tailieunhanh - Lecture Multinational financial management: Lecture 20 - Dr. Umara Noreen

After completing this chapter, students will be able to: To identify the common factors used by MNCs to measure a country’s political risk and financial risk; to explain the techniques used to measure country risk; and to explain how MNCs use the assessment of country risk when making financial decisions. | Country Risk Analysis 20 Lecture Measuring Country Risk The checklist approach involves: Assigning values and weights to political and financial risk factors, Multiplying the factor values with their weights, and summing up to give the political and financial risk ratings, Assigning weights to the risk ratings, and Multiplying the ratings with their weights, and summing up to give the country risk rating. Cougar Co.: Determining the Overall Country Risk Rating Cougar Co.: Derivation of the Overall Country Risk Rating The procedures for quantifying country risk will vary with the assessor, the country being assessed, as well as the type of operations being planned. Firms use country risk ratings when screening potential projects, and when monitoring existing projects. Measuring Country Risk Comparing Risk Ratings Among Countries One approach to comparing political and financial ratings among countries is the foreign investment risk matrix (FIRM ). The matrix displays financial (or . | Country Risk Analysis 20 Lecture Measuring Country Risk The checklist approach involves: Assigning values and weights to political and financial risk factors, Multiplying the factor values with their weights, and summing up to give the political and financial risk ratings, Assigning weights to the risk ratings, and Multiplying the ratings with their weights, and summing up to give the country risk rating. Cougar Co.: Determining the Overall Country Risk Rating Cougar Co.: Derivation of the Overall Country Risk Rating The procedures for quantifying country risk will vary with the assessor, the country being assessed, as well as the type of operations being planned. Firms use country risk ratings when screening potential projects, and when monitoring existing projects. Measuring Country Risk Comparing Risk Ratings Among Countries One approach to comparing political and financial ratings among countries is the foreign investment risk matrix (FIRM ). The matrix displays financial (or economic) and political risk by intervals ranging from “poor” to “good.” Each country can be positioned on the matrix based on its political and financial ratings. Actual Country Risk Ratings Across Countries Incorporating Country Risk in Capital Budgeting If the risk rating of a country is acceptable, the projects related to that country deserve further consideration. Country risk can be incorporated into the capital budgeting analysis of a proposed project either by adjusting the discount rate or by adjusting the estimated cash flows. Adjustment of the discount rate The higher the perceived risk, the higher the discount rate that should be applied to the project’s cash flows. Adjustment of the estimated cash flows By estimating how the cash flows could be affected by each form of risk, the MNC can determine the probability distribution of the net present value of the project. Incorporating Country Risk in Capital Budgeting Spartan, Inc.: Summary of Estimated NPVs Across Possible .

• Tài chính doanh nghiệp
• Multinational financial management
• Financial management
• Lecture Multinational financial management
• Measuring country risk
• Foreign investment risk matrix
• Country risk analysis
• Multinational capital budgeting
• Capital structure
• Multinational cost of capital
• Multinational cost
• Capital budgeting analysis
• International project
• Costs of capital
• Multinational corporation
• Capital budgeting
• International financial reporting standards
• Foreign exchange risk management
• International cash management
• Cash flow analysis
• Centralized cash management
• Lesson International financial management
• International financial management
• Globalization Multinational Firm
• The Multinational Firm
• Multinational Corporations
• Foreign Exchange Risk
• Quản lý tài chính
• Quản lý tài chính đa quốc gia
• Multinational finance
• Finance careers
• Optimizing cash flows
• Investing excess cash
• Management control
• Corporate control
• MNCs Financial Management
• Goals of MNC
• The rise of the MNCs
• Internationalization of Business
• Multinational Financial Management Theory
• Cash flows
• Multiple choice
• International equity markets
• Measures of liquidity
• Market structure