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International Financial
Management 14th Edition
ST
SOLUTIONS
UV
IA
MANUAL
_A
Jeff Madura
PP
Comprehensive Solutions Manual for Instructors
RO
and Students
||| ||| || ||| || | || ||| | || ||| |
VE
9780357130544
D?
© Jeff Madura. All rights reserved. Reproduction
or distribution without permission is prohibited.
© MEDGEEK
, TABLE OF CONTENTS
Solutions Manual – International Financial Management (14th Edition)
Author: Jeff Madura
ISBN: 9780357130544
ST
PART I: THE INTERNATIONAL FINANCIAL ENVIRONMENT
Chapter 1: Multinational Financial Management: An Overview
Chapter 2: International Flow of Funds
UV
Chapter 3: International Financial Markets
Chapter 4: Exchange Rate Determination
Chapter 5: Currency Derivatives
Chapter 6: Government Influence on Exchange Rates
PART II: EXCHANGE RATE BEHAVIOR
IA
Chapter 7: International Arbitrage and Interest Rate Parity
Chapter 8: Relationships among Inflation, Interest Rates, and Exchange Rates
Chapter 9: Forecasting Exchange Rates
_A
PART III: EXCHANGE RATE RISK MANAGEMENT
Chapter 10: Measuring Exposure to Exchange Rate Fluctuations
Chapter 11: Managing Transaction Exposure
PP
Chapter 12: Managing Economic Exposure and Translation Exposure
PART IV: LONG-TERM ASSET AND LIABILITY MANAGEMENT
Chapter 13: Direct Foreign Investment
RO
Chapter 14: Multinational Capital Budgeting
Chapter 15: International Corporate Governance and Control
Chapter 16: Country Risk Analysis
Chapter 17: Multinational Capital Structure and Cost of Capital
Chapter 18: Long-Term Debt Financing
VE
PART V: SHORT-TERM ASSET AND LIABILITY MANAGEMENT
Chapter 19: Financing International Trade
Chapter 20: Short-Term Financing
Chapter 21: International Cash Management
D?
, Chapter 1
Multinational Financial Management: An Overview
ST
Lecture Outline
Managing the MNC
How Business Disciplines Are Used to Manage the MNC
UV
Agency Problems
Management Structure of an MNC
Why Firms Pursue International Business
Theory of Comparative Advantage
Imperfect Markets Theory
IA
Product Cycle Theory
Methods to Conduct International Business
International Trade
_A
Licensing
Franchising
Joint Ventures
Acquisitions of Existing Operations
Establishing New Foreign Subsidiaries
PP
Summary of Methods
Valuation Model for an MNC
Domestic Valuation Model
Multinational Valuation Model
RO
Uncertainty Surrounding an MNC’s Cash Flows
How Uncertainty Affects the MNC’s Cost of Capital
Organization of the Text
VE
D?
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Multinational Financial Management: An Overview 2
Chapter Theme
This chapter introduces the multinational corporation as having similar goals to the purely domestic
corporation, but a wider variety of opportunities. With additional opportunities come potential increased
returns and other forms of risk to consider. The potential benefits and risks are introduced.
ST
Topics to Stimulate Class Discussion
1. What is the appropriate definition of an MNC?
UV
2. Why does an MNC expand internationally?
3. What are the risks of an MNC which expands internationally?
4. Why must purely domestic firms be concerned about the international environment?
IA
POINT/COUNTER-POINT:
Should an MNC Reduce Its Ethical Standards to Compete Internationally?
_A
POINT: Yes. When a U.S.-based MNC competes in some countries, it may encounter some business
norms there that are not allowed in the U.S. For example, when competing for a government contract,
firms might provide payoffs to the government officials who will make the decision. Yet, in the United
States, a firm will sometimes take a client on an expensive golf outing or provide skybox tickets to
PP
events. This is no different than a payoff. If the payoffs are bigger in some foreign countries, the MNC
can compete only by matching the payoffs provided by its competitors.
COUNTER-POINT: No. A U.S.-based MNC should maintain a standard code of ethics that applies to
any country, even if it is at a disadvantage in a foreign country that allows activities that might be viewed
RO
as unethical. In this way, the MNC establishes more credibility worldwide.
WHO IS CORRECT? Use the Internet to learn more about this issue. Which argument do you support?
Offer your own opinion on this issue.
ANSWER: The issue is frequently discussed. It is easy to suggest that the MNC should maintain a
VE
standard code of ethics, but in reality, that means that it will not be able to compete in some cases. For
example, even if it submits the lowest bid on a specific foreign government project, it will not receive the
bid without a payoff to the foreign government officials. The issue is especially a concern for large
projects that may generate substantial cash flows for the firm that is chosen to do the project. Ideally, the
MNC can clearly demonstrate to whoever oversees the decision process that it deserves to be selected. If
D?
there is just one decision-maker with no oversight, an MNC can not ensure that the decision will be
ethical. But if the decision-maker must be accountable to a department who oversees the decision, the
MNC may be able to prompt the department to ensure that the process is ethical.
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
International Financial
Management 14th Edition
ST
SOLUTIONS
UV
IA
MANUAL
_A
Jeff Madura
PP
Comprehensive Solutions Manual for Instructors
RO
and Students
||| ||| || ||| || | || ||| | || ||| |
VE
9780357130544
D?
© Jeff Madura. All rights reserved. Reproduction
or distribution without permission is prohibited.
© MEDGEEK
, TABLE OF CONTENTS
Solutions Manual – International Financial Management (14th Edition)
Author: Jeff Madura
ISBN: 9780357130544
ST
PART I: THE INTERNATIONAL FINANCIAL ENVIRONMENT
Chapter 1: Multinational Financial Management: An Overview
Chapter 2: International Flow of Funds
UV
Chapter 3: International Financial Markets
Chapter 4: Exchange Rate Determination
Chapter 5: Currency Derivatives
Chapter 6: Government Influence on Exchange Rates
PART II: EXCHANGE RATE BEHAVIOR
IA
Chapter 7: International Arbitrage and Interest Rate Parity
Chapter 8: Relationships among Inflation, Interest Rates, and Exchange Rates
Chapter 9: Forecasting Exchange Rates
_A
PART III: EXCHANGE RATE RISK MANAGEMENT
Chapter 10: Measuring Exposure to Exchange Rate Fluctuations
Chapter 11: Managing Transaction Exposure
PP
Chapter 12: Managing Economic Exposure and Translation Exposure
PART IV: LONG-TERM ASSET AND LIABILITY MANAGEMENT
Chapter 13: Direct Foreign Investment
RO
Chapter 14: Multinational Capital Budgeting
Chapter 15: International Corporate Governance and Control
Chapter 16: Country Risk Analysis
Chapter 17: Multinational Capital Structure and Cost of Capital
Chapter 18: Long-Term Debt Financing
VE
PART V: SHORT-TERM ASSET AND LIABILITY MANAGEMENT
Chapter 19: Financing International Trade
Chapter 20: Short-Term Financing
Chapter 21: International Cash Management
D?
, Chapter 1
Multinational Financial Management: An Overview
ST
Lecture Outline
Managing the MNC
How Business Disciplines Are Used to Manage the MNC
UV
Agency Problems
Management Structure of an MNC
Why Firms Pursue International Business
Theory of Comparative Advantage
Imperfect Markets Theory
IA
Product Cycle Theory
Methods to Conduct International Business
International Trade
_A
Licensing
Franchising
Joint Ventures
Acquisitions of Existing Operations
Establishing New Foreign Subsidiaries
PP
Summary of Methods
Valuation Model for an MNC
Domestic Valuation Model
Multinational Valuation Model
RO
Uncertainty Surrounding an MNC’s Cash Flows
How Uncertainty Affects the MNC’s Cost of Capital
Organization of the Text
VE
D?
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
, Multinational Financial Management: An Overview 2
Chapter Theme
This chapter introduces the multinational corporation as having similar goals to the purely domestic
corporation, but a wider variety of opportunities. With additional opportunities come potential increased
returns and other forms of risk to consider. The potential benefits and risks are introduced.
ST
Topics to Stimulate Class Discussion
1. What is the appropriate definition of an MNC?
UV
2. Why does an MNC expand internationally?
3. What are the risks of an MNC which expands internationally?
4. Why must purely domestic firms be concerned about the international environment?
IA
POINT/COUNTER-POINT:
Should an MNC Reduce Its Ethical Standards to Compete Internationally?
_A
POINT: Yes. When a U.S.-based MNC competes in some countries, it may encounter some business
norms there that are not allowed in the U.S. For example, when competing for a government contract,
firms might provide payoffs to the government officials who will make the decision. Yet, in the United
States, a firm will sometimes take a client on an expensive golf outing or provide skybox tickets to
PP
events. This is no different than a payoff. If the payoffs are bigger in some foreign countries, the MNC
can compete only by matching the payoffs provided by its competitors.
COUNTER-POINT: No. A U.S.-based MNC should maintain a standard code of ethics that applies to
any country, even if it is at a disadvantage in a foreign country that allows activities that might be viewed
RO
as unethical. In this way, the MNC establishes more credibility worldwide.
WHO IS CORRECT? Use the Internet to learn more about this issue. Which argument do you support?
Offer your own opinion on this issue.
ANSWER: The issue is frequently discussed. It is easy to suggest that the MNC should maintain a
VE
standard code of ethics, but in reality, that means that it will not be able to compete in some cases. For
example, even if it submits the lowest bid on a specific foreign government project, it will not receive the
bid without a payoff to the foreign government officials. The issue is especially a concern for large
projects that may generate substantial cash flows for the firm that is chosen to do the project. Ideally, the
MNC can clearly demonstrate to whoever oversees the decision process that it deserves to be selected. If
D?
there is just one decision-maker with no oversight, an MNC can not ensure that the decision will be
ethical. But if the decision-maker must be accountable to a department who oversees the decision, the
MNC may be able to prompt the department to ensure that the process is ethical.
© 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
