Overview: The Finance Function in a Multinational Setting

Finance and Global Competition Multinational Corporations Other Multinational Commercial Entities Competitive Advantage and Business Strategy in the Global Arena

Foreign Exchange Markets Fixed Exchange Rates –Bretton Woods Agreement –Exchange Rate Treaties Floating Exchange Rates –Transition Period in Early 1970s –G7 Currencies –European Currency Unit (Euro) –Asian Crisis & other recent crises

Parity Relationships Interest Rate Parity Purchasing Power Parity Case 1: Walt Disney Yen Financing

Risks in the International Arena Interest Rate Risk Purchasing Power Risk Market Risk Exchange Risk Political Risk

Risk Management Forward Contracts Futures Contracts Options Swaps Other Interest Rate Risk Management (IIRM) products –Caps –Floors –Collars

Risk Management Cases Case 2: BF Goodrich-Rabobank Interest Rate Swap –Pioneering swap arrangement Case 3: Goldman, Sachs, & Co. –Nikkei Put Warrants Case 4: State of Connecticut Municipal Swap –Yield Curve Arbitrage and Risk Management

Performance Assessment & Portfolio Management Problems with Accounting Measuring and Managing Economic Risk Exposure International Market Risk

International Investment & Financing Decisions International Cost of Capital International Capital Budgeting –Case 5: Southport Minerals

International Financial Engineering Case 6: Citicorp –Innovation in the Eurodollar Bond Market