Managing risk in international business: techniques and applications
It is essential that business managers have a clear grasp of the many different risks involved in international business transactions, how they relate to one another and how they can be minimised. Managing Risk in International Business is a comprehensive guide to the major sources of risk encounter...
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| Main Authors: | , |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
London [u.a.]
Internat. Thomson Business Press
1996
|
| Edition: | 1. ed. |
| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Summary: | It is essential that business managers have a clear grasp of the many different risks involved in international business transactions, how they relate to one another and how they can be minimised. Managing Risk in International Business is a comprehensive guide to the major sources of risk encountered in activities such as importing, exporting, borrowing, lending and investing in new markets. It provides managers with an understanding of both traditional and advanced new risk measurement techniques borrowed from modern portfolio and option pricing theory. |
| Physical Description: | XII, 376 S. graph. Darst. |
| ISBN: | 0412597209 |
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| 520 | 3 | |a It is essential that business managers have a clear grasp of the many different risks involved in international business transactions, how they relate to one another and how they can be minimised. Managing Risk in International Business is a comprehensive guide to the major sources of risk encountered in activities such as importing, exporting, borrowing, lending and investing in new markets. It provides managers with an understanding of both traditional and advanced new risk measurement techniques borrowed from modern portfolio and option pricing theory. | |
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| 650 | 7 | |a Risicoanalyse |2 gtt | |
| 650 | 4 | |a Multinationales Unternehmen | |
| 650 | 4 | |a International business enterprises -- Finance | |
| 650 | 4 | |a Investments, Foreign | |
| 650 | 4 | |a Country risk | |
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| adam_text | Contents
Preface xi
PART ONE The Firm and the International Economy 1
1 The international business environment 3
The organization of the international economic and
financial system 3
Systems of exchange rate determination 5
Systems of fixed exchange rates 5
Floating and other exchange rate systems 7
The current international financial system 11
The International Monetary Fund 13
The European Union and the European Monetary System 14
Current system of exchange rates and reserves 17
International banking and the Eurocurrency market 19
The characteristics of the Eurocurrency market 19
Eurocurrency interest rates 23
The Eurocurrency market and balance of payments adjustment 24
The foreign exchange market 24
The interbank market 25
The foreign exchange market and the Eurocurrency market 26
Organization of the international banking system 27
Correspondent banking 27
Representative offices 28
Foreign branches and subsidiaries 28
An overview of the system 30
Notes 31
2 The characteristics of international business risk 33
The nature of risk 34
Expected return and standard deviation 34
Mean variance analysis 36
Diversification and risk 36
The capital asset pricing model 39
vi Contents
Further comments on risk 42
Country specific risk: economic, financial and currency 44
Country economic risk 45
Country economic risk measured as the volatility of the
macroeconomic rate of return 48
Country financial risk 49
Currency risk 50
Political risk 53
Sources of political risk 54
The effects of political risk: direct investment 56
Political risk: cross border loans 60
Political risk: Portfolio investment 61
Notes 63
PART TWO Assessing International Business Risk 67
3 Political risk analysis 69
Methods and techniques 69
Comparative techniques 69
Analytical techniques 75
Econometric techniques 81
Applications 85
Measuring exposure in direct investment 85
Measuring political risk 89
An example of political risk analysis: the case of NPC 92
An example of political risk analysis: a direct investment project
in Mexico 95
An example of political risk analysis: a bank loan to Indonesia 97
Notes 98
4 The economics of country specific risk assessment 101
The balance of payments and the economy 101
The monetary authorities and the exchange rate 102
Macroeconomic accounting discipline 104
The exchange rate and economic adjustment 106
The balance of payments, the exchange rate and the money supply 117
Intervention in the exchange markets 117
The monetary approach to the balance of payments 121
The portfolio balance approach 122
The international parity relations 123
Purchasing power parity 123
Interest rate parity 128
Contents vii
The international Fisher relation 129
Forward rate parity 132
Assessing the risk 133
Variables and ratios for economic risk assessment 133
Variables and ratios for financial risk assessment 136
Forecasting the exchange rate 138
Appendix 4.1 A mathematical presentation of the monetary
approach to the balance of payments 144
Appendix 4.2 A mathematical presentation of the portfolio balance
approach to the balance of payments 146
Notes 148
5 Advanced techniques for macroeconomic risk assessment 153
The shortcomings of traditional international risk analysis 153
The new analytical framework 156
A presentation of the model 156
Applying the model 160
Application 169
Case study: the international creditworthiness of Argentina,
Brazil and Mexico, 1979 82 169
Estimating the systematic risk 173
Does the index work? Some proof from portfolio investment 176
Appendix 5.1 Derivation of macroeconomic market value in
foreign currency 178
Notes 180
6 Advanced techniques for assessing international country
creditworthiness 183
Using options to value securities 184
Using options pricing theory for debt valuation 184
Pricing subordinated debt 188
The agency problem 189
Estimating the maturity of non zero coupon debt 191
Using option theory in country specific financial risk assessment:
the case of Brazil 192
Estimating the parameters 193
Estimating the financial risk premium 197
The role of political risk analysis 199
The performance of the options pricing approach: results of a
60 country study 204
Appendix 6.1 Derivation of the Black Scholes Formula 212
Appendix 6.2 Mexico revisited 1994 214
viii Contents
The zero rate solvency test . 216
Political risk as an agency conflict 217
Unilateral subordination 217
Political risk measured as increased volatility 218
The combined effects of political risk: subordination and volatility 219
Notes 220
PART THREE Managing die risk 223
7 Managing political risk 225
Covering commercial exposure to political risk 225
Internal hedging techniques 226
External hedging techniques 227
Transferring the risk to an insurance company 229
Managing risky accounts receivable 235
Managing exposure of foreign direct investment to political risk 236
Internal hedging techniques 236
External hedging techniques 242
Hedging bank loans against political risk 248
Restraining loans to risky countries 248
Transferring the risk to government agencies 250
Debt equity swaps 250
Appendix 7.1 Organising political risk management in industrial
firms 257
Day to day organization 257
Emergency situations 258
Appendix 7.2 Most often cited advantages and disadvantages for
the host country of debt equity swaps 259
Advantages 259
Disadvantages 259
Note 260
8 Managing exposure to currency risk 261
Evaluating foreign currency exposure 261
Internal methods and procedures for managing foreign currency
exposure 262
Payment terms in international trade 262
Currency choice in invoicing 262
Methods of making payments 264
Documentary methods of payment 265
Other payment terms 265
International cash management 266
Contents he
The basic requirements for effective international cash management 266
In house hedging 267
Globalized accounts 268
Netting 268
Reinvoicing centres 271
Leads and lags 273
Short term lending in foreign currency 274
Short term financing in foreign currency 215
Using the foreign exchange market 276
Retail rates and settlement procedures lid
The principles of hedging with forward contracts 277
Rolling over and closing out forward contracts 282
Other hedging methods 284
Hedging with foreign currency loans 284
Hedging with swaps 285
Hedging with futures contracts on organized markets 287
Hedging with currency options 291
Characteristics of currency options 291
Pricing currency options 293
Hedging with options 294
Hedging with an option purchase 294
Hedging by selling options 298
Appendix 8.1 Hedging long term foreign exchange risk with
non zero coupon loans 301
Appendix 8.2 Advanced hedging strategies using options 303
Tunnels: an introduction to hedging with sales and purchases
of options 303
Combinations of simple options 304
Second generation options 305
Notes 310
9 Advanced techniques for managing political, economic and
financial risk 311
The orthodox theory of investment 311
Net present value 311
The option approach to investment under uncertainty 323
Simple applications: a shoe factory in Russia 325
More complicated applications: investments in natural resources 325
Concluding remarks on the option approach to investment 331
Beyond mean variance 332
Political risk and the shortcomings of mean variance analysis 332
x Contents
Pinpointing the political risk: an investment in the United States 335
Appendix 9.1 The relation between the CAPM and the
Black Scholes option pricing formula 338
Appendix 9.2 Valuing a developed oil reserve 341
Appendix 9.3 Investment choice with dependent political risk 343
Notes 345
Bibliography 347
Glossary 357
Index 367
|
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| dewey-tens | 650 - Management and auxiliary services |
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| language | English |
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| spelling | Clark, Ephraim 1722-1797 Verfasser (DE-588)10419202X aut Managing risk in international business techniques and applications Ephraim Clark and Bernard Marois 1. ed. London [u.a.] Internat. Thomson Business Press 1996 XII, 376 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier It is essential that business managers have a clear grasp of the many different risks involved in international business transactions, how they relate to one another and how they can be minimised. Managing Risk in International Business is a comprehensive guide to the major sources of risk encountered in activities such as importing, exporting, borrowing, lending and investing in new markets. It provides managers with an understanding of both traditional and advanced new risk measurement techniques borrowed from modern portfolio and option pricing theory. Internationale ondernemingen gtt Risicoanalyse gtt Multinationales Unternehmen International business enterprises -- Finance Investments, Foreign Country risk Risikomanagement (DE-588)4121590-4 gnd rswk-swf Auslandsgeschäft (DE-588)4003763-0 gnd rswk-swf Multinationales Unternehmen (DE-588)4075092-9 gnd rswk-swf Multinationales Unternehmen (DE-588)4075092-9 s Risikomanagement (DE-588)4121590-4 s DE-604 Auslandsgeschäft (DE-588)4003763-0 s Marois, Bernard Verfasser aut HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=007267772&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Clark, Ephraim 1722-1797 Marois, Bernard Managing risk in international business techniques and applications Internationale ondernemingen gtt Risicoanalyse gtt Multinationales Unternehmen International business enterprises -- Finance Investments, Foreign Country risk Risikomanagement (DE-588)4121590-4 gnd Auslandsgeschäft (DE-588)4003763-0 gnd Multinationales Unternehmen (DE-588)4075092-9 gnd |
| subject_GND | (DE-588)4121590-4 (DE-588)4003763-0 (DE-588)4075092-9 |
| title | Managing risk in international business techniques and applications |
| title_auth | Managing risk in international business techniques and applications |
| title_exact_search | Managing risk in international business techniques and applications |
| title_full | Managing risk in international business techniques and applications Ephraim Clark and Bernard Marois |
| title_fullStr | Managing risk in international business techniques and applications Ephraim Clark and Bernard Marois |
| title_full_unstemmed | Managing risk in international business techniques and applications Ephraim Clark and Bernard Marois |
| title_short | Managing risk in international business |
| title_sort | managing risk in international business techniques and applications |
| title_sub | techniques and applications |
| topic | Internationale ondernemingen gtt Risicoanalyse gtt Multinationales Unternehmen International business enterprises -- Finance Investments, Foreign Country risk Risikomanagement (DE-588)4121590-4 gnd Auslandsgeschäft (DE-588)4003763-0 gnd Multinationales Unternehmen (DE-588)4075092-9 gnd |
| topic_facet | Internationale ondernemingen Risicoanalyse Multinationales Unternehmen International business enterprises -- Finance Investments, Foreign Country risk Risikomanagement Auslandsgeschäft |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=007267772&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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