International Financial Economics

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The second edition of this text is thoroughly updated to apply financial economics principles to real-world international corporate finance decisions. It is structured into three sections. The first section discusses exchange rates comprehensively. The second section delves into measuring and hedging a firm's foreign exchange exposure, emphasizing the relationship between foreign exchange exposure in profit and equity, as well as the effects of foreign currency debt and currency swaps. The third section focuses on overseas investment decisions, addressing both countries integrated into the global financial market and those that are not. It highlights the cost of capital and the accounting aspects of overseas investments and foreign exchange risk hedging. This book is well-suited for advanced undergraduate and graduate courses in global financial management. Key features include a practical financial perspective with real-world applications, expanded content on currency swaps for managing foreign exchange exposure, a detailed exploration of economic foreign exchange exposure, and additional insights into overseas investment decisions when exchange rates are misvalued.