【学习笔记】International Finance 国际金融论研究学习笔记-2

Part I

Basics of InternationalFinance --2

Ch1 --2

Globalizationand the Multinational Firm

What’s Special about “International” Finance?

1.  Foreign Exchange Risk

–This is risk that foreign currency profits may evaporate in dollar termsdue to unanticipated unfavorable exchange rate movements.

–Suppose $1 = ￥100 and you buy 10 shares of Toyota at ￥10,000 per share.One year later the investment is worth ten percent more in yen: ￥110,000.

–But, if the yen hasdepreciated to $1 = ￥120, your investment has actually lostmoney in dollarterms.

2.  Political Risk

–Sovereign governments have theright to regulate the movement of goods, capital, and people across theirborders. These laws sometimes change in unexpected ways.

3.  Market Imperfections

–Legal restrictions on the movement of goods, people, and money

–Transactions costs

–Shipping costs

–Tax arbitrage

4.  Expanded Opportunity Set

–It doesn’t make sense to play in only one corner of the sandbox.

–True for corporations as wellas individual investors.