...Multinational Business Finance, 13e (Eiteman/Stonehill/Moffett) Chapter 1 Current Multinational Challenges and the Global Economy 1.1 Financial Globalization and Risk True/False 1) BRICs is a term used in international finance to represent assets that are considered to be inexpensive and sturdy, but fundamentally unsound and and incapable of coping with the upheavals now apparent in international financial markets. Answer: FALSE Diff: 1 Topic: 1.1 Financial Globalization and Risk Skill: Recognition 2) Multinational enterprises (MNEs) are firms, both for profit companies and not-for-profit organizations, that have operations in more than one country, and conduct their business through foreign subsidiaries, branches, or joint ventures with host country firms. Answer: TRUE Diff: 1 Topic: 1.1 Financial Globalization and Risk Skill: Recognition 3) Ownership, control, and governance changes radically across the world. The publicly traded company is not the dominant global business organization—the privately held or family-owned business is the prevalent structure—and their goals and measures of performance differ dramatically. Answer: TRUE Diff: 2 Topic: 1.1 Financial Globalization and Risk Skill: Recognition 1.2 The Global Financial Marketplace Multiple Choice 1) A well-established, large U.S.-based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value? A) an open market place B) high...
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...CHAPTER 1 GLOBALIZATION AND THE MULTINATIONAL FIRM SUGGESTED ANSWERS TO END-OF-CHAPTER QUESTIONS QUESTIONS 1. Why is it important to study international financial management? Answer: We are now living in a world where all the major economic functions, i.e., consumption, production, and investment, are highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a situation that existed when the authors of this book were learning finance some twenty years ago. At that time, most professors customarily (and safely, to some extent) ignored international aspects of finance. This mode of operation has become untenable since then. 2. How is international financial management different from domestic financial management? Answer: There are three major dimensions that set apart international finance from domestic finance. They are: 1. foreign exchange and political risks, 2. market imperfections, and 3. expanded opportunity set. 3. Discuss the three major trends that have prevailed in international business during the last two decades. Answer: The 1980s brought a rapid integration of international capital and financial markets. Impetus for globalized financial markets initially came from the governments of major countries that had begun to deregulate their foreign exchange and capital markets. The economic integration...
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...Eun & Resnick 4e CHAPTER 1 Globalization and the Multinational Firm Questions in the test bank follow the order of the chapter outline: What’s Special about International Finance? Foreign Exchange and Political Risks Market Imperfections Expanded Opportunity Set Goals for International Financial Management Globalization of the World Economy: Major Trends Emergence of Globalized Financial Markets Emergence of the Euro as a Global Currency Trade Liberalization and Economic Integration Privatization Multinational Corporations Summary MINI CASE: Nike and Sweatshop Labor APPENDIX 1A: Gains from Trade: The Theory of Comparative Advantage What’s Special about “International” Finance? 1) What major dimension sets apart international finance from domestic finance? a) foreign exchange and political risks b) Market imperfections c) Expanded opportunity set d) all of the above Answer: d 2) An example of a political risk is a) Expropriation of assets b) Adverse change in tax rules c) The opposition party being elected d) a) and b) are both correct Answer: d - p. 5 3) Production of goods and services has become globalized to a large extent as a result of a) Skilled labor being highly mobile b) Natural resources being depleted in one country after another c) Multinational corporations’ efforts to source inputs and locate production anywhere where costs...
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...Eun & Resnick 4e CHAPTER 1 Globalization and the Multinational Firm Questions in the test bank follow the order of the chapter outline: What’s Special about International Finance? Foreign Exchange and Political Risks Market Imperfections Expanded Opportunity Set Goals for International Financial Management Globalization of the World Economy: Major Trends Emergence of Globalized Financial Markets Emergence of the Euro as a Global Currency Trade Liberalization and Economic Integration Privatization Multinational Corporations Summary MINI CASE: Nike and Sweatshop Labor APPENDIX 1A: Gains from Trade: The Theory of Comparative Advantage What’s Special about “International” Finance? 1) What major dimension sets apart international finance from domestic finance? a) foreign exchange and political risks b) Market imperfections c) Expanded opportunity set d) all of the above Answer: d 2) An example of a political risk is a) Expropriation of assets b) Adverse change in tax rules c) The opposition party being elected d) a) and b) are both correct Answer: d - p. 5 3) Production of goods and services has become globalized to a large extent as a result of a) Skilled labor being highly mobile b) Natural resources being depleted in one country after another c) Multinational corporations’ efforts to source inputs and locate production anywhere where...
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...Management BS3200 Cass Business School UG Programme 15 7.5 6 MODULE SUMMARY Module outline and aims This third year module is designed to immerse business studies and banking students in the international dimension of financial issues. It focuses on the specifically international aspects of financial management so you are able to appreciate the additional sources of finance and the added issues that international investment and money management that international operation involves. This module aims to examine the various theories of exchange rate determination, and gives an appreciation of the issues relevant to international corporate finance, conveying an understanding of the challenges presented in managing a multinational enterprise Content outline - International finance in the context of international business - Corporations in relation to the international monetary system - International financial markets and the world banking system - Markets for currency and the problems with forecasting - Exchange rates - Identifying corporate foreign exchange risks - Managing the multinational finance function - International sourcing of funds - International and transfer pricing - Control of international operations - International investment of funds WHAT WILL I BE EXPECTED TO ACHIEVE? On successful completion of this module, you will be expected to be able to: Knowledge and understanding: - Understand what knowledge and skills are needed to comprehend...
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... |FACULTY OF ACCOUNTANCY AND MANAGEMENT | | | | | |Bachelor of International Business (Hons) | | | | | |Unit Code & |UKFF4024 | | |Unit Title: |MULTINATIONAL FINANCE | | |Course of Study: |Bachelor of International Business (Hons) | | |Year of Study: |Year Three, Trimester Two | | |Trimester Year |Jan 2016 | | |Credit Hour: |4 credit hours | | |Lecturing hours and |3 hours lecture per week for the duration...
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...International finance Final Exam: Essay questions Fall 2015 Instructions: Choose five questions from the list of the questions below and give it a thoughtful answer. Please formulate your answers in your own words and give references when needed. You may look up in textbooks in the library or check relevant websites to answer. Each question is to be answered fully but concisely, each answer should not be exceeding 200 words per question. The deadline to hand in the essay is January 7th, 2016 1. Describe the characteristics of a Multinational Corporation, any advantages/drawbacks, and give examples. What reasons does the author of your text give for becoming a multinational corporation? 2. Discuss the Exchange Rate, Market, and Legal/Political risks that foreign investors confront. 3. Explain the theory of Comparative Advantage, and its implication for production and trade. Are there some countries that have no comparative advantage? What happens if two countries have exactly the same skill, technology, and labor costs? How could comparative advantage explain the overseas shift of manufacturing and the outsourcing of labor? Does it provide the sole explanation, or are there other causes? (If so, discuss.) 4. Discuss the formation of the European Union, and the introduction of the Euro. Discuss the key legal and financial steps did they take to achieve the EU and enter into a common currency, and the challenges they faced (include a timeline). 5. What...
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...International Business Finance | Assessment Title: | Written Assignment | Individual/Group: | Individual | Weighting: | 70% | Submission Date: | week 24 | Instructions To Students For Submission Of This Coursework Task Details: This task takes the form of an essay and constitutes 70% of overall assessment for the module. You are required to choose ONE of the following two topics: (i) Discuss and evaluate the advantages and disadvantages of the methods used in order to hedge against the exchange rate risk? (iii) Why is it so difficult to predict future exchange rates? Critically evaluate the main methods available for predicting the future direction of exchange rates and assess their effectiveness in providing forecasts of use to international companies. Particular instructions to students: The assignment is to be no longer than 3000 words and should contain critical analysis, relevant empirical evidence and examples. Purpose of the module:This modules aims: • To provide an understanding of the theories and empirical evidence related to foreign exchange markets, and the implications of these for international firms. • To generate an understanding of the methods available to international companies to finance international trade investment and the risk associated with investment operations. • To review the alternative sources of funding available to a company.• To provide an understanding of the Multinational Enterprises theories...
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...Module 8 – Managing multinational operations Module 98 MANAGING MULTINATIONAL OPERATIONS8 MODULE 8 OVERVIEW Managing multinational operations Objectives At the completion of this module, you should be able to: • Ooutline the objectives of maintaining documentation for foreign trade transactions • Eexplain the key documents for a foreign trade transaction • Ddiscuss the various payment methods for international trade • Ddiscuss the characteristics of export finance and risk insurance • Ddiscuss the objectives and major tasks of current asset management • Eexplain the features of international cash management, accounts receivable management and inventory management • Ddiscuss the important differences between domestic taxation and multinational taxation. Learning resources Textbook Eiteman, Stonehill & Moffett 2013, edition 13th01, chapters 175, 17 19 and 20 and 18. Introduction This final module of the course encompasses a number of areas that are essential to any multinational finance course but have yet to be covered in this course. In particular, the module focuses on specific areas regarding the management of multinational operations. The module is essentially broken into three sections, all of which have a relevance to each other and to the other topics covered in this course. The first section focuses on the importance of foreign trade, in particular with regards to the growth potential it offers firms. More importantly, this section centres...
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...Introduction Multinational Companies (MNC) or Multinational Enterprises are companies which operate in more than one nation state. MNCs have considerable investments in foreign companies and manage these investments actively. The foreign activities distinguish them from national companies. The active role in the management of foreign investments distinguishes them from other organizations, like banks, with foreign investments. MNCs produce for a number of local markets according to local tastes and regulations. The MNC is structured like a federation with one headquarter and many more or less autonomous national divisions. Knowledge about the local situation, gives local managers a powerful say in the running of the MNC. It is, oftentimes, being referred as Global Companies or Transnational Companies. However, there are also differences with these three terms. Global companies produce for the world market. Production takes place where it can be done cheapest. The company is not organized according to country, like a MNC, but according to products. Management is highly centralized. The products are not designed to cater for specific local tastes. The attractive feature of the products of global companies is their price, since the standardized and high volume production methods make it possible to produce cheaply. The product division managers have the power in a global company. On the other hand, a transnational company (TNC) is a business which manages foreign direct investments...
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...ACADEMIC YEAR 2013/2014 Bachelor of Science (Hons) Actuarial Science Bachelor of Science (Hons) Financial Mathematics YEAR 3 TRIMESTER 2 UKFF 3243 INTERNATIONAL FINANCE ASSIGNMENT (Question) ------------------------------------------------- ------------------------------------------------- Pick a multinational enterprise (MNE) from Table 1 below and answer ALL questions. Table 1: List of Multinational Enterprises | Acer Inc. (Taiwan) | Aeon Co. Ltd. (Japan) | Adidas AG (Germany) | Carrefour (France) | Honda Motor Co. Ltd. (Japan) | L’Oreal Group (France) | Nokia Corporation (Finland) | Panasonic Corporation (Japan) | Tesco PLC (UK) | Wal-Mart Stores Inc. (USA) | (a) Briefly describe their business operations in its home country and other foreign countries (3 foreign countries at least), as well as their financial performance over the last five years. (12 marks) (b) Analyse how changes in Balance of Payments, exchange rates and macroeconomic conditions in their home country and other host countries (3 host countries at least) where their foreign operations located could have influenced the selected MNE’s business strategies. (18 marks) (c) Explain any good business model(s) or strategies that you think a Malaysian company in the same industry could learn from the MNE you analysed. (6 marks) Citation of references and source of information (4 marks) Presentation...
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...CHAPTER 1 GLOBALIZATION AND THE MULTINATIONAL FIRM SUGGESTED ANSWERS TO END-OF-CHAPTER QUESTIONS QUESTIONS 1. Why is it important to study international financial management? Answer: We are now living in a world where all the major economic functions, i.e., consumption, production, and investment, are highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a situation that existed when the authors of this book were learning finance some twenty years ago. At that time, most professors customarily (and safely, to some extent) ignored international aspects of finance. This mode of operation has become untenable since then. 2. How is international financial management different from domestic financial management? Answer: There are three major dimensions that set apart international finance from domestic finance. They are: 1. foreign exchange and political risks, 2. market imperfections, and 3. expanded opportunity set. 3. Discuss the three major trends that have prevailed in international business during the last two decades. Answer: The 1980s brought a rapid integration of international capital and financial markets. Impetus for globalized financial markets initially came from the governments of major countries that had begun to deregulate their foreign exchange and capital markets. The economic integration and globalization that began in the eighties...
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...14SS-FIN 4007-001 International Finance Spring 2014: Jan.6 – Apr.26 MWF 8:00-8:50 a.m. at Lindner 109 Office Hours: MWF 9:10-9:40 a.m. and by appointment. Temporary changes in office hours, if any, will be announced in advance via Blackboard and/or in class. Required Materials International Financial Management, Jeff Madura, 11th Edition, South-Western CENGAGE Learning, 2012. Earlier editions, e.g., 10th, are also acceptable at your own risk. Go to amazon.com or www.cengagebrain.com and search by textbook. You can order either a hard back text, RENTAL hard back text, eBook, or eChapters at a discount price. Some readings may be assigned to supplement your in-depth study of major topics in international financial management. Suggested Activities Read The Wall Street Journal, Business Week, Financial Times, Forbes, Fortune, The Economist, etc. Student subscription rates are available for these periodicals. Also, watch CET, CNN, CNBC, C-Span, etc. These activities are practically free. Objective of the Course The course will be discussed from the perspective of international financial management which is all about making financial decisions in the context of international environment. There are two important aspects to really good international financial decision-making. The first is experience; this you will have to get (or are getting) on your own. Suggested activities in the previous section will be a must. The...
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...Fundamentals of Multinational Finance, 4e (Moffett) Chapter 1 Current Multinational Challenges and the Global Economy Multiple Choice and True/ False Questions 1.1 The Global Financial Marketplace 1) Which of the following firms are NOT considered to be multinational enterprises (MNEs) even if they have operations in more than one country? A) for-profit companies B) not-for-profit organizations C) non-government organizations (NGOs) D) all of the above may be considered MNEs Answer: D Diff: 1 Topic: 1.1 The Global Financial Marketplace Skill: Recognition 2) "BRIC" is a term coined in 2001 to refer to a group of countries at about the same stage of advanced economic development. The BRIC countries are ________. A) Belgium, Romania, Italy, and Canada B) Brazil, Russia, India, and China C) Britain, Romania, Israel, and Colombia D) Brazil, Russia, Italy, and Chile Answer: B Diff: 1 Topic: 1.1 The Global Financial Marketplace Skill: Recognition 3) According to the authors, which of the following groups or securities are at the "heart" to the global capital markets? A) debt securities issued by governments B) bank loans and corporate bons C) equity securities D) derivative securities Answer: A Diff: 1 Topic: 1.1 The Global Financial Marketplace Skill: Recognition 4) ________ are the largest markets in the world. A) United States equity markets B) European debt markets C) Global currency markets D) Chinese export markets Answer: C Diff:...
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...University of Notre Dame Mendoza College of Business Department of Finance FIN 70500 – Multinational Financial Management Module 1, Fall, 2006 |Instructor: |Jerry G. Langley |Phone: |Office - (574) 631-6078 | | Office: |262 MCOB | |Home - (574) 234-1191 (before10PM) | |E-mail: |Jerry.Langley.3@nd.edu | | | | Office hours: I’m in my office most of the week, so stop by or call and set up a time to see me. | COURSE OBJECTIVES This course covers various aspects of the international side of finance, including organizational issues that impact the financial decision-making process. After an overview of the international financial environment companies operate in, we will learn how they organize themselves to do business internationally, the impact of volatile exchange rates and how they can be measured and managed to minimize effects on economic and reported results. In addition to looking at the theoretical underpinnings of international finance, we will also cover the practical side of financing decisions – how corporations actually use these tools to manage the potential impacts on their business that come from operating around the world. We’ll also...
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