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International Financial Management 6th Edition By Jeff Madura

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Pages: 650
File size: 8.68 MB
Format: Digital PDF
Course: Accounting
Category: eBook[PDF]

About this ebook

The 6th Edition of International Financial Management by Jeff Madura (co-authored with Roland Fox for the EMEA region edition) is structured into five distinct parts. The textbook builds from macro-level international trade concepts down to corporate-level foreign exchange risk and asset management strategies for Multinational Corporations (MNCs). [1, 2, 3]

The comprehensive table of contents and topics covered include:

🗒 Part 1: The International Financial Environment

This section provides a macro overview of global economic systems and how corporations interact across international boundaries. [1, 2]

Multinational Financial Management: Overview of MNC goals, agency problems, and theories of international business (Comparative Advantage, Imperfect Markets, and Product Cycle Theory). [1, 2]
International Flow of Funds: The balance of payments, trade agreements, factors affecting international trade flows, and the role of agencies like the IMF and World Bank. [1]
International Financial Markets: Motives for global business, international money markets, Eurocurrency markets, international credit/bond markets, and international stock markets. [1]
Exchange Rate Determination: Measuring currency movements and how inflation, interest rates, income levels, and government controls dictate exchange rate equilibria. [1]
Currency Derivatives: Mechanics and pricing of forward contracts, currency futures, currency options, and currency swap markets used for speculative and hedging purposes. [1, 2]

📈 Part 2: Exchange Rate Behavior

This segment zeroes in on how international monetary policies and macroeconomic variables interplay to alter currency valuation. [1, 2]

Government Influence on Exchange Rates: Exchange rate systems (fixed, floating, pegged), central bank interventions (direct vs. indirect), and the financial dynamics of the Eurozone. [1]
International Arbitrage and Interest Rate Parity (IRP): Locational arbitrage, triangular arbitrage, covered interest arbitrage, and the graphic/mathematical formulation of IRP. [1]
Relationships Among Inflation, Interest Rates, and Exchange Rates: Comprehensive synthesis of Purchasing Power Parity (PPP), the Fisher Effect, and the International Fisher Effect (IFE). [1]

🛡 Part 3: Exchange Rate Risk Management

This section focuses entirely on how corporate managers identify, quantify, and mitigate volatility in foreign currency markets. [1, 2]

Forecasting Exchange Rates: Technical, fundamental, market-based, and mixed forecasting methodologies.
Measuring Exposure to Exchange Rate Fluctuations: Understanding and computing Transaction Exposure, Economic Exposure, and Translation Exposure using Value-at-Risk (VaR).
Managing Transaction Exposure: Practical techniques for hedging future cash transactions using forward, money market, or options hedges.
Managing Economic and Translation Exposure: Adjusting corporate policy, restructuring operations, and using financial hedges to offset long-term economic and financial accounting distortions. [1, 2]

📊 Part 4: Long-Term Asset and Liability Management

This division covers macro-level corporate expansion, including foreign investments, cross-border corporate governance, and capital planning. [1]

Direct Foreign Investment (DFI): Motives for DFI, assessing benefits, and methods used by firms to break into foreign markets.
Multinational Capital Budgeting: Developing step-by-step cash flow models, determining the home currency value of cross-border investments, and adjusting for taxes, blocked funds, and terminal values.
International Corporate Governance and Control: Corporate governance standards across countries, target selection for international acquisitions, and evaluating post-merger execution.
Country Risk Analysis: Identifying political and financial risk variables, measuring corporate vulnerability, and establishing strategic defensive methods to mitigate risk.
Multinational Capital Structure and Cost of Capital: Assessing cost of capital across borders, evaluating debt versus equity structures globally, and understanding factors that affect capital costs for subsidiaries.
Long-Term Debt Financing: Issuing international bonds vs. domestic loans, managing long-term currency risk on financing, and structuring interest rate swaps. [1, 2, 3]

➡️ Part 5: Short-Term Asset and Liability Management

The final section handles the operational, day-to-day corporate treasury actions required to ensure global operational liquidity. [1]

Financing International Trade: Working capital techniques like letters of credit, drafts, bill of lading, factoring, and specialized trade-financing programs.
Short-Term Financing: Choosing optimal foreign currencies for short-term borrowing and evaluating effective financing rates.
International Cash Management: Optimizing corporate cash optimization, accelerating collections, minimizing transaction fees, and investing excess cash into global money market instruments. [1]