CHAPTER 19 Multinational Financial Management. Multinational vs. domestic financial management Exchange rates and trading in foreign exchange International money and capital markets. What is a multinational corporation?. A corporation that operates in two or more countries.
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Multinational vs. domestic financial management
Exchange rates and trading in foreign exchange
International money and capital markets
US $ to buy 1 unit
Japanese yen 0.009
Australian dollar 0.650
# of units of foreign
currency per US $
Japanese yen 111.11
Australian dollar 1.5385
= 111.11 x 0.650
= 72.22 Yen / A. Dollar
0.0138 A. Dollars / Yen
between yen and Australian dollars.
= 111.11 x 0.650= 72.22 yen/A. dollar.
= 1.5385 x 0.009= 0.0138 A. dollars/yen.
Yen x U.S. Dollars U.S. Dollar A. Dollar
A. Dollars x U.S. Dollars U.S. Dollar Yen
Price = (1.75)(1.50)(111.11)
= 291.66 yen
= 3.45 A. dollars
Ph = Pf(e0)
e0 = Ph/Pf
e0 = Ph/Pf
$0.6500 = $2.00/Pf
Pf = $2.00/$0.6500
= 3.0769 Australian dollars.