International Corporate Finance参考.ppt

Chapter Outline 32.1 Terminology 32.2 Foreign Exchange Markets and Exchange Rates 32.3 The Law of One Price and Purchasing Power Parity 32.4 Interest Rates and Exchange Rates: Interest Rate Parity 32.5 International Capital Budgeting 32.6 International Financial Decisions 32.7 Reporting Foreign Operations 32.8 Summary and Conclusions 32.1 Terminology American Depository Receipt (ADR): a security issued in the U.S. to represent shares of a foreign stock. Cross rate: the exchange rate between two foreign currencies, e.g. the exchange rate between ￡ and ￥. Euro (€): the single currency of the European Monetary Union which was adopted by 11 Member States on 1 January 1999. These member states are: Belgium, Germany, Spain, France, Ireland, Italy, Luxemburg, Finland, Austria, Portugal and the Netherlands. Eurobonds: bonds denominated in a particular currency and issued simultaneously in the bond markets of several countries. 32.1 Terminology Eurocurrency: money deposited in a financial center outside the home country. Eurodollars are dollar deposits held outside the U.S.; Euroyen are yen denominated deposits held outside Japan. Foreign bonds: bonds issued in another nation’s capital market by a foreign borrower. Gilts: British and Irish government securities. LIBOR: the London Interbank Offer Rate is the rate most international banks charge on another for loans of Eurodollars overnight in the London market. 32.2 Foreign Exchange Markets and Exchange Rates Without a doubt the foreign exchange market is the world’s largest financial market. In this market one country’s currency is traded for another’s. Most of the trading takes place in a few currencies. FOREX Market Participants The FOREX market is a two-tiered market: Interbank Market (Wholesale) About 700 banks worldwide stand ready to make a market in Foreign exchange. Nonbank dealers account for about 20% of the market. There are FX brokers who match buy and sell orders but do not carry inventory and FX specialists. C