Multinational Financial Management

Dr. Alan C. Shapiro is the Ivadelle and Theodore Johnson Professor of Banking and Finance. Prior to joining USC in 1978, he was an Assistant Professor at the Wharton School of the University of Pennsylvania (1971-1978). He has also been a Visiting Professor at Yale University, UCLA, the Stockholm School of Economics, University of British Columbia, and the U.S. Naval Academy. His specialties are corporate and international financial management.

Preface xiii

Selected Currencies and Symbols xvii

Symbols and Acronyms xix

Part I Environment of International Financial Management 1

1 Introduction: Multinational Enterprise and Multinational Financial Management 2

2 The Determination of Exchange Rates 52

3 The International Monetary System 88

4 Parity Conditions in International Finance and Currency Forecasting 138

5 The Balance of Payments and International Economic Linkages 183

6 Country Risk Analysis 214

Part II Foreign Exchange and Derivatives Markets 255

7 The Foreign Exchange Market 256

8 Currency Futures and Options Markets 280

9 Swaps and Interest Rate Derivatives 312

Part III Foreign Exchange Risk Management 335

10 Measuring and Managing Translation and Transaction Exposure 336

11 Measuring and Managing Economic Exposure 379

Part IV Financing the Multinational Corporation 421

12 International Financing and National Capital Markets 422

13 The Euromarkets 455

14 The Cost of Capital for Foreign Investments 476

Part V Foreign Investment Analysis 507

15 International Portfolio Investment 508

16 Corporate Strategy and Foreign Direct Investment 535

17 Capital Budgeting for the Multinational Corporation 554

Part VI Multinational Working Capital Management 585

18 Financing Foreign Trade 586

19 Current Asset Management and Short-Term Financing 613

20 Managing the Multinational Financial System 643

Glossary 673

Index 693