 5 The Foreign Exchange Market 119

How Forex Is Traded: The Institutional Framework 120

Foreign Exchange Products 128

Exchange Rate Quotations 131

Summary 143

Questions for Discussion 144

Problems 144

References 147

Chapter 6 Interest Rate Arbitrage and Parity 149

Interest Rate Arbitrage Theorem 150

Interest Rate Parity 158

Uncovered Interest Rate Arbitrage and the Carry Trade 166

Summary 169

Appendix 6A: Interest Rate Parity and Asymmetric Taxation 170

Appendix 6B: The Linkages between Interest, Inflation, and Exchange Rates 171

Questions for Discussion 177

Problems 177

References 183

Chapter 7 Currency Futures, Options, and Swaps 185

A Brief History of Derivatives 186

Currency Futures 190

Currency Options 195

Risk Profile of Currency Options 198

Option Strategies 200

Put-Call Parity Theorem 206

The Valuation of Currency Options 209

Derivatives and Zero-Premium Options 215

Currency Swaps 218

Interest Rate Swaps 224

Summary 226

Questions for Discussion 227

Problems 228

References 231

PART Three International Financing 233

Chapter 8 The International Financial Sector and the Dynamics of Global Capital Markets 235

Financing as a Global Procurement Decision 236

The Financial System and Financial (Dis)Intermediation 238

Securitization and the (Lower) Cost of Consumer Financing 241

Deregulation 249

Mapping the Financial System/Capital Market Emergence Process 252

Summary 259

Questions for Discussion 260

Problems 260

References 263

Chapter 9 Sourcing Equity Globally 265

A Grand Tour of Equity Markets 266

Global Equity Financing as a Procurement Decision 273

Internationalizing the Cost of Capital: The Landmark Case of Novo Industri 274

Why Do Firm

About the author

LAURENT L. JACQUE is the Walter B. Wriston Professor of International Finance & Banking at the Fletcher School (Tufts University). As Fletcher's Academic Dean he was responsible for the design and establishment of its Master of International Business degree program. Since 1990 he has held a secondary appointment at HEC (Paris) and was previously on the faculty of the Wharton School for eleven years. His last book, Global Derivative Debacles: From Theory to Malpractice, has been translated in French, Chinese, Russian and Korean. A recipient of several awards for outstanding teaching, he is a consultant to a number of multinational firms and financial institutions around the world. He is a graduate of HEC (Paris) and holds MA, MBA and PhD from the Wharton School.

Summary

A thorough introduction to corporate finance from a renowned professor of finance and banking As globalization redefines the field of corporate finance, international and domestic finance have become almost inseparably intertwined.

Product details

• Authors: Laurent L Jacque, Laurent L. Jacque
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Paperback / Softback
• Released: 29.04.2014
• EAN: 9781118781869
• ISBN: 978-1-118-78186-9
• No. of pages: 768
• Series: Wiley Finance; Wiley Finance Editions; The Wiley Finance Series; Wiley Finance; Wiley Finance Editions; The Wiley Finance Series
• Subject: Social sciences, law, business > Business > Business administration