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As globalization is redefining the field of corporate finance, international finance is now part and parcel of the basic literacy of any financial executive. This is why International Corporate Finance is a "must" text for upper-undergraduates, MBAs aspiring to careers in global financial services and budding finance professionals.
International Corporate Finance offers thorough coverage of the international monetary system, international financing, foreign exchange risk management and cross-border valuation. Additionally, the book offers keen insight on how disintermediation, deregulation and securitization are re-shaping global capital markets.
What is different about International Corporate Finance?
* Each chapter opens with a real-life mini-case to anchor theoretical concepts to managerial situations.
* Provides simple decision rules and "how to do" answers to key managerial issues.
* Cross-border Mergers & Acquisitions, Project Finance, Islamic Finance, Asian Banking & Finance are completely new chapters that no other textbooks currently cover.
* Accompanied with a comprehensive instructor support package which includes case studies, an Instructor's Manual, PowerPoint slides, Multiple Choice Questions and more.
List of contents
Preface xvii
Acknowledgments xxv
About the Author xxvii
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 19
Questions for Discussion 19
References 20
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 39
Controlled Exchange Rates 46
To Float or to Fix: The Trilemma of International Finance 49
Summary 50
Questions for Discussion 51
Problems 52
Internet Exercises 54
References 54
Chapter 3 Yesterday and Yesteryear 57
Chronology of the International Monetary System 58
The Gold Standard (1878-1914, 1925-1931) 61
The Bretton Woods System (1944-1971) 63
Managed Floating Exchange Rates (1973-Present) 67
European Monetary System and the European Currency Unit (1979-1999) 68
Emerging Markets Currency Regimes and Crises 72
European Monetary Union and the Birth of the Euro (1999-Present) 76
Today and Tomorrow: The Current Map of Exchange Rates 84
Summary 86
Questions for Discussion 87
Problems 88
Internet Exercises 90
References 90
Case Study 3.1: Will the Eurozone Shutter? Plant Location and Exchange Rates for Hyundai 91
Chapter 4 The Balance of Payments 99
Fundamentals of Balance of International Payments Accounting 100
Current Account 105
Financial Account 107
Official Reserve Account 109
Statistical Discrepancies: Errors and Omissions 111
Balance of Payments and the Foreign Exchange Market 111
Debtor Versus Creditor Nations 115
Linking the Balance of Payments to National Income 118
Summary 119
Questions for Discussion 120
Problems 121
Internet Exercises 122
References 124
Case Study 4.1: When One of the BRIC(k)s Falls: Trials and Tribulations of the Indian Rupee 124
Part Two The Foreign Exchange Market and Currency Derivatives 129
Chapter 5 The Foreign Exchange Market 131
How Forex is Traded: The Institutional Framework 132
Foreign Exchange Products 140
Exchange Rate Quotations 142
Summary 155
Questions for Discussion 156
Problems 157
Internet Exercises 160
References 160
Case Study 5.1: Banco Mercantil Internacional's Forex Losses 160
Chapter 6 Interest Rate Arbitrage and Parity 165
Interest Rate Arbitrage Theorem 166
Interest Rate Parity 174
Uncovered Interest Rate Arbitrage and the Carry Trade 181
Summary 184
Appendix 6A: Transaction Costs: Interest Rate Arbitarge with Bid-Ask Spreads (Advanced) 185
Appendix 6B: Interest Rate Parity and Asymmetric Taxation 187
Questions for Discussion 188
Problems 188
Internet Exercises 195
References 195
Case St
About the author
Laurent L. Jacque (Boston, MA) is the Walter B. Wriston Professor of International Finance & Banking at the
Fletcher School of Law and Diplomacy (Tufts University) and Director of its International Business Studies Program. From 2004 to 2007 he was Fletcher's Academic Dean and as such responsible for the design and the establishment of the new Master of International Business degree and the Center for Emerging Market Enterprises. Since 1990 he has also held a joint appointment at the
HEC School of Management (France) as a Professor of Economics, Finance, and International Business.
