Fundamentals of Corporate Finance
Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 1, Problem 13CRCT
Summary Introduction

To critically think about: Whether the goal of maximizing the stock value will be different in the financial management in a foreign country.

Introduction:

The major goal of the firm is the maximization of the owner’s wealth. In order to maximize the owner’s wealth, the financial manager implements the necessary actions that result in the maximum gain without considering the future consequences.

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Multinational Finance and investment Q2 c) Illustrate how to synthesize a forward hedging strategy by using only the money markets, in order to hedge against the foreign exchange risk. d) Use a numerical example to illustrate that when there is a large change in the interest rate, the approximation error by using the duration and convexity rule is smaller than the approximation error by using the duration rule only.
Multinational Finance & investment  Q2  b) Do you agree with the following statement? And explain why. “The Capital Asset Pricing Model [CAPM] assumes that the stock market is dominated by welldiversified investors who are concerned with specific risk. “
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