国际财务管理课后习题答案解析Word文档下载推荐.doc

国际财务管理课后习题答案解析Word文档下载推荐.doc

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SOLUTIONSTOEND-OF-CHAPTERQUESTIONSANDPROBLEMS

QUESTIONS

1.Whyisitimportanttostudyinternationalfinancialmanagement?

Answer:

Wearenowlivinginaworldwhereallthemajoreconomicfunctions,i.e.,consumption,production,andinvestment,arehighlyglobalized.Itisthusessentialforfinancialmanagerstofullyunderstandvitalinternationaldimensionsoffinancialmanagement.Thisglobalshiftisinmarkedcontrasttoasituationthatexistedwhentheauthorsofthisbookwerelearningfinancesometwentyyearsago.Atthattime,mostprofessorscustomarily（andsafely,tosomeextent）ignoredinternationalaspectsoffinance.Thismodeofoperationhasbecomeuntenablesincethen.

2.Howisinternationalfinancialmanagementdifferentfromdomesticfinancialmanagement?

Therearethreemajordimensionsthatsetapartinternationalfinancefromdomesticfinance.Theyare:

1.foreignexchangeandpoliticalrisks,

2.marketimperfections,and

3.expandedopportunityset.

3.Discussthemajortrendsthathaveprevailedininternationalbusinessduringthelasttwodecades.

The1990sbroughtarapidintegrationofinternationalcapitalandfinancialmarkets.Impetusforglobalizedfinancialmarketsinitiallycamefromthegovernmentsofmajorcountriesthathadbeguntoderegulatetheirforeignexchangeandcapitalmarkets.Theeconomicintegrationandglobalizationthatbeganintheeightiesispickingupspeedinthe1990sviaprivatization.Privatizationistheprocessbywhichacountrydivestsitselfoftheownershipandoperationofabusinessventurebyturningitovertothefreemarketsystem.Tradeliberalizationandeconomicintegrationcontinuedtoproceedatboththeregionalandgloballevels.InEurope,manyEUmembercountrieshaveadoptedthecommoncurrency,euro,thathasbecomethesecondglobalcurrencyaftertheU.S.dollar.

4.Howisacountry’seconomicwell-beingenhancedthroughfreeinternationaltradeingoodsandservices?

AccordingtoDavidRicardo,withfreeinternationaltrade,itismutuallybeneficialfortwocountriestoeachspecializeintheproductionofthegoodsthatitcanproducerelativelymostefficientlyandthentradethosegoods.Bydoingso,thetwocountriescanincreasetheircombinedproduction,whichallowsbothcountriestoconsumemoreofbothgoods.Thisargumentremainsvalidevenifacountrycanproducebothgoodsmoreefficientlythantheothercountry.Internationaltradeisnota‘zero-sum’gameinwhichonecountrybenefitsattheexpenseofanothercountry.Rather,internationaltradecouldbean‘increasing-sum’gameatwhichallplayersbecomewinners.

5.Whatconsiderationsmightlimittheextenttowhichthetheoryofcomparativeadvantageisrealistic?

ThetheoryofcomparativeadvantagewasoriginallyadvancedbythenineteenthcenturyeconomistDavidRicardoasanexplanationforwhynationstradewithoneanother.Thetheoryclaimsthateconomicwell-beingisenhancedifeachcountry’scitizensproducewhattheyhaveacomparativeadvantageinproducingrelativetothecitizensofothercountries,andthentradeproducts.Underlyingthetheoryaretheassumptionsoffreetradebetweennationsandthatthefactorsofproduction（land,buildings,labor,technology,andcapital）arerelativelyimmobile.Totheextentthattheseassumptionsdonothold,thetheoryofcomparativeadvantagemaylnotrealisticallydescribeinternationaltrade.

6.Whataremultinationalcorporations（MNCs）andwhateconomicrolesdotheyplay?

Amultinationalcorporation（MNC）canbedefinedasabusinessfirmincorporatedinonecountrythathasproductionandsalesoperationsinseveralothercountries.Indeed,someMNCshaveoperationsindozensofdifferentcountries.MNCsobtainfinancingfrommajormoneycentersaroundtheworldinmanydifferentcurrenciestofinancetheiroperations.Globaloperationsforcethetreasurer’sofficetoestablishinternationalbankingrelationships,toplaceshort-termfundsinseveralcurrencydenominations,andtoeffectivelymanageforeignexchangerisk.

7.RossPerot,aformerPresidentialcandidateoftheReformParty,whichisathirdpoliticalpartyintheUnitedStates,hadstronglyobjectedtothecreationoftheNorthAmericanTradeAgreement（NAFTA）,whichnonethelesswasinauguratedin1994.PerotfearedthelossofAmericanjobstoMexicowhereitismuchcheapertohireworkers.WhatarethemeritsanddemeritsofPerot’spositiononNAFTA?

ConsideringtherecenteconomicdevelopmentsinNorthAmerica,howwouldyouassessPerot’spositiononNAFTA?

SincetheinceptionofNAFTA,manyAmericancompaniesindeedhaveinvestedheavilyinMexico,sometimesrelocatingproductionfromtheUnitedStatestoMexico.AlthoughthismighthavetemporarilycausedunemploymentofsomeAmericanworkers,theywereeventuallyrehiredbyotherindustriesoftenforhigherwages.Atthesametime,Mexicohasbeenexperiencingamajoreconomicboom.ItseemsclearthatbothMexicoandtheU.S.havebenefitedfromNAFTA.Perot’sconcernappearstohavebeenillfounded.

8.In1995,aworkinggroupofFrenchchiefexecutiveofficerswassetupbytheConfederationofFrenchIndustry（CNPF）andtheFrenchAssociationofPrivateCompanies（AFEP）tostudytheFrenchcorporategovernancestructure.Thegroupreportedthefollowing,amongotherthings:

“TheboardofdirectorsshouldnotsimplyaimatmaximizingsharevaluesasintheU.K.andtheU.S.Rather,itsgoalshouldbetoservethecompany,whoseinterestsshouldbeclearlydistinguishedfromthoseofitsshareholders,employees,creditors,suppliersandclientsbutstillequatedwiththeirgeneralcommoninterest,whichistosafeguardtheprosperityandcontinuityofthecompany”.Evaluatetheaboverecommendationoftheworkinggroup.

TherecommendationsoftheFrenchworkinggroupclearlyshowthatshareholderwealthmaximizationisnotauniversallyacceptedgoalofcorporatemanagement,especiallyoutsidetheUnitedStatesandpossiblyafewotherAnglo-SaxoncountriesincludingtheUnitedKingdomandCanada.Tosomeextent,thismayreflectthefactthatshareownershipisnotwidespreadinmostothercountries.InFrance,about15%ofhouseholdsownshares.

9.Emphasizingtheimportanceofvoluntarycompliance,asopposedtoenforcement,intheaftermathofsuchcorporatescandalsasthoseinvolvingEnronandWorldCom,U.S.PresidentGeorgeW.Bushstatedthatwhiletougherlawsmighthelp,“ultimately,theethicsofAmericanbusinessdependsontheconscienceofAmerica’sbusinessleaders.”Describeyourviewonthisstatement.

Therecanbedifferentanswerstothisquestion.Ifbusinessleadersalwaysbehavewithahighethicalstandard,manyofthecorporatescandalswehaveseenlatelymightnothavehappened.Sincewecannotfullydependontheethicalbehavioronthepartofindividualbusinessleaders,thesocietyshouldprotectitselfbyadoptingtherules/regulationsandgovernancestructurethatwouldinducebusinessleaderstobehaveintheinterestofthesocietyatlarge.

10.SupposeyouareinterestedininvestinginsharesofNokiaCorporationofFinland,whichisaworldleaderinwirelesscommunication.Butbeforeyoumakeinvestmentdecision,youwouldliketolearnaboutthecompany.VisitthewebsiteofYahoo（）andcollectinformationaboutNokia,includingtherecentstockpricehistoryandanalysts’viewsofthecompany.Discusswhatyoulearnaboutthecompany.Alsodiscusshowtheinstantaneousaccesstoinformationviainternetwouldaffectthenatureandworkingsoffinancialmarkets.

Asstudentsmighthavelearnedfromvisitingthewebsite,informationisreadilyavailableevenforforeigncompanieslikeNokia.Readyaccesstointernationalinformationhelpsintegratefinancialmarkets,dismantlingbarrierstointernationalinvestmentandfinancing.Integration,however,mayhelpafinancialshockinonemarkettobetransmittedtoothermarkets.

MINICASE:

NIKEANDSWEATSHOPLABOR

Nike,acompanyheadquarteredinBeaverton,Oregon,isamajorforceinthesportsfootwearandfashionindustry,withannualsalesexceeding$12billion,morethanhalfofwhichnowcomefromoutsidetheUnitedStates.Thecompanywasco-foundedin1964byPhilKnight,aCPAatPriceWaterhouse,andBillBowerman,collegetrackcoach,eachinvesting$500tostart.Thecompany,initiallycalledBlueRibbonSports,changeditsnametoNikein1971andadoptedthe“Swoosh”logo—recognizablearoundtheworld—originallydesignedbyacollegestudentfor$35.Nikebecamehighlysuccessfulindesigningandmarketingmass-appealingproductssuchastheAirJordan,thebestsellingathleticshoeofalltime.

NikehasnoproductionfacilitiesintheUnitedStates.Rather,thecompanymanufacturesathleticshoesandgarmentsinsuchAsiancountriesasChina,Indonesia,andVietnamusingsubcontractors,andsellstheproductsintheU.S.andinternationalmarkets.IneachofthoseAsiancountrieswhereNikehasproductionfacilities,theratesofunemploymentandunder-employmentarequitehigh.ThewagerateisverylowinthosecountriesbyU.S.standards—thehourlywagerateinthemanufacturingsectorislessthan$1ineachofthosecountries,comparedwithabout$20intheUnitedStates.Inaddition,workersinthosecountriesoftenoperateinpoorandunhealthyenvironmentsandtheirrightsarenotparticularlywellprotected.Understandably,hostcountriesareeagertoattractforeigninvestmentslikeNike’stode