4324Ch1 - Chapter 1 Introduction The focus of this course...

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© Sanjiv Sabherwal, 2015, All rights reserved. 1 1 Chapter 1: Introduction The focus of this course is on financial decision making in an international context. Our objective is to acquire the tools and techniques needed for decision making by multinational corporations. What are the unique dimensions of international finance? Globalization: Major Trends Multinational corporations 2 The Unique Dimensions of International Finance Foreign exchange risk - Revenues in a foreign currency are less valuable in $ terms if the foreign currency loses value relative to the $ - Costs incurred in a foreign currency are greater in $ terms if the foreign currency gains value relative to the $ For example, on June 1, 2007, the exchange rate between the $ and £ was $1.9822/£ whereas on August 23, 2015, the exchange rate is about $1.5694/£. 3 A Slight Digression: Our Convention for Quoting Exchange Rates On August 23, 2015, the exchange rate between the U.S. Dollar (USD) and the Mexican Peso (MXN) is: USD 1 = MXN 16.9878 We will express this as MXN 16.9878 / USD.
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