2024 – Chapters1 and 16 1 Describe the main business of the MNC 2 What is the
Multinational Financial Management – 2024
2024 – Chapters1 and 16 1 Describe the main business of the MNC 2 What is the.
Chapters1 and 16
(1) Describe the main business of the MNC.
Annual report
(2) What is the goal of the MNC according to the annual report?
(3) Describe the international business methods used by the MNC (such as exporting, importing,
International joint ventures
international joint ventures, development of foreign subsidiaries, etc.).
(4) In what countries does the MNC expect to expand in the near future? Why does the MNC see opportunities in those countries? What are the risks of pursuing new business in those countries?
(5) In what countries does the MNC export products? How has the MNC’s export business been
affected by recent changes in the factors that can affect the degree of international trade (such
as national income of foreign countries, inflation of foreign countries, or exchange rate
movements)?
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Chapters 12 and 13
(6) How is the foreign exchange market used by the MNC?
(7) How is the Eurocurrency market used by the MNC?
Eurobond market
(8) How is the Eurobond market used by the MNC?
(9) Does it appear that the MNC issues stock in foreign countries? (Determine if its stock is
listed on foreign stock markets.)
>chapters 4
Chapters 4, 8, 9, 10 and 11
(10 ) What are the currencies that the MNC uses to conduct its international business? How have the values of these currencies changed in the last year? (To answer this question, review a recent foreign exchange table provided by any business newspaper and another table containing quotations from a year ago.
) The answers to this question will be used in later chapters to determine how the firm was affected by changes in the values of these currencies.
(11) Does the MNC use currency futures or options for its international business? If so, explain how.
(12) Does the main foreign currency used by the MNC change on a daily basis against the dollar? (To answer this question, review the foreign exchange table for the last two or three issues of any business newspaper.)
Purchasing power parity holds
(13) Does it appear that the MNC is concerned about exchange rate movements? Based on this answer, does the MNC appear to believe that purchasing power parity holds? Explain.
(14) In what way the MNC is exposed to exchange rate risk? That is, how were the MNC’s cash flows recently affected by exchange rate movements according to its annual report?
(15) How were the MNC’s consolidated earnings affected due to the translation exposure according to its annual report?
(16) Does the MNC hedge any of its transaction exposure? If so, what techniques does the MNC use to hedge its transaction exposure? Explain numerically.
Translation exposure
(17) Does the MNC hedge any of its translation exposure? If so, what techniques does it use to hedge its translation exposure? Explain numerically.
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Chapters 15 and 16
(18) The textbook enumerate several benefits from direct foreign investment. Which of these benefits apply to the MNC’s direct foreign investment?
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>chapter 17
Chapter 17
(19) Does it appear that the MNC has had a large capital budget for foreign projects recently?
(20) Identify the countries where the MNC has recently implemented new projects. (This can usually be determined by reviewing the geographical segment data in the annual report and assessing the change in the MNC’s assets in each geographic region over the last few years.)
(21) Has the MNC undergone any restructuring (including international acquisitions or divestitures) recently? If so, describe the restructuring. Does this restructuring reflect a change in the focus of the MNC’s business?
Chapter 6
(22) Given the foreign countries where the MNC does most of its international business, describe the types of country risk to which the MNC is exposed to.
Chapter 14
Foreign country
(23) For the foreign country in which the MNC does most of its business, explain how you would estimate the MNC’s cost of capital used to support its business in that country.
(24) Given the foreign countries in which the MNC does most of its international business, do you think the MNC uses mostly equity or debt to support its foreign projects? Explain.
(25) Does the MNC borrow foreign currencies on a long-term basis? If so, does it appear that the MNC is borrowing the currencies that it needs to support its existing international business?
Chapter 18
(26) What types of payment methods do you think the MNC uses to pay for imports?
(27) What types of trade finance methods does the MNC use according to its annual report? If these methods are not described in the annual report, what trade finance methods do you think the MNC uses based on its operations?
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Chapter 19
(28) Does the MNC invest in short-term securities denominated in foreign currencies? Are the funds denominated in the same currencies that the MNC commonly uses to conduct its foreign business operations?
(29) Does the MNC borrow short-term funds in foreign currencies? If so, does it appear that
these funds are borrowed to finance existing business denominated in those foreign currencies?
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