國際財務(wù)管理答案

1、國際財務(wù)管理答案Soluti ons for In ter nati onal Corporate FinanceChapter 1 . Chap ter 2 . Chap ter 3 . Chap ter 4 . Chap ter 5 . Chap ter 6 . Chap ter 7 . Chapter 8 . Chap ter 9 . Chap ter 10 Chap ter 11 Chap ter 121 017425 056647 07 88693Cha pter 1 5. In ter nati onal Bus in ess Methods. Sny der Golf Co.,

2、a U.S. firm that sells high-quality golf clubs in the U.S., wan ts to expand in ternatio nally by selli ng the same golf clubs in Brazil.a. Describe the tradeoffs that are involved for each method (such as exporting, direct foreign investment, etc.) that Snyder could use to achieve its goal.ANSWER:

3、Sn yder can export the clubs, but the transportation expenses may be high. If could establish a subsidiary in Brazil to produce and sell the clubs, but this may require a large in vestme nt of fun ds. It could use lice nsing, in which it specifies to a Brazilian firm how to p roduce the clubs. In th

4、is way, it does not have to establish its own subsidiary there.b. Which method would you recomme nd for this firm? Justify your recomme ndati on.ANSWER: If the amou nt of golf clubs to be soldin Brazil is small, it may decide to export. However, if the expected sales level is high, it may ben efit f

5、rom lice nsin g. If it is con fide nt that the exp ected sales level will rema in high, it may be willing to establish a subsidiary. The wages are lower in Brazil, and the large investment needed to establish a subsidiary may be worthwhile.8. Comp arative Adva ntage.a. Exp lai n how adva ntage bus i

6、n ess.relatesthe theory of to the n eed forcom parative intern ati onalANSWER:adva ntage sp ecialize othertheory imp lies that in production,Thecoun triesforcom parative coun tries shouldofthereby relying on some p roducts.Consequently, there is a need for international bus in ess.b. Explain how the

7、 p roduct cycle theory relatesto the growth of an MNC.advantages inwas initiallyANSWER: The product cycle theory suggests that at some point in time, the firm will attem pt to capitalize on its perceived markets other than where it established.s Intern ati onal10. Valuationof Wal- Mart Bus in ess. I

8、n additi on to all of its stores in theU.S., Wal-Mart has 11 stores in Argentina, 24 stores in Brazil, 214 stores in Can ada, 29 stores in China, 92 stores in Germany, 15 stores in South Korea, 611 stores in Mexico, and 261 stores in the U.K. Consider the value ofWal-Mart as being com po sed of two

9、p arts, a U.S. part (due to bus in ess in the U.S.) and a non-U.S. part (due to bus in ess in other coun tries).Exp la in how to determ ine the p rese nt value (in dollars) of the non-U.S. part assum ing that you had access to all the details of Wal-Mart bus in esses outside the U.S.future. You cand

10、ollars using a year. Determ ineANSWER: The non-U.S. part ca n be measured as the present value of future dollar cash flows result ing from the non-U.S. bus in esses. Based on rece nt earnings data for each store and applying an expected growth rate, you can estimate the remitted earnings that will c

11、ome from each country in each year in the con vert those cash flows to forecasted exchange rate per the present value of cash flows of all stores with in one coun try. Then rep eat the p rocess for other countries. Then add up all the present values that you estimated to derive a consolidated presen

12、t value of all non-U.S. subsidiaries.joint venture with brewery in Japan. Anheuser-Busch to15. In ter nati onal Joint Ven ture. An heuser-Busch, the p roducer of Budweiser and other beers, has recently expanded into Japan by engaging in a Kirin Brewery, the largest The joint venture enables have its

13、 beer distributed through Kirin s distributi on cha nn els in Japan. In addition, it can utilize Kirin facilities to p roduce beer that will be sold locally .In retur n, An heuser-Busch p rovides in formati on about the America n beer market to Kiri n.a. Explain how the joint venture can enable Anhe

14、user-Busch to achieve its objective of maximiz ing shareholder wealth.ANSWER: The joint venture creates a way for An heuser-Busch to distribute Budweiser throughout Japan. It en ables An heuser-Busch to pen etrate the Japan ese market without requiri ng a substa ntial in vestme nt in Japan.b. Exp la

15、i n how the joi nt ven ture can limit the risk of the in ter nati onal bus in ess.ANSWER: The joint venture has limited risk because Anheuser-Busch does not need toestablish its own distributi on n etwork in Japan. Thus, Anheuser-Busch may be able to use a smallerin vestme ntfor the in ter nati onal

16、bus in ess, and there is a higher p robability that the in ter nati onal bus in ess will be successful.is ableto benefitin Japan, accessiblesystembe so more about howc. Many in ter nati onal joi nt ven tures are intended to circumvent barriers that normally prevent foreign competition. What barrier

17、in Japan is Anheuser-Busch circumventing as a result of the joint ven ture? What barrier in the Un ited States is Kiri n circumve nti ng as a result of the joint ven ture? ANSWER: An heuser-Busch from Kirin distribution which would not normallyKirin is able to lear nits product across therefore brea

18、ksAnheuser-Busch expanded n umerous coun tries, and through an“ informatiortDarr”r.d. Explain how An heuser-Busch could lose some of its market share in coun tries outside Japan as a result of this p articular jo int ven ture.ANSWER: Anheuser-Busch could lose some of its market share to Kirin as a r

19、esult of exp lai ning its worldwide expansion strategies to Kirin. However, it app ears that An heuser-Busch exp ects the poten tial ben efits of the joint ven ture to outweigh any poten tial adverse effects.24. Global Competition. Explain why more sta ndardized p roduct sp ecificati ons across coun

20、 tries can in crease global com petiti on.ANSWER: Standardized product specifications allow firms to more easily expand their bus in ess across other coun tries, which in creases global com petiti on.Cha pter 2 4. Free Trade. There has been considerable momentum to reduce or remove trade barriers in

21、 an effort to achieve “ freetrade. ”et, one disgruntled executive of an exporting firm stated, “ Freetrade is not conceivable; we are always at the mercy of the exchange rate. Any country can use this mecha nism to impose trade barriers. ” What does this stateme nt mea n?ANSWER: This stateme nt imp

22、lies that eve n if there were no exp licit barriers, a gover nment could attem pt to manipu late excha nge rates to a level that would effectively reduce foreign com petiti on. For exam pie, a U.S. firm may be discouraged from attem pting to export to Japan if the value of the dollar is very high ag

23、a inst the yen. The prices of the U.S. goods from the Japan ese persp ective are too high because of the strong dollar. The reverse situati on could also be possible in which a Japanese exporting firm is priced out of the U.S. market because of astrong yen (weak dollar). Answer is based on opin io n

24、.foreign securities, which are not to negative shocks in the U.S, when MNCs believe that US overvalued, they can pursue8. In ter nati onal In vestme nts. In rece nt years many U.S.-based MNCs have in creased their in vestme nts in as susce ptible market. Also, securities are non-U.S. securities that

25、 are drive n by a differe nt market. Moreover, in periods of low U.S. interest rates, U.S. corporations tend to seek in vestme nts in foreig n securities. In gen eral, the flow of funds in to foreig n coun tries tends to decli ne whe n U.S. i nvestors an tic ip ate a str ong dollar.a. Exp lai n how

26、exp ectati ons of a stro ng dollar can affect the tendency of U.S. investors to in vest abroad.ANSWER: A weak dollar would discourage U.S. in vestors from in vest ing abroad. It can cause the investors to purchase foreign currency (when investing) at a higher exchange rate than the exchange rate at

27、which they would sell the curre ncy (whe n the in vestme nt is liquidated).b. Exp la in how low U.S. i nterest rates can affect the tendency of U.S.-based MNCs to in vest abroad.ANSWER:Low U.S. in terest rates can en courage U.S.-based MNCs to in vest abroad, as in vestors seek higher retur ns on th

28、eir in vestme nt tha n they can earn in the U.S.c. In general terms, what is the attraction of foreig n in vestme nts to U.S. i nvestors?ANSWER: The main attraction is potentially higher retur ns. The in ter nati onal stocks can out perform U.S. stocks, and in ter nati onal bonds can out perform U.S

29、. bon ds. However, there is no guara ntee that the returns on in ter nati onal in vestme nts will be so favorable. Some in vestors may also pu rsue in ter nati onal in vestme nts to diversify their investment portfolio, which can po ssibly reduce risk.10. Excha nge Rate Effects on Trade.a. Ex pl ai

30、n why a stron ger dollar could enl arge the U.S. bala nee of trade deficit. Explain why a weaker dollar could affect the U.S. balanee of trade deficit.ANSWER: A stro nger dollar makes US exports more expensive to importers and may reduce imports. It makes U.S. imports cheap and may in crease U.S. im

31、 ports. A weaker home curre ncy in creases the p rices of imp orts pu rchased by the home country and reduces the p rices p aid by foreig n bus in esses for the home country exports. This should cause a decrease in the home country dema nd for imp orts and an in crease in the foreig n dema nd for th

32、e home country exp orts, and therefore in crease the curre nt acco unt. However, this relati on shi p can be distorted by other factors.b. It is sometimes suggested that a floating excha nge rate will adjust to reduce or elim in ate any current account deficit. Explain why this adjustme nt would occ

33、ur.ANSWER: A current account deficit reflects a net sale of the home currency in exchange for othercurre ncies.This pl aces dow nwardpressure on that home currency value. If the currency weakens, it will reduce the home dema nd for foreig n goods (since goods will now be more expen sive), and will i

34、n crease the home export volume (sinee exports will appear chea per to foreig n coun tries).c. Why does the excha nge rate not always adjust to a curre nt acco unt deficit?ANSWER: In some cases, the home currency will rema in strong eve n though a curre nt account deficit exists, since other factors

35、 (such as international capital flows) can offset the forces placed on the currency by the currentacco unt.13. Effects of Tariffs. Assume a sim pie world in which the U.S. exports soft drinks and beer to France and imports wine from France. If the U.S. imposes large tariffs on the French wine, ex pl

36、 ai n the likely impact on the values of the U.S. beverage firms, U.S. wi ne p roducers, the French beverage firms, and the French wine p roducers.ANSWER: The U.S. wine producers benefit from the U.S. tariffs, while the French wine producers are adversely affected. The French government would likely

37、 retaliate by imposing tariffs on the U.S. beverage firms, which would adversely affect their value. The French beverage firms would ben efit.15. Dema nd for Exp orts. A relatively small U.S. bala nee of trade deficit is comm only attributed to a strong dema nd for U.S. exp orts. What do you think i

38、s the un derly ing reas on for the strongdema nd for U.S. exp orts?ANSWER: The stro ng dema nd for U.S. exports is commo niy attributed to strong foreig n econo mies or to a weak dollar.Cha pter 3 5. In ter nati onal Finan cial Markets. Rece ntly, Wal-Mart established two retail outlets in the city

39、of Shen zhe n, China, which has a popu lati on of 3.7 million. These outlets are massive and contain products purchased locally as well as imp orts. As Wal-Mart gen erates earnings bey ond what it n eeds in She nzhe n, it may remit those earnings back to the United States. Wal-Mart is likely to buil

40、d additio nal outlets in Shenzhen or in other Chinese cities in the future.a. Explain how the Wal-Mart outlets in China would use the spot market in foreig n excha nge. ANSWER: The Wal-Mart stores in Chi na need other currencies to buy products from other coun tries, and must con vert the Chin ese c

41、urre ncy (yua n) into the other curre ncies in the spot market to purchase these products. They also could use the spot market to con vert excess earnings denominated in yuan into dollars,which would be remitted to the U.S. parent.b. Explain how Wal-Mart might utilize the in ter nati onalmoney marke

42、twhe n it isThus,a deposit or other MNCsthelending source for Wal-Mart on a short-term basis.c. Exp lai n how Wal-Mart intern ati onal bond market establishme nt of new outlets in foreig n markets. ANSWER:could use theto finance theWal-Mart could issue bonds in theestablishi ng other Wal-Mart stores

43、 in Asia. ANSWER: Wal-Mart may need to maintain some depo sits in the Eurocurre ncy market that can be used (when needed) to support the growth of Wal-Mart stores in various foreign markets. Whe n some Wal-Mart stores in foreig n markets n eed fun ds, they borrow from banks in the Eurocurre ncy mark

44、et. Eurocurrency market serves as andEurob ondestablishmarket to gen erate funds n eeded to new outlets. The bonds may be denominated in the currency that is needed; then, once the stores are established, some of the cash flows gen erated by those stores could be used to pay in terest on the bon ds.

45、11. Foreig n Excha nge. You just came back from Canada, where the Canadian dollar was worth $.70. You still have C$200 from your trip and could excha nge them for dollars at the air port, but the air port foreig n excha nge desk will only buy them for $.60. Next week, you will be going to Mexico and

46、 will n eed p esos. The air port foreig n excha nge desk will sell you p esos for $.10 per p eso. You met a tourist at the air port who is from Mexico and is on his way to Can ada. He is willi ng to buy your C$200 for 130 pesos. Should you accept the offer or cash the Canadian dollars in at the air

47、port? Exp lai n.ANSWER: Exchange with the tourist. If you exchange the C$ for pesos at the foreign exchange desk, the cross-rate is $.60/$10 = 6.Thus, the C$200 would be exchanged for 120 pesos (computed as 200 x 6). If you exchange Can adia n dollars for p esos with the tourist, you will receive 13

48、0 p esos.15. Excha nge Rate Effects on Borrowi ng. Exp la in how the app reciati on of the Japan ese yen against the U.S. dollar would affect the return to a U.S. firm that borrowed Japanese yen and used the p roceeds for a U.S. p roject.ANSWER: If the Japan ese yen app reciates over the borrow ing

49、p eriod, this imp lies that the U.S. firm con verted yen to U.S. dollars at a lower excha nge rate tha n the rate at which it p aid for yen at the time it would repay the loa n. Thus, it is adversely affected by the app reciati on .Its cost of borrowing will be higher as a result of this app reciati

50、 on.20. Interest Rates. Why do interest rates vary among coun tries? Why are in terest ratesanother country, currency used innormally similar for those European countries that use the euro as their currency? Offer a reas on why the gover nment in terest rate of one country could be slightly higher t

51、ha n that of the government interest rate of even though the euro is the both coun tries.ANSWER: Interest rates ineach country are based on the supply of funds and dema nd for funds for a give n curre ncy. However, the supply and dema nd con diti ons for the euro are dictated by all p artic ip at in

52、g coun tries in aggregate, and do not vary among p artic ip ati ng coun tries. Yet, the gover nment in terest rate in one country that uses the euro could be slightly higher than others that use the euro if it is subject to default risk. The higher interest rate would reflect a risk p remium.21. For

53、wardCon tract.The WolfpackCorpo rati on is a U.S. exp orter that in voices itsin Britishpound willthe future,a forwardexports to the United Kingdom pounds. If it expects that the appreciate against the dollar in should it hedge its exports with con tract? Exp la in.ANSWER: The forward con tractfutur

54、e receivables or p ayablescan hedge in foreig n curre ncies to in sulate the firm aga inst excha nge rate risk. Y et, in this case, the Wolf pack Corpo rati on should not hedge because it would ben efit from app reciati on of the pound whe n it con verts the pounds to dollars.Cha pter 4 3. I nflatio

55、 n Effects on Excha nge Rates. Assume that the U.S. i nflatio n rate becomes high relative to Can adia n in flati on. Other thi ngs being equal, how should this affect the (a) U.S. dema nd for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Can adia n doll

56、ar?ANSWER:Dema nd for Ca nadian dollars should in crease, supply of Can adia n dollars for sale should decrease, and the Can adia n dollar value should in crease.12. Factors Affecting Exchange Rates. Mexico tends to have much higher inflation than the United States and also much higher interest rate

57、s than the United States. Inflation and in terest rates are much more volatile in Mexico tha n in in dustrialized coun tries. The value of theMexica n p eso is typ ically more volatile tha n the curre ncies of in dustrialized coun tries from a U.S. perspective; it has typically depreciated from one

58、year to the next, but the degree of depreciation has varied substantially. The bid/ask spread tends to be wider for the pes tha n for curre ncies of in dustrialized coun tries.a. Ide ntify the most obvious econ omic reas on for the p ersiste nt dep reciati on of the p eso.ANSWER: The high inflation in Mexico places continual downward pressure on the value of the p eso.b. High in terest rates are comm on ly exp ected to strengthen a country currency because they can encourage foreign investment in securities in that coun try, whi