Chapter 15: International Portfolio Investment
1. Identify and describe the advantages of international investing
2. Using the efficient frontier model, analyze how international investing can allow investors to
achieve a better risk-return tr
WACC - Weighted Average Cost of Capital
Comprehensive Mini Case 2 - Dupont
Suppose DuPont is considering an investment that would extend the life of one of its chemical
facilities for 4 years
The project would require upfront costs o
Fin 370 Chapter 10
Measuring and Managing Accounting Exposure
-Forward as far as exchange rates
-Exchange rate risk created by accountants and future events
Exchange Rate risks created by accountants
1. Accounting Exposure: difficult to hedge an event tha
Chapter 8- Fin 370
Part I: Currency Futures and Options
Futures contracts/market: another way to hedge-mitigating the risk that the exchange rates will move against
-Many people think of futures contracts as gambling, not really gambling
-Its our secon
Fin 370-Chapter 2
Equilibrium Exchange Rates (only Ch. 2 Section 1)
The Equilibrium Exchange Rate:
the HISTORICAL exchange rate that is the local currency price of one unit of foreign currency
Pegged Currency: ex. Chinese Yuan
-Devaluation-when their valu
Introductory Corporate Finance
Some terms that you should be familiar with
FV, PV, N, I/Y, PMT
If you are unsure of some of these terms, it is very important that
Chapter 2 Finance 320:
Firms Disclosure of Financial Information:
-Investors, financial analysts, managers, and other interested parties, such as creditors, rely on financial
statements to obtain reliable information about a corporation.
Finance 320 Chapter 6: Bonds
Bonds: securities sold by governments and corporations to raise money from investors today in
exchanged for a promised future amount. Bonds typically make two payments to their holders; principal
or face value, and additional
1) Additional Funds Needed
You are planning to purchase a small firm (ex: coffee shop) in your town. There is no other
competing business in town.
1) The latest income statement and balance sheet for the busin
Example: Marginal Product Inc.
Sales will increase from $5million to $8 million.
Production is at full capacity (24 hrs. per day).
Dividend payout will be 70% of NI.
Spontaneous balance sheet accounts.
Increase in a constant proportion to sales.
Finance 320- Chapter 3: Time Value of Money
The Financial Managers (CFO) Roles
-Make decisions on behalf of the firms investors. Good decisions require that benefits exceed costs. Such
decisions increase firm value.
CFOs three main f
Fin 370 Chapter 4: Parity Conditions in International Finance and Currency Forecasting
1. Identify and explain the five key theoretical economic relationships that result from arbitrage
activities: purchasing power parity, the Fisher Effect, t
Fin 370: Chapters 12 & 13
Topics: International Financing and National Capital Markets
Chapter 12 (423-452)
1. Describe the trends and differences in corporate financing patterns globally
Chapter 18 (formerly Ch. 15) Fin 370- Financing Foreign Trade
Part I- The Trade Cycle and Risk
-A way to look at the transaction through the eyes of the banking community and the risks involved.
Logistics Risk: risks that come up when you have the ship le
Fin 370- Chapter 7 (formerly Ch. 6)
The Foreign Exchange Market: any place where money denominated in one currency is bought and sold with
money denominated in another currency.
Hard currencies: US Dollar, European Euro, British Pound, Japanese Yen
Fin 370 Chapter 1 (pages 3-20): Multinational Enterprise and Multinational Financial Management
The Rise of the Multinational Corporation (MNC): is a company engaged in producing and selling
goods or services in more than one country. Consists of parent c
WEB EXERCISE #3Show all calculations
Find the latest two days of quotes for the $/euro, the $/pound, and the yen/$ provided by
www.x-rates.com and calculate how each has appreciated/depreciated against the dollar
over the two day period.
Student ID No._
Global mutual funds
invest in individual countries everywhere
can invest anywhere in the world, including the U.S.
can invest only outside the U.S.
focus on sp
April 10, 2016
WEB EXERCISE #5 THE WORLD BANK GROUP
The World Bank states on their website that their two most important missions are to end
extreme world poverty by 2030 and promote shared prosperity. 1Created in 1944, the World
FIRST EXAM REVIEW
1. What is meant by containerized global trade?
The use of containers in export shipments makes the transport
and handling easier and faster.
2. What is meant by inter modal transportation In global trade?
WEB EXERCISE #4
Instructions: Use the website www.annualreports.com to research the three MNCs used in
Visit the website and access the latest annual reports of any 3 MNCs of your choice.
1. For each of the three MNCs you reviewed:
WEB EXERCISE #2:
1. Visit the website of the Ex-Im bank. List any 3 programs Ex-Im provides. Explain how each works
in 2-3 sentences each.
According to the Export-Import Banks website, they provide export credit insurance, working capital
guarantee, and p
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