An Introduction to Multinational Enterprises and International Finance (WEEK 1) – CHAPTER 1&2
SLIDE | NOTES |
3 | * There is a continuum of business environments from very similar to very different. * The term “multinational” implies “cross-border.” However, multinational financial management can take place within a nation’s borders (e.g., Canada or Belgium) or even outside any nation’s borders (e.g., external Eurocurrency markets) as businesses interact with different cultures or social, legal, economic, or political environments. * While we take the perspective of the financial manager of a multinational corporation, this framework works just as well for individuals, small businesses, and government entities. Along the way, we provide a tour of businesses and business environments in many countries around the world. |
6 | Why dose IFM important for purely domestic firms? |
7 | Identify the main goal of the MNC. |
8 | Explain why agency problem is more sever in MNC setting? |
10 | Explain the different strategies MNC can use to reduce the agency cost? |
11 | Differentiate decentralized management style from centralized management style. How can these styles affect to the MNC’s agency cost? Explain. |
13 | List and briefly explain three main constraints which MNC mangers are confronted. |
14 | Why the MNC financial decisions are different to the purely domestic firms’ financial decisions? |
15 | What is different about IFM? |
16 | * Identify the main factors which affect to the value of foreign projects. * To add value, multinationality must either increase E[CFt] in the numerator or decrease the discount rate it in the denominator. * The objective of investment policy is to identify and invest in the set of assets that maximizes firm value. * Find the investments yielding the greatest value based on the level and riskiness of operating cash flows (ala capital budgeting in Chapter 14) * Cash flows can be...