公司理财精要版原书第12版英文版最新精品课件Ross_12e_PPT_Ch21

INTERNATIONAL FINANCE TERMINOLOGY
• American Depositary Receipt (ADR) • Cross-rate • Eurobond • Eurocurrency (Eurodollars) • Foreign bonds • Gilts • London Interbank Offered Rate (LIBOR) • Swaps
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• The United States has one of the most developed capital markets in the world, but foreign markets are becoming more competitive and are often willing to try more innovative ways to do business.
EXAMPLE: EXCHANGE RATES
• Suppose you have $10,000. Based on the rates in Figure 21.1, how many Japanese Yen can you buy?
▪ Exchange rate = 102.32 Yen per dollar ▪ Buy $10,000(102.32) = 1,023,200 Yen
WORK THE WEB EXAMPLE
• Thinking about going to Mexico for spring break or Japan for your summer vacation?
• How many pesos or yen can you get in exchange for $1,000?
▪ The two numbers are reciprocals of each other (1 / 1.1836 = 0.7210).
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• Illustrate the different types of exchange rate risk and ways firms manage exchange rate risk
• Show the impact of political risk on international business investing
▪ Euro
1.1836
0.8449
▪ The first number (1.1836) is how many U.S. dollars it takes to buy 1 Euro.
▪ The second number (0.8449) is how many Euros it takes to buy $1.
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• Suppose you are visiting Mumbai and you want to buy a souvenir that costs 1,000 Indian Rupees. How much does it cost in U.S. dollars?
▪ Exchange rate = 60.150 rupees per dollar ▪ Cost = 1,000 / 60.150 = $16.63
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▪ Must consider the political risk associated with actions of foreign governments
▪ More financing opportunities when you consider the international capital markets, which may reduce the firm’s cost of capital
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GLOBAL CAPITAL MARKETS
• The number of exchanges in foreign countries continues to increase, as does the liquidity on those exchanges.
• Exchanges that allow for the flow of capital are extremely important to developing countries.
EXCHANGE RATES
• The price of one country’sBiblioteka Baiducurrency in terms of another country’s currency
• Most currency is quoted in terms of dollars.
• Consider the following quote:
• Triangle Arbitrage is the act of exchanging through three currencies to exploit a mispriced trio of currency quotes.
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DOMESTIC VS. INTERNATIONAL FINANCIAL MANAGEMENT
• Considerations in International Financial Management
▪ Need to consider the effect of exchange rates when operating in more than one currency
CHAPTER 21
INTERNATIONAL CORPORATE FINANCE
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EXAMPLE: TRIANGLE ARBITRAGE
• We observe the following quotes: ▪ 1 Euro per $1 ▪ 2 Swiss Franc per $1 ▪ 0.4 Euro per 1 Swiss Franc
• What is the cross rate for Euros per Swiss Franc? ▪ (1 Euro / $1) / (2 SF / $1) = 0.5 Euro / SF ▪ This is not the same as the quote above (0.4 Euro per Swiss Franc).
EXAMPLE: TRIANGLE ARBITRAGE (CTD.)
• To execute triangle arbitrage in this example: buy low (0.4 Euro / SF), and sell high (0.5 Euro / SF).
• For example, with $100 to start:
• Go to the XE website to find out.
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KEY CONCEPTS AND SKILLS
• Define how exchange rates are quoted, what they mean, and the difference between spot and forward exchange rates
• Explain purchasing power parity, interest rate parity, unbiased forward rates, uncovered interest rate parity, and the international Fisher effect and their implications for exchange rate changes
CHAPTER OUTLINE
• Terminology • Foreign Exchange Markets and Exchange
Rates • Purchasing Power Parity • Interest Rate Parity, Unbiased Forward
Rates, and the International Fisher Effect • International Capital Budgeting • Exchange Rate Risk • Political Risk
• Buy $100 (1 Euro / $1) = 100 Euro;
▪ Use Euro to buy SF.
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