Tài chính quốc tế (international finance)

CHAPTER 1: INTRODUCTION TO INTERNATIONAL FINANCE Introduction to International finance Financial instruments International financial market Introduction to International finance 1.1 Why is International Finance Important? 19/12/10 B02013 - Introduction to International finance Why is International Finance Important?  Companies (and individuals) can raise funds, invest money, buy material, produce goods and sell products and services overseas  With these increased opportunities comes additional risks We need to know how to identify these risks and then how to control or remove them 19/12/10 B02013 - Introduction to International finance 1.2 What is different about international Financial Management? 1.2.1 Culture, history and institutions 1.2.2 Corporate governance 1.2.3 Foreign Exchange Risk 1.2.4 Political Risk 1.2.5 Market Imperfections 1.2.6 Expanded Opportunity Set 19/12/10 B02013 - Introduction to International finance Financial instruments: • • • • Cash Shares Bonds Other cash instruments such as loans and deposits • Derivative instruments 19/12/10 B02013 - Introduction to International finance International Financial Market 3.1.International capital transfer • Unilateral transfer • Bilateral transfers • Multilaterals transfer 19/12/10 B02013 - Introduction to International finance 3.2 Classification of Financial Market 3.2.1 Form of Financial Instruments • Equity market • Bonds market • Foreign exchange markets 19/12/10 B02013 - Introduction to International finance 3.2.2 Length of Maturity – Currency market – Capital market 3.2.3 Kind of Trading: - Primary Market - Secondary Market - Collateralized Mortgage Obligations - Future contracts 19/12/10 B02013 - Introduction to International finance Discussion questions • What are the Advantages and disadvantages of financial instruments? • Update financial news 19/12/10 B02013 - Introduction to International finance CHAPTER THE INTERNATIONAL MONETARY SYSTEM Chapter Objectives: Evolution of the International Monetary System International institutions systems International financial adjustment 12/19/2010 B02013 - The international Monetary system CHAPTER VI: INTERNATIONAL FINANCIAL MANAGEMENT AT MNCs Multinational Corporation International Management at MNCs 12/22/2010 B02013 - International Financial Management at MNCs 1 Multinational Corporation 1.1 What is MNCs? A corporation that has its facilities and other assets in at least one country other than its home country They have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management 12/22/2010 B02013 - International Financial Management at MNCs Multinational Corporation 1.2 Characteristics • Centralize ownership • Use a wide and vary range of resources • Often chase after global management strategy Risk - Buy and sell of products - Financial Transfer 12/22/2010 B02013 - International Financial Management at MNCs International Management at MNCs 2.1 Concept Manage and mitigate risks in transferring of financial products and services between countries, intercompany, bilateral or multilateral 2.2 Manage Risks - Risks in transaction (A/R, A/P, ) - Risks in fluctuation (inflation…) - Risks in investments B02013 - International Financial 12/22/2010 Management at MNCs International Management at MNCs 2.3 Tools and method of management  Choose a suitable management system - Self-managed subsidiaries - Central Management by Parent company Each system has there own costs and risks  Adjusted Present Value Approach - Calculate present value of return on investment to ensure the profitability 12/22/2010 B02013 - International Financial Management at MNCs International Management at MNCs 2.3 Tools and method of management  Risk of foreign exchange fluctuations – Translation Exposure – difference between exposed assets and liabilities – Fluctuations in foreign exchange rates – Fluctuations in real value of firm in long-term  Fluctuations in exchange rate will change book value of MNC 12/22/2010 B02013 - International Financial Management at MNCs International Management at MNCs 2.3 Tools and method of management  Risk of foreign exchange fluctuations How to mitigate risk? - Buy and sell of Forward, Future contract - Use strong currency in contract (less fluctuate) - Accept payment or storage of currency that is expected to be valuated - Other instruments 12/22/2010 B02013 - International Financial Management at MNCs International Management at MNCs 2.3 Tools and method of management + Forward Hedge - Binding contract under which a commodity or financial instrument is bought or sold at the market price (spot price) as on today (date of making the contract), but is to be delivered on a stated future (forward) date in settlement of the contract - Mitigate risks - Self-insurance in contract - IMM contract B02013 - International Financial 12/22/2010- Currency Options Management at MNCs - Intra IC Hedge International Management at MNCs 2.3 Tools and method of management + Credit/ Money Market Hedge The use of borrowing and lending transactions in foreign currencies to lock in the home currency value of a foreign currency transaction + Choose time of payment Incase, home currency of importer is devaluatig compare to exporter’s one, he/she will try to pay promptly But if the home currency is valuating, B02013 - International Financial 12/22/2010 he/she will try to delay the payment process Management at MNCs International Management at MNCs 2.3 Tools and method of management + Exposure Netting Offsetting exposures in one currency with exposures in the same or another currency, when exchange rates are expected to move in such a way that losses or gains on the first exposed position should be offset by gains or losses on the second currency exposure Can be used in combination group of currency that have similar fluctuation or one weak - International Financial currency and oneB02013 strong currency 12/22/2010 Management at MNCs 10 International Management at MNCs 2.3 Tools and method of management + Price adjustment Increase price when domestic currency is devaluated will help to cover any loss 12/22/2010 B02013 - International Financial Management at MNCs 11 International Management at MNCs 2.3 Tools and method of management + Interest Rate Swaps Exchange of periodic interest payments between two parties (called counter parties) as means of exchanging future cash flows 12/22/2010 B02013 - International Financial Management at MNCs 12 International Management at MNCs 2.3 Tools and method of management + Currency Swaps Simultaneous buying and selling of a currency to convert debt principal from the lender's currency to the debtor's currency 12/22/2010 B02013 - International Financial Management at MNCs 13 International Management at MNCs 2.3 Tools and method of management + Swaps contract + Bilateral loans contract + Bank Swap + Others issues - Floating Exchange Rate - FASB 52 - Inflation - Electronic Fund Management 12/22/2010 B02013 - International Financial Management at MNCs 14 Discussion questions What is Multinational companies? How to manage risks in the MNCs? Listed few tools and techniques of the MNCs 12/22/2010 B02013 - International Financial Management at MNCs 15 ... in Debt Crisis 3.2 Roles of International Financial Institutions - IFIs - WB (World Bank) - IMF (International Money Fund) - Paris & London Financial Club - They are the major player in debt reconstructing