chap031 - Chapter 31 INTERNATIONAL CORPORATE FINANCE SLIDES...

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Chapter 31 INTERNATIONAL CORPORATE FINANCE SLIDES 31.1 Key Concepts and Skills 31.2 Chapter Outline 31.3 Terminology 31.4 Terminology 31.5 Foreign Exchange Markets and Exchange Rates 31.6 FOREX Market Participants 31.7 Exchange Rates 31.8 Example 31.9 Cross Rates 31.10 Triangle Arbitrage 31.11 Triangle Arbitrage 31.12 Triangle Arbitrage 31.13 Triangle Arbitrage 31.14 Types of Transactions 31.15 Absolute Purchasing Power Parity 31.16 Relative Purchasing Power Parity 31.17 Example 31.18 Interest Rate Parity 31.19 Interest Rate Parity 31.20 Interest Rate Parity 31.21 IRP and Covered Interest Arbitrage 31.22 IRP and Covered Interest Arbitrage 31.23 IRP and Covered Interest Arbitrage 31.24 IRP and Covered Interest Arbitrage 31.25 Reasons for Deviations from IRP 31.26 International Fisher Effect 31.27 Equilibrium Exchange Rate Relationships 31.28 International Capital Budgeting 31.29 Home Currency Approach 31.30 Foreign Currency Approach 31.31 Exchange Rate Risk 31.32 Short-Term Exposure 31.33 Long-Term Exposure 31.34 Translation Exposure 31.35 Managing Exchange Rate Risk 31.36 Political Risk 31.37 Quick Quiz
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A-107 CHAPTER 31 CHAPTER WEB SITES Section Web Address 31.1 www.adr.com www.bloomberg.com 31.2 www.swift.com www.xe.com www.exchangerate.com www.ft.com 31.4 www.travlang.com/money cbs.marketwatch.com 31.7 www.cia.gov/cia/publications/factbook End-of-chapter material www.mhhe.com/edumarketinsight CHAPTER ORGANIZATION 31.1 Terminology 31.2 Foreign Exchange Markets and Exchange Rates Exchange Rates 31.3 Purchasing Power Parity Absolute Purchasing Power Parity Relative Purchasing Power Parity 31.4 Interest Rate Parity, Unbiased Forward Rates, and the International Fisher Effect Covered Interest Arbitrage Interest Rate Parity Forward Rates and Future Spot Rates Putting It All Together 31.5 International Capital Budgeting Method 1: The Home Currency Approach Method 2: The Foreign Currency Approach Unremitted Cash Flows 31.6 Exchange Rate Risk Short-Term Exposure Long-Term Exposure Translation Exposure Managing Exchange Rate Risk 31.7 Political Risk
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CHAPTER 31 A-108 ANNOTATED CHAPTER OUTLINE Slide 31.0 Chapter 31 Title Slide Slide 31.1 Key Concepts and Skills Slide 31.2 Chapter Outline 31.1. Terminology Slide 31.3 – Slide 31.4 Terminology -American Depository Receipt (ADR) – security issued in the U.S. that represents shares in a foreign company -Cross-rate – exchange rate between two currencies implied by the exchange rates of each currency with a third -Eurobond – bonds issued in many countries but denominated in a single currency -Eurocurrency – money deposited in the bank of a foreign country (dollars deposited in a French bank are called Eurodollars) Lecture Tip: Eurodollars are “deposits of U.S. dollars in banks located outside the United States.” However, you should emphasize that Eurodollars are not actual U.S. currencies deposited in a bank, but are bookkeeping entries on a bank’s ledger. These deposits are loaned to the Euro bank’s U.S. affiliate to meet liquidity needs, or the funds might be loaned to a corporation abroad that needs the loan denominated in U.S. dollars. Money does not normally leave
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