Instructor’s Resource Manual
j j
Multinational Business j
Finance
Fifteenth Edition
j
David K. Eitemanj j
University of California, Los Angeles
j j j j
Arthur I. Stonehill j j
Oregon State University and University of Hawaii at Manoa
j j j j j j j j
, Michael H. Moffett j j
Thunderbird School of Global Management at
j j j j j j
Arizona State University
j j
NewjYork,jNY
ThisjworkjisjprotectedjbyjUnitedjStatesjcopyrightjlawsjandjisjprovidedjsolelyjforjthej
usejofjinstructorsjinjteachingjtheirjcoursesjandjassessingjstudentjlearning.jDissem
inationjorjsalejofjanyjpartjofjthisjworkj(includingjonjthejWorldjWidejWeb)jwilljdestroyj
thejintegrityjofjthejworkjandjisjnotjpermitted.j Thejworkjand
materialsjfromjitjshouldjneverjbejmadejavailablejtojstudentsjexceptjby
instructorsjusingjthejaccompanyingjtextjinjtheirjclasses.j Alljrecipientsjofjthisjworkj
arejexpectedjtojabidejbyjthesejrestrictionsjandjtojhonorjthejintendedjpedagogicaljp
urposesjandjthejneedsjofjotherjinstructorsjwhojrelyjonjthesejmaterials.
VicejPresident,jBusiness,jEconomics,jandjUKjCourseware:jDonnajBattista
SeniorjSponsoringjEditor:jNeerajjBhalla
,ManagingjProducer,jBusiness:jAlisonj Kalil
ContentjProducer:jSugandhjJuneja
ProjectjManager:jDineshjDeivendiran
Copyrightj©j2019,j2016,j2013jbyjPearsonjEducation,jInc.jorjitsjaffiliates.jAlljRightsjReserved.
ManufacturedjinjthejUnitedjStatesjofjAmerica.jThisjpublicationjisjprotectedjbyjcopyright,jandjpermissionjsh
ouldjbejobtainedjfromjthejpublisherjpriorjtojanyjprohibitedjreproduction,jstoragejinjajretrievaljsystem,jorjtra
nsmissionjinjanyjformjorjbyjanyjmeans,jelectronic,jmechanical,jphotocopying,jrecording,jor
otherwise.jForjinformationjregardingjpermissions,jrequestjforms,jandjthejappropriatejcontactsjwithinjthejPearson
jEducationjGlobaljRightsjandjPermissionsjdepartment,jpleasejvisit
www.pearsoned.com/permissions/.
Unlessjotherwisejindicatedjherein,janyjthird-
partyjtrademarks,jlogos,jorjiconsjthatjmayjappearjinjthisjworkjarejthejpropertyjofjtheirjrespectivejowner
s,jandjanyjreferencesjtojthird-
partyjtrademarks,jlogos,jicons,jorjotherjtradejdressjarejforjdemonstrativejorjdescriptivejpurposesjonly.jS
uchjreferencesjarejnot
intendedjtojimplyjanyjsponsorship,jendorsement,jauthorization,jorjpromotionjofjPearson’sjproductsjbyjthejo
wnersjofjsuchjmarks,jorjanyjrelationshipjbetweenjthejownerjandjPearsonjEducation,jInc.,jorjitsjaffiliates,jaut
hors,jlicensees,jorjdistributors.
ISBN-13:j 978-0-13-479657-4
ISBN-10:j 0-13-479657-8
, Contents
Chapterj1jMultinationaljFinancialjManagement:jOpportunitiesjandjChallenges............................... 1
Chapterj2jThejInternationaljMonetaryjSystem .................................................................................. 8
Chapterj3jThejBalancejofjPayments ................................................................................................ 13
Chapterj4jFinancialjGoalsjandjCorporatejGovernance .................................................................... 22
Chapterj5jThejForeignjExchangejMarket ........................................................................................ 28
Chapterj6jInternationaljParityjConditions ....................................................................................... 34
Chapterj7jForeignjCurrencyjDerivatives:jFuturesjandjOptions ....................................................... 41
Chapterj8jInterestjRatejRiskjandjSwaps........................................................................................... 46
Chapterj9jForeignjExchangejRatejDeterminationjandjIntervention ................................................. 52
Chapterj10jTransactionjExposure ................................................................................................... 60
Chapterj11jTranslationjExposure .................................................................................................... 66
Chapterj12jOperatingjExposure ...................................................................................................... 71
Chapterj13jGlobaljCostjandjAvailabilityjofjCapital ......................................................................... 76
Chapterj14jFundingjthejMultinationaljFirm .................................................................................... 81
Chapterj15jMultinationaljTaxjManagement .................................................................................... 89
Chapterj16jInternationaljTradejFinance .......................................................................................... 97
Chapterj17jForeignjDirectjInvestmentjandjPoliticaljRisk .............................................................. 101
Chapterj18jMultinationaljCapitaljBudgetingjandjCross-BorderjAcquisitions ................................ 115
j j
Multinational Business j
Finance
Fifteenth Edition
j
David K. Eitemanj j
University of California, Los Angeles
j j j j
Arthur I. Stonehill j j
Oregon State University and University of Hawaii at Manoa
j j j j j j j j
, Michael H. Moffett j j
Thunderbird School of Global Management at
j j j j j j
Arizona State University
j j
NewjYork,jNY
ThisjworkjisjprotectedjbyjUnitedjStatesjcopyrightjlawsjandjisjprovidedjsolelyjforjthej
usejofjinstructorsjinjteachingjtheirjcoursesjandjassessingjstudentjlearning.jDissem
inationjorjsalejofjanyjpartjofjthisjworkj(includingjonjthejWorldjWidejWeb)jwilljdestroyj
thejintegrityjofjthejworkjandjisjnotjpermitted.j Thejworkjand
materialsjfromjitjshouldjneverjbejmadejavailablejtojstudentsjexceptjby
instructorsjusingjthejaccompanyingjtextjinjtheirjclasses.j Alljrecipientsjofjthisjworkj
arejexpectedjtojabidejbyjthesejrestrictionsjandjtojhonorjthejintendedjpedagogicaljp
urposesjandjthejneedsjofjotherjinstructorsjwhojrelyjonjthesejmaterials.
VicejPresident,jBusiness,jEconomics,jandjUKjCourseware:jDonnajBattista
SeniorjSponsoringjEditor:jNeerajjBhalla
,ManagingjProducer,jBusiness:jAlisonj Kalil
ContentjProducer:jSugandhjJuneja
ProjectjManager:jDineshjDeivendiran
Copyrightj©j2019,j2016,j2013jbyjPearsonjEducation,jInc.jorjitsjaffiliates.jAlljRightsjReserved.
ManufacturedjinjthejUnitedjStatesjofjAmerica.jThisjpublicationjisjprotectedjbyjcopyright,jandjpermissionjsh
ouldjbejobtainedjfromjthejpublisherjpriorjtojanyjprohibitedjreproduction,jstoragejinjajretrievaljsystem,jorjtra
nsmissionjinjanyjformjorjbyjanyjmeans,jelectronic,jmechanical,jphotocopying,jrecording,jor
otherwise.jForjinformationjregardingjpermissions,jrequestjforms,jandjthejappropriatejcontactsjwithinjthejPearson
jEducationjGlobaljRightsjandjPermissionsjdepartment,jpleasejvisit
www.pearsoned.com/permissions/.
Unlessjotherwisejindicatedjherein,janyjthird-
partyjtrademarks,jlogos,jorjiconsjthatjmayjappearjinjthisjworkjarejthejpropertyjofjtheirjrespectivejowner
s,jandjanyjreferencesjtojthird-
partyjtrademarks,jlogos,jicons,jorjotherjtradejdressjarejforjdemonstrativejorjdescriptivejpurposesjonly.jS
uchjreferencesjarejnot
intendedjtojimplyjanyjsponsorship,jendorsement,jauthorization,jorjpromotionjofjPearson’sjproductsjbyjthejo
wnersjofjsuchjmarks,jorjanyjrelationshipjbetweenjthejownerjandjPearsonjEducation,jInc.,jorjitsjaffiliates,jaut
hors,jlicensees,jorjdistributors.
ISBN-13:j 978-0-13-479657-4
ISBN-10:j 0-13-479657-8
, Contents
Chapterj1jMultinationaljFinancialjManagement:jOpportunitiesjandjChallenges............................... 1
Chapterj2jThejInternationaljMonetaryjSystem .................................................................................. 8
Chapterj3jThejBalancejofjPayments ................................................................................................ 13
Chapterj4jFinancialjGoalsjandjCorporatejGovernance .................................................................... 22
Chapterj5jThejForeignjExchangejMarket ........................................................................................ 28
Chapterj6jInternationaljParityjConditions ....................................................................................... 34
Chapterj7jForeignjCurrencyjDerivatives:jFuturesjandjOptions ....................................................... 41
Chapterj8jInterestjRatejRiskjandjSwaps........................................................................................... 46
Chapterj9jForeignjExchangejRatejDeterminationjandjIntervention ................................................. 52
Chapterj10jTransactionjExposure ................................................................................................... 60
Chapterj11jTranslationjExposure .................................................................................................... 66
Chapterj12jOperatingjExposure ...................................................................................................... 71
Chapterj13jGlobaljCostjandjAvailabilityjofjCapital ......................................................................... 76
Chapterj14jFundingjthejMultinationaljFirm .................................................................................... 81
Chapterj15jMultinationaljTaxjManagement .................................................................................... 89
Chapterj16jInternationaljTradejFinance .......................................................................................... 97
Chapterj17jForeignjDirectjInvestmentjandjPoliticaljRisk .............................................................. 101
Chapterj18jMultinationaljCapitaljBudgetingjandjCross-BorderjAcquisitions ................................ 115
