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Lecture International finance: An analytical approach (3e): Chapter 14 - Imad A. Moosa

Chapter 14 - International short-term financing and investment. To explain why short-term foreign currency financing and investment are considered, to consider the choice between domestic and foreign currency financing and investment, to identify the costs and benefits of financing/investment with a portfolio. | Chapter 14 International Short-Term Financing and Investment Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Objectives To explain why short-term foreign currency financing and investment are considered To consider the choice between domestic and foreign currency financing and investment To identify the costs and benefits of financing/investment with a portfolio 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Internal financing A multinational firm can utilise internal financing by: requesting a transfer of funds from a subsidiary increasing mark-ups on supplies sent to subsidiaries 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Sources of external financing Standby Eurocredits: Eurocurrency lines and revolving commitments Euronotes: note issuance facilities and Euro-commercial papers 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Why foreign currency financing? Foreign currency financing introduces FX risk only if there is no exposure already It may be cheaper 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Three-month interest rates (Australia) 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Three-month interest rates (U.S.) 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Three-month interest | Chapter 14 International Short-Term Financing and Investment Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Objectives To explain why short-term foreign currency financing and investment are considered To consider the choice between domestic and foreign currency financing and investment To identify the costs and benefits of financing/investment with a portfolio 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Internal financing A multinational firm can utilise internal financing by: requesting a transfer of funds from a subsidiary increasing mark-ups on supplies sent to subsidiaries 14- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a International Finance: An Analytical Approach 3e by Imad A. Moosa Slides prepared by Afaf Moosa Sources of external financing