International Corporate Finance -- Contents -- Preface -- Acknowledgments -- About the Author -- Chapter 1 What Is International Corporate Finance? -- The Uneven Reach of Globalization -- The Rise of the Multinational Corporation -- What Is Different about International Corporate Finance? -- Risks in the Wonderland of International Finance -- Foreign Exchange Risk -- Country Risk -- Mildly Segmented Global Financial Markets -- Internationalization and the Locus of the Finance Function -- The International Control Conundrum -- Exploiting the Multinational Enterprise System -- Constrained Optimization -- Summary -- Questions for Discussion -- References -- Part One The International Monetary Environment -- Chapter 2 Exchange Rates Regimes -- Some First Principles about Exchange Rate Determination -- Demand for Foreign Exchange -- Supply of Foreign Exchange -- Equilibrium Exchange Rate -- Factors Causing Exchange Rates to Change -- The Importance of News and the Role of Expectations -- How to Measure Exchange Rate Appreciation or Depreciation -- World Map of Exchange Rate Regimes: The Flexibility × Convertibility Space -- Floating Exchange Rates -- Managed Floating Exchange Rates (Dirty Float) -- Taxonomy of Central Bank Intervention -- Modus Operandi of Central Bank Intervention under a Managed Float -- Tracking Central Bank Intervention -- Central Bank Intervention and Market Expectations -- Stabilized or Pegged Exchange Rates -- Modus Operandi of Central Bank Intervention under a Stabilized Exchange Rate System -- Pegging to an Artificial Currency Unit (Mid-1970s to the Present) -- Fixed Currency Composition -- Currency Portfolio Diversification -- Secret Artificial Currency Units -- Two-Tier Exchange Markets -- Controlled Exchange Rates -- Single Controlled Exchange Rate -- Multiple Exchange Rates -- Crawling Peg or System of Mini-Devaluations.

Summary -- Appendix 2A: The Purchasing Power Parity Hypothesis -- The Law of One Price -- Absolute Purchasing Power Parity -- Relative Purchasing Power Parity -- Generalization -- Equivalent Formulation -- Critical Evaluation of the Purchasing Power Parity Hypothesis -- The Purchasing Power Parity Hypothesis as a Predictive Tool -- Questions for Discussion -- Problems -- References -- Chapter 3 Yesterday and Yesteryear A Brief History of the International Monetary System -- Chronology of the International Monetary System -- The Gold Standard (1878−1914, 1925−1931) -- The Bretton Woods System (1944−1971) -- Pegged Exchange Rates -- Exchange Controls -- The Demise of Bretton Woods -- Managed Floating Exchange Rates (1973−) -- European Monetary System and the European Currency Unit (1979−1999) -- Grid of Bilateral Par Values à la Bretton Woods -- The ECU and Divergence Indicators -- The EMS Straitjacket Comes Unglued -- Why Did the EMS Fail? -- Emerging Markets Currency Regimes and Crises -- Sovereign Debt Crisis (1982−1989) -- Collapse of the Soviet Empire (1989) -- Asian Financial Crisis (1997) -- Currency Boards and the Demise of the Argentine Peso -- The CFA Franc Zone -- European Monetary Union and the Birth of the Euro (1999−Present) -- Is the Euro-Zone an Optimum Currency Area? -- How Discrepant National Rates of Inflation Undermine the Stability of the Euro -- Is the Euro Doomed? -- Today and Tomorrow: The Current Map of Exchange Rates -- Floating Currencies -- "Pegged Yet Adjustable" Currencies -- Controlled Exchange Rates -- Summary -- Questions for Discussion -- Problems -- References -- Chapter 4 The Balance of Payments -- Fundamentals of Balance of International Payments Accounting -- Misconceptions about the Balance of Payments -- Balance of Payments Accounting -- Reading a Balance of Payments -- Current Account -- Capital Account.

Official Reserve Account -- Statistical Discrepancies: Errors and Omissions -- Balance of Payments and the Foreign Exchange Market -- Debtor versus Creditor Nations -- Linking the Balance of Payments to National Income -- Summary -- Questions for Discussion -- Problems -- References -- Part Two The Foreign Exchange Market and Currency Derivatives -- Chapter 5 The Foreign Exchange Market -- How Forex Is Traded: The Institutional Framework -- The FX Trading Room -- "The Market That Never Sleeps" -- Buy Side Meets Sell Side in the FX Market -- Buy Side Meets Sell Side through a Bank FX Dealer -- Buy Side Meets Sell Side Directly through Electronic Communication Networks (ECNs) -- Foreign Exchange Products -- Exchange Rate Quotations -- Currency Symbols -- Cross-Rates -- Bid-Ask Spreads -- Spatial Arbitrage and the Law of One Price -- Forward Exchange Contracts -- Summary -- Questions for Discussion -- Problems -- References -- Chapter 6 Interest Rate Arbitrage and Parity -- Interest Rate Arbitrage Theorem -- Arbitraging Short-Term Investment Opportunities: The International Cash Management/Investment Decision -- Algebraic Formulation of the Interest Rate Parity Theorem -- Arbi-Loan and the Financing Decision -- Pure Interest Rate Arbitrage -- Interest Rate Parity -- Equilibrium in the Forward Exchange Market and the No-Profitor Synthetic Forward Exchange Rate -- Interest Rate Differential and the Implicit Interest Rate as an Approximation of the Interest Rate Parity Theorem -- Critical Assessment of the Interest Rate Parity Theory -- Counterparty Risk -- Country Risk -- Transaction Costs: Interest Rate Arbitrage with Bid-Ask Spreads (Advanced) -- Uncovered Interest Rate Arbitrage and the Carry Trade -- Summary -- Appendix 6A: Interest Rate Parity and Asymmetric Taxation -- Appendix 6B: The Linkages between Interest, Inflation, and Exchange Rates.

International Fisher Effect -- Purchasing Power Parity -- Uncovered Interest Rate Parity -- Interest Rate Parity -- Forward Rates as Unbiased Forecasters of Future Spot Rates -- Questions for Discussion -- Problems -- References -- Chapter 7 Currency Futures, Options, and Swaps -- A Brief History of Derivatives -- Ancient Times -- Middle Ages -- Renaissance -- Industrial Revolution -- Information Age -- Currency Futures -- Contract Standardization -- Reading Futures Quotations -- Marking to Market and the Elimination of Credit Risk -- Hedgers and Speculators -- Pricing Currency Futures -- Currency Options -- Currency Option Contracts -- Risk Profile of Currency Options -- Buyer of a Call Option -- Writer of a Call Option -- Put Options -- Option Strategies -- Option Combinations -- Writing Covered Call Options -- Straddle -- Put-Call Parity Theorem -- The Valuation of Currency Options -- Intrinsic Value -- Time Value -- Key Parameters in Pricing Currency Options -- Delta and Delta Hedge -- Pricing Currency Options -- Derivatives and Zero-Premium Options -- Forward Range Agreement and Currency Collars -- Forward Participation Agreements -- Currency Swaps -- What Are Currency Swaps? -- Cash-Flow Analysis of a Currency Swap -- Valuation of Currency Swaps -- Interest Rate Swaps -- Reducing the Cost of Borrowing with Interest Rate Swaps -- Exploiting Comparative Advantage in the Debt Market through Interest Rate Swaps -- Valuing Interest Rate Swaps -- Why Do Firms Enter into Interest Rate Swaps? -- Combining Currency Swaps with Interest Rate Swaps -- Summary -- Questions for Discussion -- Problems -- References -- Part Three International Financing -- Chapter 8 The International Financial Sector and the Dynamics of Global Capital Markets -- Financing as a Global Procurement Decision -- The Financial System and Financial (Dis)Intermediation.

Banks versus Capital Markets: The Rising Tide of Disintermediation -- Securitization and the (Lower) Cost of Consumer Financing -- A Primer on Securitization -- Subprime Crisis, Securitization, Credit Default Swaps, and the AIG Debacle -- When Should a Firm Turn to Securitization? -- Future-Flow Securitization -- International Securitization -- Deregulation -- Kingdom of Denmark's Bull and Bear Notes -- Mapping the Financial System/Capital Market Emergence Process -- The Emergence Continuum and the National Cost of Capital -- Three-Dimensional (3-D) Segmentation Map -- A Mapping Paradigm for Emerging Capital Markets -- Summary -- Questions for Discussion -- Problems -- References -- Chapter 9 Sourcing Equity Globally -- A Grand Tour of Equity Markets -- Statistical Market Overview -- Trading Practices -- The World's Major Stock Markets -- Global Equity Financing as a Procurement Decision -- Internationalizing the Cost of Capital: The Landmark Case of Novo Industri -- Why Was the Copenhagen Stock Exchange Segmented from Other Developed Capital Markets? -- How Novo Internationalized Its Cost of Capital -- Why Do Firms Cross-List? -- Lowering the Cost of Equity Capital -- Enhanced Corporate Visibility Is Good for Business -- How to Source Equity Globally -- Equity Listing -- American Depositary Receipts (ADRs) -- Global Depositary Receipts -- Global Registered Shares -- Summary -- Questions for Discussion -- Problems -- References -- Chapter 10 Sourcing Debt from Global Bond Markets -- The International Debt Procurement Decision -- Grand Tour of the Global Debt Market -- Debt Securities -- Euro Bonds, Eurobonds, and Euro Eurobonds -- Cost of Foreign Currency Debt Financing -- A Primer on Bond Valuation -- The Effective Cost of Straight Foreign Debt -- The Impact of Taxation -- Debt Refinancing -- Straight Debt -- Currency Swaps.

Long-Term Forward Contracts.