FOUNDATIONS OF MULTINATIONAL FINANCIAL

The focus throughout this book is on taking advantage of being multinational. Too often, companies focus on the threats and risks inherent in venturing abroad rather than on the opportunities that are available to multinational firms. These opportunities include the ability to obtain a greater degree of international diversification than security purchases alone can provide, as well as the ability to arbitrage between imperfect capital markets, thereby obtaining funds at a lower cost than could a purely domestic firm. The emphasis of this text is on broad concepts and practices rather than on extensive quantitative material. It is intended primarily for an undergraduate audience, but it is suitable for use in graduate level courses where less quantitative coverage is desirable. Many instructors will find the text ideal for use in bank management and executive development programs. It presumes a knowledge of basic corporate finance, economics, and algebra, but it does not require prior knowledge of international economics or international finance. All areas of corporate finance are explored, including working capital management, capital budgeting, cost of capital, and financial structure. However, this is done from the perspective of a multinational corporation, concentrating on those decision elements that are rarely, if ever, encountered by purely domestic firms. These elements include multiple currencies with frequent exchange-rate changes and varying rates of inflation, differing tax systems, multiple money markets, exchange controls, segmented capital markets, and political risks such asnationalization and expropriation.