Multinational Financial Management, 10th solution manual ch_11

《Multinational Financial Management, 10th solution manual ch_11》由会员上传分享，免费在线阅读，更多相关内容在教育资源-天天文库。

1、CHAPTER11MEASURINGANDMANAGINGECONOMICEXPOSUREThischapterdefineseconomicexposureastheextenttowhichagivencurrencychangewillchangethevalueofafirm.Exchangeriskisjustthevariabilityofafirm'svaluethatisduetouncertaincurrencychanges.Withregardtomanagingcurrencyrisk,thekeyissueistheproperroleofcorpo

2、ratefinancialmanagement.Totheextentthatthefirmisoperatinginefficientfinancialmarkets,theprimaryexposuremanagementobjectiveoffinancialexecutivesshouldbetoarrangetheirfirm'sfinancesinsuchawayastominimizetherealeffectsofexchangeratechanges.Themajorburdenofcopingwithexchangeriskmustbebornebythe

3、marketingandproductionpeoplebecausetheydealinimperfectproductandfactormarketswheretheirspecializedknowledgeprovidesarealadvantage.Theirroleistodesignmarketingandproductionstrategiestodealwithexchangerisks.Theappropriatemarketingandproductionstrategiesaresimilartothosethatwouldbesuitablefora

4、nyfirmconfrontedwithshiftingrelativeoutputorinputpricescausedbyanyeconomic,political,orsocialfactors.KeyPointsonMeasuringExchangeRisk1.Becausethevalueofafirmisequaltothepresentvalueoffuturecashflows,accountingmeasuresofexposurethatarebasedonchangesinthebookvaluesofforeigncurrencyassetsandli

5、abilitiesneedbearnorelationshiptoreality.2.Becausecurrencychangesareusuallyprecededbyoraccompaniedbychangesinrelativepricelevelsbetweentwocountries,itisimpossibletodetermineexposuretoagivencurrencychangewithoutconsideringsimultaneouslytheoffsettingeffectsofthesepricechanges.Thispointisillus

6、tratedbytheexamplesofApexSpain,theBrazilianshoemanufacturer,andChile.Thelattertwoexamplesshowwhathappenswhentherealexchangeratechangesbecauseinflationisnotoffsetbyexchangeratechanges.Onlyforeigncurrencydenominatedcontractualcashflowsareaffectedbynominalcurrencychanges.Noncontractualoperati

7、ngcashflowsareaffectedonlybyrealcurrencychanges.Thedomesticanalogueisthatonlynominalcashflowsareaffectedbyinflation.Noncontractualdomesticoperatingcashflowsareaffectedonlybyrelativepricechanges(i.e.,bychangesinthepricesofthefirm'sinputsrelativetoitsoutpu