International Financial Management

When we were graduate students, we chose to study international finance because we wanted to understand issues such as how exchange rates are determined, how people manage the risks that fluctuations in exchange rates create, and how people decide on the value of an international investment, be it a bond, an equity, a factory, or a company. We also recognized that the economic forces that people now call globalization were trends that would only increase in importance over time. We like to think that we made a good call on our careers because, without a doubt, globalization of business is now a fact. While the anti-globalization forces of economic nationalism and outright protectionism do periodically interrupt the advances of globalization and are currently on the rise, the gains to trade and the ongoing decreases in the costs of transportation and communication assure us that globalization is here to stay. Our goal with this book is to equip future global business leaders with the tools they need to understand the issues, to make sound international financial decisions, and to manage the myriad risks that their businesses face in a competitive global environment.

Over the years, the markets for goods and services as well as capital and labor have become increasingly open to the forces of international competition. All business schools have consequently “internationalized” their curriculums. Nevertheless, our combined 66 years of teaching experience indicates that most students will not be ready for the real world, with its global complications, unless they know the material in this book. They will not really understand how fluctuations in exchange rates create risks and rewards for multinational corporations and investment banks, and they will not understand how those risks can be managed. They will not really understand how to determine the value of an overseas project or the nature of country risk. The purpose of this book is to prepare students to deal with these and other real-world issues.

This Book's Approach: Making Better Decisions by Blending Theory and Practice with Real-World Data Analysis

International Financial Management, 3rd Edition, continues to blend theory, examples, the analysis of data, and practical case situations to allow students to truly understand not only what to do when confronted with an international financial decision but why that decision is the correct one.