Focused on real-life decision making in an international context, this text demystifies and simplifies multinational financial management in a clear, conceptual framework. The approach is to treat international financial management as a natural and logical extension of the principles and valuation framework provided by domestic corporate financial management to account for dimensions unique to international finance. All traditional areas of corporate finance are explored - working capital management, capital budgeting, cost of capital, and financial structure - from the perspective of a multinational corporation.

Introduction: Multinational Enterprise and Multinational Financial Management --The Rise of the Multinational Corporation -- The Internationalization of Business and Finance -- Multinational Financial Management: Theory and Practice -- Outline of This Book -- The Origins and Consequences of International Trade -- Environment of International Financial Management -- The Determination of Exchange Rates -- Setting the Equilibrium Spot Exchange Rate -- Expectations and the Asset-Market Model of Exchange Rates -- Fundamentals of Central Bank Intervention -- The International Monetary System -- Alternative Exchange Rate Systems -- A Brief History of the International Monetary System -- The European Monetary System and Monetary Union -- Emerging Market Currency Crises -- The Balance of Payments and International Economic Linkages -- Balance-of-Payments Categories -- The International Flow of Goods, Services, and Capital -- Coping with the Current-Account Deficit -- Country Risk Analysis -- Measuring Political Risk -- Economic and Political Factors Underlying Country Risk -- Country Risk Analysis in International Banking -- The Foreign Exchange Market -- Organization of the Foreign Exchange Market -- The Spot Market -- The Forward Market -- Currency Futures and Options Markets -- Futures Contracts -- Currency Options -- Reading Currency Futures and Options Prices -- Parity Conditions in International Finance and Currency Forecasting -- Arbitrage and the Law of One Price -- Purchasing Power Parity -- The Fisher Effect.