tailieunhanh - Business finance multinational (Fourteenth edition): Part 2

(BQ) Continued part 1, Business finance multinational (Fourteenth edition): Part 2 has contents: Transaction exposure, transaction exposure, operating exposure, the global cost and availability of capital, raising equity and debt globally, multinational tax management,. and other contents. Invite you to refer this document. | PART 3 Foreign Exchange Exposure CHAPTER 10 Transaction Exposure CHAPTER 11 Translation Exposure CHAPTER 12 Operating Exposure CHAPTER 10 Transaction Exposure There are two times in a man s life when he should not speculate when he can t afford it and when he can. Following the Equator Pudd nhead Wilson s New Calendar Mark Twain. LEARNING OBJECTIVES Distinguish between the three major foreign exchange exposures experienced by firms Analyze the pros and cons of hedging foreign exchange transaction exposure Examine the alternatives available to a firm for managing a large and significant transaction exposure Evaluate the institutional practices and concerns of conducting foreign exchange risk management Explore advanced dimensions of foreign currency hedging Foreign exchange exposure is a measure of the potential for a firm s profitability net cash flow and market value to change because of a change in exchange rates. An important task of the financial manager is to measure foreign exchange exposure and to manage it so as to maximize the profitability net cash flow and market value of the firm. This chapter provides an in-depth discussion of transaction exposure which is the first category of two main accounting following chapters focus on translation exposure which is the second category of accounting exposures and operating exposure. The chapter concludes with a Mini-Case China Noah Corporation examining what a Chinese firm s currency hedging practices. Types of Foreign Exchange Exposure What happens to a firm when foreign exchange rates change There are two distinct categories of foreign exchange exposure for the firm those that are based in accounting and those that arise from economic competitiveness. Accounting exposures specifically described as transaction exposure and translation exposure arise from contracts and accounts being denominated in foreign currency. The economic exposure which we will .