1 Determination of Spot Exchange Rates.- I. Some First Principles.- II. Floating Exchange Rates.- III. Stabilized Exchange Rates.- IV.
Controlled Exchange Rates.- Summary and Conclusions.- Annotated Bibliography.- Problems.- Case Study 1.1: Hippocrates Inc.- 2 Determination of Forward Exchange Rates.- I.
Forward Exchange Contracts.- II. Interest Rate Parity Theorem.- III. Modern Theory.- Summary and Conclusions.- Selected Bibliography.- Problems.
- Case Study 2.1: Bookwell's Financing Choices.- 3 Currency Futures, Options, Derivatives, and Swaps.- I. Currency Futures.- II. Currency Options.- III.
Derivatives and Zero-Premia Options.- IV. Currency Swaps.- Summary and Conclusions.- Selected Bibliography.- Problems.- Case Study 3.1: Daewoo's Unorthodox Funding Strategy.
- Case Study 3.2: Intercomex: Exchange Risk in Coffee Trading.- 4 Forecasting Floating Exchange Rates.- I. Market-Based Forecasts.- II. Model-Based Forecasts: Technical vs. Econometric Modeling Approaches.
- Summary and Conclusions.- Selected Bibliography.- Problems.- 5 Forecasting Pegged Yet Adjustable Exchange Rates.- I. Step 1: Assessing the Balance of Payments Outlook.- II. Step 2: Measuring the Magnitude of Required Adjustment.
- III. Step 3: Timing Adjustment Policies.- IV. Step 4: Anticipating the Nature of Adjustment Policies.- Summary and Conclusions.- Appendix 5.A: The Purchasing Power Parity Hypothesis.- Selected Bibliography.
- Problems.- Case Study 5.1: Morris De Minas.- 6 Accounting Exposure to Foreign Exchange Risk.- I. Transaction Exposure.- II. Translation Exposure.
- Summary and Conclusions.- Selected Bibliography.- Problems.- 7 Economic Exposure to Foreign Exchange Risk.- I. A Taxonomy of Economic Exposures.- II. Inflation and Profitability.
- III. Devaluation and Profitability.- IV.Towards an Operational Measure of Economic Exposure.- Summary and Conclusions.- Annotated Bibliography.- Problems.- Case Study 7.
1: Euclides Engineering, Ltd.- Case Study 7.2: British Materials Corporation.- 8 Exchange Risks in International Trade.- I. The Mechanics of Hedging Transaction Exposures.- II. Eliminating Foreign Exchange Risk in Long-term Contracts.
- III. Exchange Risk in International Bidding.- IV. The Optimal Hedging Decision.- Summary and Conclusions.- Appendix 8. A: An Introduction to the Theory of Expected Utility for Foreign Exchange Risk Management.- Selected Bibliography.
- Problems.- Case Study 8.1: Whirlpool Appliances, Inc.- 9 Optimal Currency Denomination in Long-Term Debt Financing.- I. Expected Cost of Foreign Currency Financing.- II. Risk-adjusted Cost of Foreign Debt Financing.
- Summary and Conclusions.- Selected Bibliography.- Problems.- Case Study 9.1: BC Hydro.- 10 Hedging Translation Exposure.- I. The Mechanics of Contractual Hedging.
- II. The Mechanics of Financial Hedging.- III. Hedging in a Multicurrency World: A Risk-Preference Framework.- Summary and Conclusions.- Selected Bibliography.- Problems.- Case Study 10.
1: Gillette International Finance.- 11 Exchange Rates and the International Control Conundrum.- I. The International Control Conundrum.- II. Mapping the Currency Space.- III. Value-Based Contingent Budgeting with Imperfect Currency Pass Through.
- IV. Estimating Exchange Rate Pass Through.- Summary and Conclusions.- Selected Bibliography.- Case Study 11.1: Multiquimica Do Brasil.- Index of Authors.- Index of Subjects.
- Solutions to Selected Problems.- About the Author.