Multinational Finance, 4th Edition

Multinational Finance assumes the viewpoint of the financial manager of a multinational corporation with investment or financial operations in more than one country. The text provides a framework for evaluating the many opportunities, costs, and risks of multinational operations in a manner that allows readers to see beyond the algebra and terminology to the general principles of multinational financial management.

Multinational Finance includes coverage of traditional topics such as foreign exchange and Eurocurrency markets, multinational treasury management, management of currency risk exposures (transaction, operating, and translation), country risk, multinational capital structure and cost of capital, taxation of foreign source income, and international portfolio diversification. Also included are distinctive chapters on the economic rationale for hedging currency risks, derivatives markets (with separate chapters on currency futures, options, and swaps), real options in international markets, international corporate governance, and international asset pricing.

Intended for MBA and advanced undergraduate classes, the text requires only a single preparatory course in finance. Chapters that extend material from the first course begin with a brief review of the fundamentals. Numerous graphs and figures assist the reader in understanding key financial concepts and techniques are used in practice. Advanced material is placed in chapter appendices, so that study can be tailored to each individual's objectives. 

Exciting new material on topics of contemporary interest. The text includes information on the best practices of multinational corporations, as well as the current thinking of top scholars in the field.

•  Concepts: Project valuation under equilibrium and disequilibrium conditions, time-varying expected returns and volatilities, hedge funds and private equity, agency costs, moral hazard, behavioral finance, home bias, the legal environment and investor protections, tunneling, the diversification discount, asset allocation styles, and the success of politically-connected CEOs.
•  Tools: All-in costs, the “Greeks” (deltas, gammas, vegas, & thetas), price elasticities, conditional & implied volatilities, exchange-traded funds (ETFs), hedge funds and private equity, credit derivatives, project finance, assets-in-place and growth options, and the no-arbitrage condition.
• Models: Exchange rate forecasting, value-at-risk, conditional asset pricing models, factor models (e.g., currency; global vs. country vs. industry), the international value premium, and international momentum strategies.

This edition of Multinational Finance retains the classic features developed in earlier editions, as well as a wealth of new material on current and future topics.

Distinctive chapters on key topics. Distinctive chapters are devoted to topics of special interest.

• Chapters 5-7 provide detailed treatments of futures, options, and swaps. These specialized chapters are appropriate for students desiring a fuller understanding of the financial tools available for currency risk management.
• Chapter 8 develops the rationale for hedging currency risk. This provides a deeper understanding of the motives of the firm’s stakeholders for managing currency risk, and the valuation consequences of currency risk management for the firm’s stakeholders.
•  Chapter 17 takes a real options approach to valuing the flexibility in cross-border investments. 
• Chapter 18 describes cross-border differences in corporate governance and their implications for the international market for corporate control. 
• Chapters 19-21 develop the international aspects of a traditional course in investments, with chapters devoted to international capital markets, portfolio diversification, and asset pricing.

Learning Aides

 Several learning aides are used to highlight the main points in each chapter and assist the student in learning the material. 

• Sidebars run in the margins and highlight key concepts and definitions.
• Market Updates and Applications appearing as boxed essays provide real-world examples and practical applications of the conceptual material.
• Websites appearing in the text link the chapter topics to the real world.
• Key Terms appear in boldface the first time they are used. Key terms are listed at the end of each chapter and defined in a comprehensive Glossary.
• An annotated list of Suggested Readings at the end of each chapter provides a gateway to the academic and practitioner literature in the area.
• More than 200 end-of-chapter Conceptual Questions summarize the key ideas in each chapter and allow readers to test their understanding of the material.
• More than 150 end-of-chapter Problems provide practice in applying the financial concepts, techniques, and strategies. Solutions to even-numbered problems are provided at the end of the text.