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Similar to forward contracts in terms of obligation to purchase or sell currency on a specific settlement date in the future. Differ from forward contracts because futures have standard contract specifications: Standardized number of units per contract (See Exhibit 5.2) Offer greater liquidity than forward contracts Typically based on U.S. doll...
33 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 911 | Lượt tải: 0
Relative Inflation: Increase in U.S. inflation leads to increase in U.S. demand for foreign goods, an increase in U.S. demand for foreign currency, and an increase in the exchange rate for the foreign currency. (See Exhibit 4.5) Relative Interest Rates: Increase in U.S. rates leads to increase in demand for U.S. deposits and a decrease in demand f...
23 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 909 | Lượt tải: 0
When the euro is appreciating against the dollar (based on an upward movement of the direct exchange rate of the euro), the indirect exchange rate of the euro is declining. When the euro is depreciating (based on a downward movement of the direct exchange rate) against the dollar, the indirect exchange rate is rising.
44 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 848 | Lượt tải: 0
Removal of the Berlin Wall: Led to reductions in trade barriers in Eastern Europe. Single European Act of 1987: Improved access to supplies from firms in other European countries. North American Free Trade Agreement (NAFTA): Allowed U.S. firms to penetrate product and labor markets that previously had not been accessible. General Agreement on Ta...
40 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 869 | Lượt tải: 0
Parent control of agency problems Parent should clearly communicate the goals for each subsidiary to ensure managers focus on maximizing the value of the subsidiary. Corporate control of agency problems Entire management of the MNC must be focused on maximizing shareholder wealth. Sarbanes-Oxley Act (SOX) Ensures a more transparent process fo...
36 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 931 | Lượt tải: 0
Property and casualty reinsurance: Effectively allocates a portion of insurance companies’ return and risk to other insurance companies Is similar to a commercial bank’s acting as a lending agent by allowing other banks to participate in the loan Allows a company to write larger policies because a portion of the risk involves will be assumed by ...
61 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 905 | Lượt tải: 0
Income allocation among securities firms The proportion of income derived from each source varies among securities firms in any particular year e.g., when IPOs are hot, income from underwriting fees will be high Some securities firms emphasize investment banking and therefore generate a high proportion of income from underwriting and advising fe...
45 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 1143 | Lượt tải: 0
A CFS: Can be used to finance distributor or dealer inventories until a sale occurs Can serve as an effective marketing tool by providing retail financing Advantages of captive finance subsidiaries A CFS allows a corporation to clearly separate its manufacturing and retailing activities from its financing activities A CFS has no reserve requir...
20 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 931 | Lượt tải: 0
Factors that affect cash flows (cont’d) Change in the risk-free interest rate SIs’ cash flows are inversely related to interest rate movements SIs rely heavily on short-term deposits SIs’ assets commonly have fixed rates Change in industry conditions SIs are exposed to regulatory constraints, technology, and competition
46 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 911 | Lượt tải: 0
No consensus measurement of risk exists that allows for comparison of various types of risk among all banks Beta is the degree of sensitivity of stock returns to the returns of the stock market as a whole: The regression model is applied to quarterly historical data The coefficient is an estimate of beta because it measures the sensitivity o...
21 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 912 | Lượt tải: 0