Determinants of capital structure for a purely domestic firm with multinational firms.

The determinants of capital structure for a purely domestic firm with multinational firms.

  1. List and explain the evidence for international determinants of capital structure. Compare and contrast the determinants of capital structure for a purely domestic firm with multinational firms.
  2. Explain how hedging may create value for a firm. How would a treasure determine whether or not to hedge, as well as the correct strategy to hedge FX risks?
  3. Explain how and why one can use interest rates and inflation rates to predict the movement of foreign exchange rates. Compare and contrast Interest Rate Parity (IRP), Purchasing Power Parity (PPP), and the international Fisher Effect.
  4. Explain how expected changes in FX rates affects a decision to invest or borrow abroad. Should the cash management function be centralized? Explain the advantages and disadvantages of having a centralized cash management system.
  5. Suppose nations attempt to pursue independent monetary and fiscal policies. Explain how this would affect FX behavior. Would independent monetary and fiscal policies also affect political risks?

Determinants of capital structure

Sample Solution

 

determine irrationality of a suicide if there was no way possible of the individual knowing; it can only be judged if there was no attempt to get it from reliable sources (Battin 137-138). I think that Battin is inferring that not having the correct information could mean they are unable to participate in rational thought process. Another assumption of suicide not being rational due to this criterion is caused by internal factors, such as depression where they ca Determinants of capital structure n unknowingly suppress certain information (Brandt, cited in Battin 1995, 138). She counters this by stating that you can still have adequate information because the future may be already negative, even with a smaller view (Battin 138-139). Therefore, f Determinants of capital structure rom her counterargument, she is cou Determinants of capital structure ntering any claims of narrow views that the opposition would try to argue by stating that an individual’s health status does not matter. Battin states that some would claim that suicide would be irrational if one committed it because of an unlikely future, but states t>

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