Differentials in Interest Rates
Differentials in Inflation rates
Terms of Trade
Interest rates, inflation, current-account deficits and the terms of trade are greatly interconnected and
impact the overall exc
Though the real estate market has been depressed in some countries due to the aftermath
of the global financial crisis, the markets in some countries or cities have kept their
robust growth in prices and expansions. A noteworthy case is commercial and res
Chapter 24 Overview: Strategic Planning and Budgeting
Organizations make two main types of plans: (a) strategic (or long-range)
plans, which usually cover several future years and are focused on major
programs, and (b) budgets, which
Problems on Relevant Costs for Decision Making
Problem no: 1: Accepting a Special Order
Sutherland manufactures and sells 110,000 laser printers each
month. A principal component part in each printer is its paper feed
drive. Sutherlands plant currently ha
Costco is a global markdown retailer with 715 retail stores in six nations and thirty-seven states.
Entrepreneurs and experts in the $100k compensation range are the essential clients because of their
expendable salaries and interest fo
III. Company Description
From the Costco website:
Costco Wholesale Corporation operates an international chain of membership warehouses,
mainly under the "Costco Wholesale" name, that carry quality, brand name merchandise at
substantially lower prices tha
1. State the data type for each of the following values. If a value is invalid explain
why it is.
double by default
Invalid, no such construct
char (Back slash)
EBITDA as a percentage of sales
Depreciation as a percentage of fixed assets
Dividend payout ratio
Depreciation & Amortization
How is a bonds value determined? What is the value of a 10-year
100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00
90.91 $ 82.64 $ 75.13 $ 68.30 $ 62.09 $ 56.45
What is the value o
Common Stockholders are the owners of a corporation, they have ownership rights which
they can elect directors as well as office managers. Stockholders also have preemptive
rights of purchasing additional shares as the firm sells.
1. Value of Stock
Chapter 1: An Overview of Financial Management
Chapter 2: Financial Markets and Institutions
Chapter 3: Financial Statements, C
The Balance of Payments
BCA + BKA + BRA = 0
BCA = balance on current account
BKA = balance on capital account
BRA = balance on the reserves account
Under a pure flexible exchange rate
BCA + BKA = 0
U.S. Balance of Payments Data
THEORETICAL RELATIONSHIPS: What Determines Foreign Exchange Rates?
A Comprehensive and Integrated Framework in Foreign Exchange Rate Determination: The chart
summarizes relationships among various macro factors in determining exchange rates.
These data of foreign currency quotes are taken from the Financial Section of the Newspaper.
ILLUSTRATING MULTI CURRENCY ARBITRAGE
Key Currency Cross Rates - Taken from Wall Street Journal 2007
Each Foreign country Each Country has a
is unique and is not
always understood by environment: Base
GLOBAL Bank Evaluation and Management
$ (Million) %
Balance Sheet of A Typical Bank
Cash at Hand
at Central Bank
Table 1: Growth and Dominance of Internet and Telecom
WORLD INTERNET USAGE AND POPULATION STATISTICS
June 30, 2012
of TableWorld Regions
Uses of Country Risk in Global
is Country Risk?
Why is it Important?
What factors affect it?
How rating agencies determine Country
How reliable / Consistent is it?
How do Corporations use it?
Strategies to mitigate Country risk.
How Global Managers create Value?
Corporate VALUE CREATION STRATEGY
Per Finance Theory, a Financial Manager Can
Create Value by:
1. Enable Sales growth and Market Share growth
2. Growth of Operating profit margin
3. Lowering Cash tax rate
4. Incremental i
Global Financial Strategy
The Greek Letters
Example (Page 365)
A bank has sold for $300,000 a European call option on 100,000
shares of a non-dividend-paying stock (the price of the option per
share, textbook style, is therefore $3.00).
S0 = 49, K = 50, r = 5%, s = 20
Class Case #1: TS
Fixed Income Securities
Suppose the prices of one-year, two-year, and three-year zero coupon bonds
each with a par value of $100 are $90; $80, and $70, respectively.
1. Form a portfolio of zero coupon bonds that replicates a three-year $
Case #2, Fixed Income Securities
Consider a pool of new (unseasoned) 15-year mortgages with a contract
rate of 6% compounded monthly and principal value of $100M. To save
paper, print only first and last 20 rows of amortization and cash
flow tables with l
CHEAPER LOAN: WEST HAMPTON
OR EAST HAMPTON?
Quoted interest rate
Amount borrowed to
get $100 today
Date 1, get loan
Date 2, pay it back
10 Effective annual interest
Date 1, get loan
1). Consider investment/production and consumption of one person in a simple twoperiod economy without capital markets. Use diagrams to describe investment and
consumption of this rational individual given a subjective rate of time preference. Extend