Given that it is costly, the widespread use of foreign exchange hedging is puzzling for several reasons. In an efficient market exchange rate fluctuations should even out over time. Also, exchange rate risk is generally regarded as unsystematic, and even if it is systematic investors can...

Over the last 20 years, research has confirmed and reconfirmed the benefits of international diversification. [See Madura (1984) for a review of this research.] However, changes in international stock market and foreign exchange market behavior require that some issues be reassessed. First, how...

Methods of capital budgeting have been well established in the finance literature as well as in corporate practice. In general, the discounted cash flow methods (IRR, NPV, PI) are considered to be superior. An investment project is therefore acceptable (at least in financial terms) when its net...

This paper derives a model for analyzing the net present value of a change in credit policy, in the presence of exchange rate uncertainty, tax differentials, and potential limitations on raptratiation of profits. When our model is compared to the standard model used in the domestic environment,...