财务管理外文文献及翻译--跨国公司财务

附录A：外文文献（译文）

跨国公司财务

有重大国外经营业务的公司经常被称作跨国公司或多国企业。跨国公司必须考虑许多并不会对纯粹的国内企业产生直接影响的财务因素，其中包括外币汇率、各国不同的利率、国外经营所用的复杂会计方法、外国税率和外国政府的干涉等。

公司财务的基本原理仍然适用于跨国企业。与国内企业一样，它们进行的投资项目也必须为股东提供比成本更多的收益，也必须进行财务安排，用尽可能低的成本进行融资。净现值法则同时适用于国内经营和国外经营，但是，国外经营应用净现值法则时通常更加复杂。也许跨国财务中最复杂的是外汇问题。当跨国公司进行资本预算决策或融资决策时，外汇市场能为其提供信息和机会。外汇、利率和通货膨胀三者的相互关系构成了汇率基本理论。即：购买力平价理论、利率平价理论和预测理论。

跨国公司融资决策通常要在以下三种基本方法中加以选择，我们将讨论每种方法的优缺点。

(1) 把现金由国内输出用于国外经营业务；

(2) 向投资所在国借贷；

(3) 向第三国借贷。

1专业术语

学习财务的学生通常会听到一个单词总在耳边嗡嗡作响：全球化( g l o b a l i z a t i o n )。学习资金市场的全球化必须首先掌握一些新的术语，以下便是在跨国财务中，还有本章中最常用到的一些术语：

(1) 美国存托证（American Depository Receipt,ADR）。它是在美国发行的一种代表外国股权的证券，它使得外国股票可在美国上市交易。外国公司运用以美元发行的ADR，来扩大潜在美国投资者群体。ADR以两种形式代表大约690家外国公司：一是在某个交易所挂牌交易的ADR，称为公司保荐形式；另一种是非保荐形式，这些ADR通常由投资银行持有并为其做市。这两种形式的ADR均可由个人投资和买卖，但报纸每天只报告保荐形式

的存托证的交易情况。

(2) 交叉汇率(cross rate)。它是指两种外国货币(通常都不是美元)之间的汇率。美元作为确定交叉汇率的桥梁，例如，如果投资者想卖出日元买进瑞士法郎，他可能先卖出日元买入美元，随后又卖出美元买入瑞士法郎。所以，虽然该交易只涉及日元与瑞士法郎，但是美元汇率起到了基准作用。

(3) 欧洲货币单位(Earopean Currency Unit,ECU)。E C U是1 9 7 9年设计的由1 0种欧洲货币组成的一揽子货币，它是欧洲货币体系（EMS）的货币单位。根据章程，EMS成员国每五年或者当出现某种货币权重发生2 5％或以上的变动时，都要重新估算一次ECU的组成。其中德国马克权重最大，法国法郎、英国英磅和荷兰盾的各自权重也在1 0％以上。权重最小的是希腊德拉克马、卢森堡法郎和爱尔兰镑。

(4) 欧洲债券( E u r o b o n d s )。以特定货币标价，同时在几个欧洲国家的债券市场发行。对许多跨国公司和各国政府而言，这已经成为筹集资本的一条重要途径。它的发行不受国内发行条款的限制，通常在伦敦组建辛迪加，交易在有买卖双方存在的任何地方都可能，也确实会发生。

(5) 欧洲货币( E u r o c u r r e n c y )。它是存放在发行国之外的金融中心里的货币。例如，欧洲美元—最为广泛使用的欧洲货币，就是存放在美国之外的银行里的美元。

(6) 外国债券(foreign bonds)。与欧洲债券不同，它是借款人在外国资本市场上发行的债券，通常以外国货币标价。例如，扬基债券，就是外国政府、银行或公司在美国发行的债券，但是近年来出现的一些扬基债券是以非美元货币标价的。这些债券的发行所在国经常会把这些外国债券和国内企业发行的债券区别对待，包括适用不同的税法、对发行总量的限制或适用更加苛刻的披露条款。

外国债券通常以其发行所在国的绰号命名，如扬基债券（美国）、日本武士债券（日本）、伦布兰特（R e m b r a n d t）债券（荷兰）和牛头犬债券（英国）。由于各国对外国债券普遍实行更严格的管制、更苛刻的披露要求的原因，外国债券市场过去几年中并未成长起来，而欧洲债券市场在此期间得到了蓬勃发展。将近有一半的外国债券是在瑞士发行的。

(7) 金边债券( g i l t s )。严格地说，它是指英国政府和爱尔兰政府发行的证券。不过该术语也包括了英国地方政府和一些海外官方发行的证券。

(8) 伦敦银行间拆借利率（London Interbank Offerde Rate,LIBOR）。它是指大多数跨国银行在伦敦市场上拆借欧洲美元的隔夜利率。L I B O R是货币市场上的证券和由政府

和公司借款人发行的短期债券定价的基准。信用稍差的发行者的借款利率通常较L I B O R 高出一个百分点以上。

(9) 掉期交易( S w a p s )。有两种基本的掉期交易，即利率掉期和货币掉期。利率掉期是指交易双方通过掉期将浮动利率换成固定利率，或者相反。货币掉期是指不同货币的掉期协议。对以不同货币计价的债务进行掉期时，该项交易经常会同时包括以上两种掉期。2外汇市场与汇率

外汇市场(foreign exchange market)无疑是世界上最大的资金市场。各国货币在该市场上进行交易。这类交易大多只发生在少数几种货币之间：美国美元（$）、德国马克（D M）、英国英镑（￡）、日元（￥）、瑞士法郎（S F）和法国法郎（F F）。

外汇市场是一种场外交易市场。交易者进行交易的地点并不固定，他们位于遍布世界各地的大商业银行与大投资银行之中。交易者通过计算机终端、电话和其他通讯工具进行联络。国外交易的通讯网络还包括环球银行金融电信协会（S W I F T），这是比利时设立的一个非盈利性合作组织。纽约的银行，通过S W I F T的当地处理中心可以将信息传递到伦敦的银行，该联系是通过数据传递线路实现的。

外汇市场形形色色的参与者包括以下几种类型：

(1) 将本国货币兑换成外国货币以支付用外国货币计价的商品货款的进口商。

(2) 收到外国货币，却想兑换成本国货币的出口商。

(3) 买卖外币股票和外币债券，并进行投资组合的经理人员。

(4) 执行外汇买卖指令的外汇经纪人。

(5) 进入外汇市场的交易者。

2.1 汇率

汇率(exchange rate)是指一国货币换成另一国货币的兑换价。实务中，几乎全部的货币交易都是通过美元进行的。例如，德国马克和英国英镑的交易也要按各自与美元的标价进行。如果标价表示的是每单位外币可兑换的美元数，则该标价被称为直接标价（或美式标价），如，1 . 5 0美元= 1英镑和0 . 4 0美元= 1马克都是直接标价。但财务报刊通常按照每单位美元可兑换的外币金额进行标价，该种标价方法被称为间接标价（或欧式标价）。例如：0 . 6 7英镑= 1美元和2 . 5马克= 1美元。

所有的外币都用美元标价有以下两个原因。第一，这种做法减少了过多的货币交叉标价，例如，若有五个主要货币就会产生 1 0种汇率。第二，这种做法可以有效地减少三

角套汇( t r i a n g u l a r a r b i t r a g e )的发生。如果所有的货币都可互相交易，那么就更有可能出现不一致的情况。而在这种做法下，法国法郎对德国马克的汇率就会与美元和德国马克之间的汇率相比较。这样就会得出一个存在于美元与法国法郎之间特定的汇率，它能阻止三角套汇的发生。

2.2 交易类型

外汇市场上存在三种交易：即期、远期和掉期。即期交易(Spot trades)是外汇买卖双方就两个营业日内进行交割的汇率达成协议，该汇率被称为即期汇率( s p o t - e x c h a n g e r a t e )。远期交易( f o r w a r d t r a d e s )是外汇买卖双方就将来交割汇率达成协议，该汇率被称为远期汇率( f o r w a r d -exchange rate)。未来的交易日期通常是以1个星期到5 2个星期为限。掉期是在卖出（买入）某种外汇的同时就未来某个时间再买入（卖出）该外汇达成协议。卖出价与再买入价之差被称为掉期汇率(Swap rate)。

例：A银行1 0月11日向B银行在纽约的户头卖出美元，同时其在伦敦某银行的账户收到了英镑。11月11日，依协议，作相反的交易。A将英镑卖给B，B将美元卖给A。这就是一项掉期交易。实际上，A在借入英镑的同时放弃了美元的使用权，而B获得了美元使用权。

3一价定律与购买力平价说

即期汇率是如何确定的呢？一价定律（Law of one price,LOP）是其中一条。一价定律是指一种商品不论在哪国购入，购入成本都是一样的。若以公式表示则为：以Ｓ￡（t）代表即期汇率，即在t时买入一英镑需要的美元数；PUS（t）和PU K（t）分别表示在美国和在英国的某特定商品的当前价格，比如说苹果。那么对苹果来说就满足以下的一价定律：PU S（t）=S￡（t）PU K（t）

L O P的理论基础与三角套汇相似。如果L O P不成立，那么就会出现在国家之间贩运苹果进行套汇的行为。例如，假设苹果在纽约的价格是每蒲式耳4美元，而在伦敦市场的价格是每蒲式耳 2 . 5 0镑。这样套用一价定律就有：$ 4 =S￡（t）×￡2 . 5 0即S￡（t）= $ 1 . 6 0 /￡

也就是说，一价定律要求：英镑与美元的汇率是 1 . 6 0美元/英镑。

又假设实际汇率是每英镑2美元，投机者以4美元从纽约购入一蒲式耳苹果运到伦敦，以2 .5 0英镑的价格出售。英镑又可以2美元/英镑兑换成美元，总共可得5美元并产生1美元的收益。

L O P的理论基础是指如果汇率不是1 . 6 0美元/英镑，而是比如说2美元/英镑，那么就会有力量来改变汇率。同时/或者改变苹果的价格。在本例中，会有大量的苹果从纽约运到伦敦，这样在纽约，由于苹果的需求，将会使那儿苹果的美元价格上涨，而在伦敦，对苹果的大量供应将使苹果的英镑价格下跌。苹果商需要将英镑兑换成美元，即大量供应英镑，大量需求美元，这也将施加压力迫使汇率从2美元/英镑降下来。

就像大家能看出来一样，要使L O P严格成立必须满足三个假设：

(1) 苹果贸易的交易成本，如运费、保险费、损耗等等，必须是0。

(2) 不存在苹果贸易壁垒，如关税或税收。

(3) 最后，纽约市场上的苹果要与伦敦市场上的苹果一模一样。如果英国人只吃青苹果的话，你就不可能把红苹果运到伦敦去。

因为交易成本不为0，其他条件也很难满足，所以一价定律实际上只适用于那些非常相似的贸易商品。L O P不能要求梅塞德斯（M e r c e d e s）的汽车价格与福特汽车的相等，也不能要求法国的原子能工厂价格与纽约原子能工厂的相等。因为两家的汽车互不相同，而原子能工厂即使一模一样，也因非常昂贵两难以运输。由于消费者会购买许多种商品，所以经济学家谈的是购买力平价（P u r c h a s i n g - p o w e r p a r i t y, P P P），它表示汇率会自行调整，以保证市场一揽子商品不论是从哪个国家购入的，价格一律相等。另外，P P P还可推衍出相对购买力平价（relative purchasing-power parity, R P P P），即商品某国货币的标价变化率与他国货币标价变化率的比值决定了两国外汇汇率的变化率。

4利率和汇率：利率平价说

远期汇率和即期汇率被隐藏在一价定律之后的套汇活动联系了起来。首先来看看相关术语。如果某种货币的远期汇率高于即期汇率，那么该远期汇率就被称为远期升水（这意味着该货币即期贴水）。如果远期汇率小于即期汇率，则称为远期贴水。

假设德国马克的即期汇率是2 . 5 0马克= 1 . 0 0美元，一个月远期汇率为2 . 4 0马克= 1 . 0 0美元。因为远期买入一美元所用的德国马克数小于即期数，所以马克在远期外汇市场中比在即期外汇市场上更值钱，即该一个月期的德国马克远期升水。当然，马克这样，美元就与之相反。本例中，美元远期是贴水的，

因为其远期价值小于即期价值。远期汇率的标价等于即期汇率加上升水或减去贴水。

本币远期是升水还是贴水取决于本币和外币市场的相对利率。利率平价理论( i n t e r e s t - r a t e -parity theorem)是指：若本币市场利率高于某一外币市场利率，则该外币在远期

将溢价（升水）售出；若本币市场利率低于外币市场利率，则该外币在远期将折价（贴水）售出。

建立利率平价理论必须借助于一些数学符号。令S（0）代表即期外汇的本币汇率（当期记为0）,如果本币是美元，外币是德国马克，那么我们可作S（0）= 0 . 4 0美元/马克。S（0）采用直接标价或美式标价。F（0 , 1）表示一个月到期的合约所确定的远期外汇的本币汇率，该合约在一个月后交割。表示以本币标价的欧洲货币存款的年利率，i*表示以外币标价的欧洲货币存款的年利率。当然，存款期可以选择与远期合约期限相同。现在来考虑一下某个投机商的情况，他可以进入外币存款和欧洲货币存款的银行间市场。假设他有一些美元准备进行为期一个月的投资，他还可以取得美元贷款或德国马克贷款。而美元年利率为6％，马克年利率为1 0％，哪一种方法更好呢？

5跨国资本预算

奇尔斯腾设备公司（Kihlstrom Equipment）,一家以美国为基地的跨国公司，正在评估在法国的一项投资。该公司设备出口定单大量增长，它现在必须考虑是否应该在法国设厂。该项目将投入F F 2 , 0 0 0万，预计今后三年每年将产生F F 8 0 0万的现金流量。当前法国法郎的即期汇率是S（0）= 0 . 2 0美元/法郎。该公司应当如何以美元计量该项目的净现值呢？

海外投资不会改变公司运用的N P V法则，即必须确认各年净增现金流量，并以适当的资本成本进行贴现，计算净现值。之后，公司只进行那些净现值为正数的项目。但是，有两个因素，即外币折算和资金汇回母国，使跨国投资项目的净现值计算变得更为复杂。

5.1外币折算

奇尔斯腾设备公司计算该项目的净现值的最简单的方法就是将所有的以法郎计量的现金流量都折算为以美元计量，包括三个步骤：

第1步：估计以法郎计量的未来现金流量；

第2步：以预计汇率将现金流量折算为美元；

第3步：通过资本成本计算以美元计量的净现值。

5.2不汇回的现金流量

上例假定外国投资产生的全部税后现金流量都汇回母公司。这种汇回决策类同于国内企业的股利决策。项目现金流量与实际汇回母公司的现金流量可以存在显著不一致。当然，项目净现值并不会由于推迟汇回而有所不同，即未汇回现金流量被用于再投资，收益率（调

整以后的）与国内资本成本相同。外国子公司将资金汇回母公司有多种途径，其中包括：

(1) 股利；

(2) 总部管理费；

(3) 商标和专利的特许权使用费。

跨国公司必须特别关注资金汇回问题，原因有二：第一，当前和未来都可能存在外汇管制。许多政府都生怕被指责成受到外国企业的剥削，所以它们总想限制跨国公司将资金汇回母国。另一个原因是税负。跨国公司总要确定在某一外国取得的利润都要缴些什么税，而且公司缴纳的总税款可能是资金汇回时间的函数。例如，奇尔斯腾公司在法国的子公司需要就在法国的所得向法国缴税，而公司还要就汇回美国的资金再次纳税。大多数情况下，公司计算在美国纳税义务时允许抵减外国税收支出，所以，若法国的公司所得税率是3 4％，则公司就不要再补缴所得税了。

5.3跨国公司的资本成本

进行跨国投资的企业要回答的一个重要问题是：跨国项目所要求的收益率是否不同于类似的国内项目的收益率，问题的答案取决于以下两点：国际金融市场的分割；征收、外汇管制和税收的政治风险。

跨国多样化经营的成本较低假设美国投资者不允许持有外国证券；而且不同国家的金融市场条块分割。另外假设美国企业不受同样的限制。这样，进行跨国投资的企业可以为其他的美国股东提供间接的多样化投资机会，而这种多样化无法在国内实现。这将降低跨国项目的风险增加额。

另外一种情况是，股东的国际投资并不受限，股东通过购买外国证券就可以获得多样化投资的收益。在这种情况下，美国企业的项目资本成本不会因为项目是在美国还是在外国而有所不同。但是在实务中，持有外国证券要花费较高的成本，包括税收、信息获取费和交易成本。所以虽然美国投资者可以自由持有外国证券，但是他们却不能实现完全的国际多样化。

6跨国财务决策

跨国公司国外项目资金的筹集有三条基本途径：

(1) 从本国筹集资金用于国外项目；

(2) 向项目东道国举债；

(3) 向债务成本最低的国家举债。

如果一家美国企业为其国外项目在美国借款，那么它就要承担汇率风险。若外币贬值，则当外币现金流量汇回美国时，母公司遂产生汇兑损失。当然，企业会卖出远期外汇以规避汇率风险，但是，卖出期限在一年以上的远期合约是很困难的事情。

美国企业还可以向项目东道国借款，这是规避长期汇率风险的常用手段。如果奇尔斯腾设备公司想在法国投资2 , 0 0 0万法郎，那么它就可能从法国借入其中一部分。公司还应知道能够规避长期汇率风险的仅仅是从法国借入的那部分资金，剩余资金的风险就无法由此规避了。

另外企业还可以找寻借款利率低的国家。但是，外国利率较低可能源于较低的预计通货膨胀率，所以，财务经理必须小心地通过名义利率洞悉实际利率。

6.1 中短期融资

进行中短期融资时，美国的跨国公司有个选择：即向美国银行以本国利率借款和在欧洲货币市场上借入欧洲美元。

欧洲美元( E u r o d o l l a r )是指存放在美国境外的美元。例如，存放在法国巴黎的美元就是欧洲美元。欧洲货币市场是指进行外币存放的银行，如欧洲银行( e u r o b a n k s )。大多数欧洲货币交易都涉及在欧洲银行存款的借贷。例如，一家欧洲银行收到一家美国银行汇来的一笔欧洲美元存款，而后，该欧洲银行向借款企业放出一笔欧洲美元贷款。这就是欧洲货币市场。该市场不从事私人存贷业务，它所面向的顾客，是公司和政府。

欧洲货币市场有一个重要特征，即贷款利率采用浮动利率制。利率以同期限同币种的伦敦银行间拆放利率为基准，再加上一定的边际浮动点数确定。例如，当前L I B O R的美元贷款利率是8％，美元贷款的边际数是0 . 5％，那么借款方承受的利率就是8 . 5％，该利率每6个月变动一次，贷款期限从3年到1 0年不等。

显然，在完全有效的竞争性财务市场上，欧洲货币市场的欧洲美元贷款利率应当等同于美国借贷市场的贷款利率。如果前者高于后者，那么投机商就会从国内市场借入美元到欧洲市场贷出。这种投机交易将迫使两个市场上的利率相等。但是，有时两者之间确实存在差别，这种差别大部分是由于风险、政府管制和税收导致的。

6.2 国际债券市场

全球债券市场由2 , 1 5 0亿美元以各种货币发行的债券组成。由表 3 2 - 4可知以美元标价的债券占了总数的4 4 . 6％。全球市场可以划分为国内债券市场和国际债券市场。国内债券是指企业在本国境内发行的债券，国际债券是企业以非本国货币发行的债券。

国际债券的交易是柜台交易，交易双方是彼此松散联系的单个银行。这些银行在相应的国内债券市场上却联系紧密。国际债券可以分成两种类型：外国债券和欧洲债券。

外国债券它是指外国债款方在某个国家的国内债券市场上发行的债券。这些债券经常以发行所在国的绰号和该国货币命名计价。例如，一家瑞士表公司在美国发行的以美元计价的债券。

这些外国债券被称为扬基债券( Yankee bonds)。所有在美国发行的外国债券一样，根据1 9 3 3年的《证券法》，扬基债券必须是记名债券。债券评级机构如标准普尔公司通常会对扬基债券评定等级，还有许多扬基债券在纽约股票市场上市交易。

许多外国债券如扬基债券，都是记名债券。使得它们对那些蔑视税收机关的投资者缺乏吸引力。出于很显而易见的原因，这些交易商更喜欢欧洲债券而不是外国债券。记名债券都以一个债券系列代号命名。注以债券所有权的转让必须经过记名的合法转让，这又需要经纪机构（如商业银行）的参与。

欧洲债券它是指以某一货币计价，同时在几个国家的债券市场上发行的债券，前缀―欧洲‖是指债券发行的范围不包括以其货币计价的那个国家。

大多数欧洲债券都是不记名债券，持有债券便具有其所有权，而许多外国债券却是记名债券。

欧洲债券的发行多采用承销方式，但也有一些是私下募集的[3]。公开承销发行的债券与国内债券市场公开售卖的债务很相似，借款方把其债券卖给银行经理团体，后者又将债券卖给其他的银行。这些银行分为两类：承销商和债券出售方。它们又将债券售给交易商和基金投资者。经理银行也可以作为承销商或出售商。债券承销商通常根据一份企业约定书出售欧洲债券，即他们必须以预先商定的价格购入债券，随后在市场上以较高的价格售出。欧洲债券包括固定利率债券、浮动利率债券，可转换债券、零息债券、抵押债券和双重计价债券。

7跨国经营的报告

当一家美国公司编制合并财务报表时，它必须将国外子公司以当地货币反映的账项折算为报告货币，通常是以母公司货币（即美元）进行反映。如果在会计期间内汇率发生变动，那么就会由此产生汇兑利得或损失。

假设一家美国企业在1 9 8 2年收购了一家英国公司，当时的汇率是1英镑= 2美元。英国子公司在随后几年的业绩非常好（根据英镑计量结果），与此同时，英镑的汇价跌

至 1 . 2 5美元。美元的相对升值是否使得该美国公司处境更好一些了呢？这种升值是否要在收益计量中反映呢？

这些问题一直是最具争议的会计问题。由此引发以下两个问题：

(1) 每一个资产负债表项目折算应当用何种汇率才合适呢？

(2) 未实现的会计折算利率和损失应当如何处理呢？

外币折算目前应当遵循美国财务会计准则委员会 1 9 8 1年1 2月发布的第5 2号公告规定的复杂条款。5 2号公告的大部分条款都要求所有的资产和负债必须以现行汇率从子公司货币折算为母公司货币。利得和损失，以一个特殊账户累积地反映在资产负债表中的股东权益部分。这样，折算利得和损失就不直接在计算净收益过程中确认，而是等到外币资产出售时或外币负债清偿时才加以确认。

8本章小结

跨国公司的业务比国内企业的要复杂得多。管理层必须了解利率、外汇汇率和通货膨胀率之间的关系，必须知道大量不同的资金市场规则和税收制度。

(1)本章介绍了国际融资的一些最基本理论。购买力平价理论（一价定律）;汇率预测理论；利率平价理论。

(2)购买力平价理论认为1美元在各个国家的购买力都应当是一样的。这意味着不论是在纽约买的还是在东京买的苹果价格都一样。该理论还认为两国货币之间汇率的变动与各国商品价格的通货膨胀率相关。

(3)汇率预测理论认为远期汇率等于预测的即期汇率。

(4)利率平价理论认为两国的利率差额等于远期汇率与即期汇率之差。该等式使投机商想迅速致富的可能性完全破灭。该等式还使得在美国的无风险投资报酬率等于在其他国家的无风险收益率。

当然，购买力平价理论和利率平价理论并不能完全与实际情况相符。政府管制和税收制度都是制约因素。但是，大量的经验研究和直觉都表明这些理论近似地反映了国际资金市场的运作。

(5)本章还讨论了国际资本预算的一些问题。净现值法则仍然是选择项目的正确方法，但主要问题在于如何确定正确的资本成本。我们认为股东投资于国内证券和国外证券所要求的收益率是相等的。该收益率同样适用于国内证券投资组合。但是，必须做两项调整：

a. 跨国公司的资本成本可能会低于国内同类公司的资本成本，原因在于国际多样化会

带来收益。

b. 跨国公司的资本成本也可能会高于国内同类公司的资本成本，原因在于跨国投资产生的附加风险。

(6)本章简要地介绍了国际资金市场。跨国公司可能会考虑从当地资金市场融资或从欧洲货币及欧洲债券市场上融资。这些市场上的利率各不相同，因此跨国公司必须仔细地考虑各国税收和政府管制因素。

附录B：外文文献（原文）

International Corporate Finance Corporations that have significant foreign operations are often referred to as international corporations or multinationals. International corporations must consider many financial factors that do not directly affect purely domestic firms. These include foreign exchange rates, different interest rates from country to country, complex accounting methods for foreign operations, foreign tax rates, and foreign government intervention.

The basic principles of corporate finance still apply to international corporations;like domestic companies, they seek to invest in projects that create more value for the shareholders than they cost and to arrange financing that raises cash at the lowest possible cost. That is, the net present value principle holds for both foreign and domestic operations. However, it is usually more complicated to apply the NPV principle to foreign operations.

Perhaps the most important complication of international finance is foreign exchange.The foreign exchange markets provide information and opportunities for an international corporation when it undertakes capital-budgeting and financing decisions. The relationship among foreign exchange, interest rates, and inflation is defined by the basic theories of exchange rates: purchasing-power parity, interest-rate parity, and the expectations theory.

Typically, international financing decisions involve a choice of three basic approaches: （1）Export domestic cash to the foreign operations.

（2）Borrow in the country where the investment is located.

（3）Borrow in a third country.

1 Terminology

A common buzzword for the student of finance is globalization. The first step in learning about the globalization of financial markets is to conquer the new vocabulary. Here are

some of the most common terms used in international finance and in this chapter: （1）An American Depository Receipt (ADR) is a security issued in the United States to represent shares of a foreign stock, allowing that stock to be traded in the United States. Foreign companies use ADRs, which are issued in U.S. dollars, to expand the pool of potential U.S. investors. ADRs are available in two forms for about 690 foreign companies: company-sponsored, which are listed on an exchange, and unsponsored, which are usually held by the investment bank that makes a market in the ADR. Both forms are available to individual investors, but only company-sponsored issues are quoted daily in newspapers.

（2）The cross rate is the exchange rate between two foreign currencies, generally neither of which is the U.S. dollar. The dollar, however, is used as an interim step in determining the cross rate. For example, if an investor wants to sell Japanese yen and buy Swiss francs, he would sell yen against dollars and then buy francs with those dollars. So, although the transaction is designed to be yen for francs, the dollar’s exchange rate serves as a benchmark.（3）A European Currency Unit (ECU) is a basket of 10 European currencies devised in 1979 and intended to serve as a monetary unit for the European Monetary System(EMS). By charter, EMS members reevaluate the composition of the ECU every five years or when there has been a shift of 25 percent or more in the weight of any currency.The German deutschemark is the most heavily weighted currency in the basket, with the French franc, the British pound, and the Dutch guilder each comprising more than 10 percent of the currency. The smallest weights are the Greek drachma, the Luxembourg franc, and the Irish punt.

（4）Eurobonds are bonds denominated in a particular currency and issued simultaneously in the bond markets of several European countries. For many international companies and governments, they have become an important way to raise capital. Eurobonds are issued outside the restrictions that apply to domestic offerings and are typically syndicated in London. Trading can and does take place anywhere a buyer and a seller are.

（5）Eurocurrency is money deposited in a financial center outside of the country whose currency is involved. For instance, Eurodollars—the most widely used Eurocurrency are U.S. dollars deposited in banks outside the United States.

（6）Foreign bonds, unlike Eurob onds, are issued by foreign borrowers in another nation’s capital market and traditionally denominated in that nation’s currency. Yankee bonds, for

example, are issued in the United States by a foreign country, bank, or company; in recent years, however, some Yankee offerings have been denominated in currencies other than the U.S. dollar. Often the country in which these bonds are issued will draw distinctions between them and bonds issued by domestic issuers, including different tax laws, restrictions on the amount of issues, or tougher disclosure rules.

Foreign bonds often are nicknamed for the country of issuance: Yankee bonds (United States), Samurai bonds (Japan), Rembrandt bonds (the Netherlands), and Bulldog bonds (Britain). Partly because of tougher regulations and disclosure requirements,the foreign-bond market hasn’t grown in the past several years with the vigor of the Eurobond market. Nearly half of all foreign bonds are issued in Switzerland.

（7）Gilts, technically, are British and Irish government securities, although the term also includes issues of local British authorities and some overseas public-sector offerings.

（8）The London Interbank Offered Rate (LIBOR) is the rate that most international banks charge one another for loans of Eurodollars overnight in the London market.LIBOR is a cornerstone in the pricing of money-market issues and other short-term debt issues by both governments and corporate borrowers. Less creditworthy issuers will often borrow at a rate of more than one point over LIBOR.

（9）There are two basic kinds of swaps: interest rate and currency. An interest-rate swap occurs when two parties exchange debt with a floating-rate payment for debt with a fixedrate payment, or vice versa. Currency swaps are agreements to deliver one currency against another currency. Often both types of swaps are used in the same transaction when debt denominated in different currencies is swapped.

2 Foreign Exchange Markets And Exchange Rates

The foreign exchange market is undoubt edly the world’s largest financial market. It is the market where one country’s currency is traded for another’s. Most of the trading takes place in a few currencies: the U.S. dollar ($), German deutschemark (DM), British pound sterling(￡), Japanese yen (￥), Swiss franc (SF), and French franc (FF).

The foreign exchange market is an over-the-counter market. There is no single location where traders get together. Instead, traders are located in the major commercial and investment

banks around the world. They communicate using computer terminals, telephones and other telecommunication devices. One element in the communications network for foreign transactions is the Society for Worldwide Interbank Financial Telecommunications(SWIFT). It is a Belgian not-for-profit cooperative. A bank in New York can send messages to a bank in London via SWIFT’s regional processing centers. The connections are through

data-transmission lines.

The many different types of participants in the foreign exchange market include the following:

（1）Importers who convert their domestic currency to foreign currency to pay for goods from foreign countries.

（2）Exporters who receive foreign currency and may want to convert to the domestic currency.

（3）Portfolio managers who buy and sell foreign stocks and bonds.

（4）Foreign exchange brokers who match buy and sell orders.

（5）Traders who make the market in foreign exchange.

2.1 Exchange Rates

An exchange rate is the price of one country’s currency for another’s. In practice, almost all trading of currencies takes place in terms of the U.S. dollar. For example, both the German deutschemark and the British pound will be traded with their price quoted in U.S. dollars. If the quoted price is the price in dollars of a unit of foreign exchange, the quotation is said to be in direct (or American) terms. For example, $1.50= ￡1 and $0.40 DM1 are in direct terms. The financial press frequently quotes the foreign currency price of a U.S. dollar. If the quoted price is the foreign currency price of a U.S. dollar, the quotation is indirect (or European). For example, ￡0.67 = $1 and DM2.5=$1.

There are two reasons for quoting all foreign currencies in terms of the U.S. dollar. First, it reduces the number of possible cross-currency quotes. For example, with five major currencies, there would potentially be 10 exchange rates. Second, it makes triangular arbitrage more difficult. If all currencies were traded against each other, it would make inconsistencies more likely. That is, the exchange rate of the French franc against the deutschemark

would be compared to the exchange rate between the U.S. dollar and the deutschemark. This implies a particular rate between the French franc and the U.S. dollar to prevent triangular arbitrage.

2.2 Types of Transactions

Three types of trades take place in the foreign exchange market: spot, forward, and swap.Spot trades involve an agreement on the exchange rate today for settlement in two days.The rate is called the spot-exchange rate. Forward trades involve an agreement on exchange rates today for settlement in the future. The rate is called the forward-exchange rate. The maturities for forward trades are usually 1 to 52 weeks. A swap is the sale (purchase) of a foreign currency with a simultaneous agreement to repurchase (resell) it sometime in the future. The difference between the sale price and the repurchase price is called the swap rate.

EXAMPLE：On October 11, bank A pays dollars to bank B’s account at a New York bank and A receives pounds sterling in its account at a bank in London. On November 11,as agreed to on October 11, the transaction is reversed. A pays the sterling back to B, while B pays back the dollars to A. This is a swap. In effect, A has borrowed pounds sterling while giving up the use of dollars to B.

3 The Law Of One Price And Purchasing-power Parity

What determines the level of the spot-exchange rate? One answer is the law of one price(LOP). The law of one price says that a commodity will cost the same regardless of the country in which it is purchased. More formally, let S￡(t) be the spot-exchange rate, that is,the number of dollars needed to purchase a British pound at time t.Let PUS(t) and PUK(t)be the current U.S. and British prices of a particular commodity, say, apples. The law of one price says that PUS(t)=S￡(t) PUK(t).for apples.

The rationale behind LOP is similar to that of triangular arbitrage. If LOP did not hold, arbitrage would be possible by moving apples from one country to another. For example,suppose that apples in New York are selling for $4 per bushel, while in London the price is ￡2.50 per bushel. Then the law of one price implies that $4 =S￡(t) ￡2.50 and S￡(t) =$1.60/￡ .That is, the LOP implied spot-exchange rate is $1.60 per pound.That is, the LOP implied spot-exchange rate is $1.60 per pound.

Suppose instead that the actual exchange rate is $2.00 per pound. Starting with $4, a trader could buy a bushel of apples in New York, ship it to London, and sell it there for￡2.50. The pounds sterling could then be converted into dollars at the exchange rate, $2/￡yielding a total of $5 for $1 ($5 $4) gain.

The rationale of the LOP is that if the exchange rate is not $1.60/￡ but is instead, say $2/￡, then forces would be set in motion to change the rate and/or the price of apples. In our example, there would be a whole lot of apples flying from New York to London. Thus, demand for apples in New York would raise the dollar price for apples there, and the supply in London would lower the pound-sterling price. The apple traders converting pounds sterling into dollars, that is, supplying pounds sterling and demanding dollars, would also put pressure on the exchange rate to fall from $2/￡.

As you can see, for the LOP to be strictly true, three assumptions are needed:

（1）The transactions cost of trading apples—shipping, insurance, wastage, and so on—must be zero.

（2）No barriers to trading apples, such as tariffs or taxes, can exist.

（3）Finally, an apple in New York must be identical to an apple in London. It won’t do for you to send red apples to London if the English eat only green apples.

Given the fact that the transaction costs are not zero and that the other conditions are rarely exactly met, the LOP is really applicable only to traded goods, and then only to very uniform ones. The LOP does not imply that a Mercedes costs the same as a Ford or that a nuclear power plant in France costs the same as one in New York. In the case of the cars,they are not identical. In the case of the power plants, even if they were identical, they are expensive and very difficult to ship.

Because consumers purchase many goods, economists speak of purchasing-power

parity (PPP), the idea that the exchange rate adjusts so that a market basket of goods costs the same, regardless of the country in which it is purchased. In addition, a relative version of purchasing-power parity has evolved. Relative purchasing-power parity (RPPP) says that the rate of change in the price level of commodities in one country relative to the rate of change in the price level in another determines the rate of change of the exchange rate between the two countries.

4 Interest Rates And Exchange Rates: Interest -rate Parity

The forward-exchange rate and the spot-exchange rate are tied together by the same sort of arbitrage that underlies the law of one price. First, here is some useful terminology. If forward-exchange rates are greater than the spot-exchange rate in a particular currency, the forward foreign currency is said to be at a premium (this implies the domestic currency is at a discount). If the values of forward-exchange rates are less than the spot-exchange rate, the forward rate of foreign currency is at a discount.

Suppose we observe that the spot DM rate is DM2.50=$1.00 and the one-month forward DM is DM2.40=$1.00. Because fewer marks are needed to buy a dollar at the forward rate than are needed to buy a dollar at the spot rate, the mark is more valuable in the forward market than in the spot market. This means that the one-month forward DM is at a premium. Of course,whatever we say for the mark must be the opposite of what we say for the dollar. In this example, the dollar is at a discount because the forward value is less than the spot value. Forward exchange is quoted in terms of the premium or discount that is to be added onto the spot rate.

Whether forward rates are at a premium or a discount when compared to a domestic currency depends on the relative interest rates in the foreign and domestic currency markets. The interest-rate–parity theorem implies that, if interest rates are higher domestically than in a particular foreign country, the foreign country’s currency will be selling at a premium in the forward market; and if interest rates are lower domestically, the foreign currency will be selling at a discount in the forward market.

We need some notation to develop the interest-rate–parity theorem. Let S(0) be the current domestic-currency price of spot foreign exchange (current time is denoted by 0). If the domestic currency is the dollar and the foreign exchange is the deutschemark, we might observe S(0) $0.40/DM. S(0) is in direct or U.S. terms. Let F(0,1) be the current domestic currency price of forward exchange for a contract that matures in one month. Thus, the contract is for forward exchange one month hence. Let i and i* be the yearly rates of interest paid on Eurocurrency deposits denominated in the domestic (i) and foreign (i*) currencies,

respectively. Of course, the maturity of the deposits can be chosen to coincide with the maturity of the forward contract. Now consider a trader who has access to the interbank market in foreign

exchange and Eurocurrency deposits. Suppose the trader has some dollars to invest for one month. The trader can make a dollar loan or a deutschemark loan. The annual interest rate is 10 percent in deutschemarks and 6 percent in dollars. Which is better?

5 International Capital Budgeting

Kihlstrom Equipment, a U.S.-based international company, is evaluating an investment in France. Kihlstrom’s exports of drill bits have increased to such a degree that the company is considering operating a plant in France. The project will cost FF20 million, and it is expected to produce cash flows of FF8 million a year for the next three years. The current spotexchange rate for French francs is S(0)=$0.20/FF. How should Kihlstrom calculate the net present value of the projects in U.S. dollars?

Nothing about the fact that the i nvestment is made abroad alters Kihlstrom’s NPV criterion. Kihlstrom must identify incremental cash flows and discount them at the appropriate cost of capital. After making the required discounted cash flow calculations,Kihlstrom should undertake projects with a positive NPV. However, two major factors that complicate such international NPV calculations are foreign exchange conversion and repatriation of funds.

5.1 Foreign Exchange Conversion

The simplest way for Kihlstrom to calculate the NPV of the investment is to convert all French-franc cash flows to U.S. dollars. This involves a three-step process: Step 1. Estimate future cash flows in French francs.

Step 2. Convert to U.S. dollars at the predicted exchange rate.

Step 3. Calculate NPV using the cost of capital in U.S. dollars.

5.2 Unremitted Cash Flows

The previous example assumed that all after-tax cash flows from the foreign investment were remitted to the parent firm. The remittance decision is similar to the dividend for a purely domestic firm. Substantial differences can exist between the cash flows of a project and the amount that is actually remitted to the parent firm. Of course, the net present value of a project will not be changed by deferred remittance if the unremitted cash flows are reinvested at a rate of return equal (as adjusted for exchange rates) to the domestic cost of capital.

A foreign subsidiary can remit funds to a parent in many ways, including the following:

(1)Dividends.

(2)Management fees for central services.

(3)Royalties on the use of trade names and patents.

International firms must pay special attention to remittance for two reasons. First, there may be present and future exchange controls. Many governments are sensitive to the charge of being exploited by foreign firms. Therefore, governments are tempted to limit the ability of international firms to remit cash flows. Another reason is taxes. It is always necessary to determine what taxes must be paid on profits generated in a foreign country. International firms must usually pay foreign taxes on their foreign profits. The total taxes paid by an international firm may be a function of the time of remittance. For example, Kihlstrom’s French subsidiary would need to pay taxes in France on the profits it earns in France. Kihlstrom will also pay taxes on dividends it remits to the United States. In most cases Kihlstrom can offset the payment of foreign taxes against the U.S. tax liability. Thus, if the French corporate income tax is 34 percent, Kihlstrom will not be liable for additional U.S. taxes.

5.3 The Cost of Capital for International Firms

An important question for firms with international investments is whether the required return for international projects should be different from that of similar domestic projects.

Lower Cost of Capital from International Firm Diversification In the previous chapter, we expressed some skepticism concerning the benefits of diversification. We can make a stronger case for diversification in international firms than for purely domestic firms. Suppose barriers prevented shareholders in the United States from holding foreign securities;the financial markets of different countries would be segmented. Further suppose that firms in the United States were not subject to the same barriers. In such a case, a firm engaging in international investing could provide indirect diversification for U.S. shareholders that

they could not achieve by investing within the United States. This could lead to the lowering of the risk premium on international projects. In general, if the costs of investing abroad are lower for a firm than for its shareholders, there is an advantage to international diversification by firms, and this advantage will be reflected in a lower risk-adjusted discount rate.