At first sight, the idea of investing internationally seems exciting and full of promise because of the many benefits of international portfolio investment. By investing in foreign securities, inves-tors can participate in the growth of other countries, hedge their consumption basket against...

This article explores the forecasting accuracy of the “random walk” and other models of exchange rate behavior. Under present conditions of floating exchange rates, it is argued, anticipations of future demand and supply determine fluctuations in exchange rates. The authors present results...

New financial techniques and instruments are created when both the demand for and the supply of those instruments become sufficiently large. New financial instruments appear almost always to represent new combinations or packages of a relatively small number of financial services. In the...

The availability of more alternatives in the decision making process is one of the most important distinguishing characteristics between the management function in an international business enterprise111 The terms international business enterprise, international corporation, multinational...

Purpose – In the presence of capital market imperfections, risk management at the enterprise level is apt to increase the firm's value to shareholders by reducing costs associated with agency conflicts, external financing, financial distress, and taxes. The purpose of this paper is to provide...

The authors provide the reader with a simple introduction to credit derivatives. The article includes a broad overview of the market, estimates of the global market size, and a description of the most widely used products.

This essay analyses alternative strategies for a firm to deal with exchange risk. “Profit maximising” and “risk minimising” strategies are examined as extreme alternatives. The former requires successful exchange rate forecasting, the latter is based on avoiding any impact of unexpected...