<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073102555/324680/globe.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (1.0K)</a>CHAPTER 10

Opening Case
Volkswagen's Hedging Strategy

Introduction

The Functions of the Foreign Exchange Market
     Currency Conversion
     Insuring against Foreign Exchange Risk

Management Focus
South African Airlines' Disastrous Currency Hedge

The Nature of the Foreign Exchange Market

Economic Theories of Exchange Rate Determination
     Prices and Exchange Rates
     Interest Rates and Exchange Rates
     Investor Psychology and Bandwagon Effects

Country Focus
Why Did the Korean Won Collapse?
     Summary

Exchange Rate Forecasting
     The Efficient Market School
     The Inefficient Market School
     Approaches to Forecasting

Currency Convertibility

Implications for Managers
     Transaction Exposure
     Translation Exposure
     Economic Exposure
     Reducing Translation and Transaction

Management Focus
Translation Exposure at Baxter International
     Reducing Economic Exposure
     Other Steps for Managing Foreign Exchange Risk

Chapter Summary

Critical Thinking and Discussion Questions

Research Task

Closing Case
The Rising Euro Hammers Auto Parts Manufacturers