MGT 342 Ch. 20
Terms
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- 4 key financial functions (mgmt activities)
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1) capital structure
2) capital budgeting
3) long-term financing
4) working capital managment - capital structure
- determining proper mix of debt and equity
- capital budgeting
- analyzing investment opportunities
- long-term financing
- selection, issuance, mgmt of long-term debt and equity capital, inluding location and currency
- working capital management
- propert mgmt of comp's currency A/L
- Eurocurrency
- currency banked outside of its country of origin
- eurodollars
- dollars banked outside the US
- LIBOR
- interest rate that banks charge each other on Eurocurrency loans
- Foreign bonds
- sold outside of the country of the borrower but in the currency of the country of issue
- eurobonds
- sold in countries other than in the one in whose currency the bond is denominated
- global bond
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combination of domestic and euro bond
registered in diff nat'l mkts according to the registration reqs of each mkt - Reason for Asian fin'l crisis
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comps relied too muich on debt esp bank debt to fund their growth
lack of development of bond and equity mkts forced comps to relie on bank debt - ADR
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American Depositary Receipt
negotiable certificate issued by a US bank that represents shares of stock of a foreign corp
represents underlying shares of a foreign corp's stock held in trust at a custodian bank in a foreign country
popular way for a euroequity to get a listing in US -
Global cash management:
things to be aware of -
local and corporate sys needs for cash
method and centralization of cash w/drawal from subsidiaries
what to do w/centralized cash - Exposure management strategy
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1) Define and measure exposure
2) Organize and implement a reporting sys
3) Adopt a policy assigning responsibility for hedging
4) Formulate strategies for hedging