The preeminent edition in international business texts by Alan C. Shapiro is the tenth edition of Multinational Financial Management. Shapiro covers many in depth topics in this strong selling textbook. John Wiley & Sons has a very solid text in their publishing house with this edition.
This textbook begins by introducing the concept of multinational enterprise and how it inter-relates to financial management. Determination of exchange rates and the international monetary system are covered in detail, including spot exchange rates, central bank intervention, exchange rate equilibrium and alternative exchange rates. Included are chapters on international finance and currency forecasting which is comprised of topics on the law of one price, purchasing power parity and the Fisher effect. It also encompasses interest rate parity as well as the difference and interrelation of the forward rate and future spot rate.
The author canvases the topics of the international flow of goods, country risk analysis and the foreign exchange market with a more in depth look at the forward and spot markets. International currency futures and options are covered as well as a look at interest rate currency swaps, forwards and futures in addition to structured notes. The text continues into the subjects of translation and transaction exposure which entails methods for measuring foreign exchange exposure, currency translation methods and transaction / translation exposure. Economic exposure is also touched on with attention to foreign exchange risk, consequences of exchange rate changes, how to identify and calculate economic exposure and managing operating exposure.
Multinational Financial Management 10 edition discusses national capital markets as international financial centers, project finance, development banks and corporate sources and uses of these funds. The European and Asian currency markets are touched on prior to examining foreign investment cost of capital as well as the weighted average cost of capital for foreign projects, the cost of debt capital, discount rates for foreign investments and the valuation of low cost financing opportunities. International portfolio investment is explained through the subjects of the risk or reward of international equity and bond investing, optimum international asset allocation, the measurement of both the total return from foreign portfolio investing as well as foreign security exchange risk.
Foreign direct investment is covered as a corporate strategy for multinational enterprise. In addition the theory of the multinational corporation and global expansion strategy are explained. Multinational corporations are further discussed with the basic rules of capital budgeting, foreign investment analysis, foreign project evaluations and political risk analysis. Financing foreign trade is encompassed by including the topics of payment terms, documents and financing techniques in international trade as well as government sources for export financing and countertrade. Multinational short term financing and management of international cash, accounts receivable and inventory are all discussed. Finally, managing the multinational financial system is deliberated through the topics of its valuation, inter company fund flow mechanisms and designing a global remittance policy.
In conclusion, Multinational Financial Management in its tenth edition is a solid textbook for the instruction of many of the mechanisms for the management for a successful global business with locations distributed worldwide.