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 International Financial
Management
14th Edition

Jeff Madura
Florida Atlantic University

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

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 International Financial Management, © 2021, 2018 Cengage Learning, Inc.
Fourteenth Edition WCN: 02-300
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 Brief Contents

PART 1: The International Financial Environment 1

1 Multinational Financial Management: An Overview 3
2 International Flow of Funds 31
3 International Financial Markets 61
4 Exchange Rate Determination 101
5 Currency Derivatives 131

PART 2: Exchange Rate Behavior 185

6 Government Influence on Exchange Rates 187
7 International Arbitrage and Interest Rate Parity 227
8 Relationships among Inflation, Interest Rates, and Exchange Rates 259

PART 3: Exchange Rate Risk Management 297

9 Forecasting Exchange Rates 299
10 Measuring Exposure to Exchange Rate Fluctuations 325
11 Managing Transaction Exposure 355
12 Managing Economic Exposure and Translation Exposure 393

PART 4: Long-Term Asset and Liability Management 413

13 Direct Foreign Investment 415
14 Multinational Capital Budgeting 435
15 International Corporate Governance and Control 475
16 Country Risk Analysis 501
17 Multinational Capital Structure and Cost of Capital 525
18 Long-Term Debt Financing 551

PART 5: Short-Term Asset and Liability Management 575

19 Financing International Trade 577
20 Short-Term Financing 595
21 International Cash Management 611
Appendix A: Answers to Self-Test Questions 643
Appendix B: Supplemental Cases 656
Appendix C: Using Excel to Conduct Analysis 676
Appendix D: International Investing Project 684
Appendix E: Discussion in the Boardroom 687
Appendix F: Use of Bitcoin to Conduct International Transactions 695
Glossary 698
Index 705

iii
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 Contents

Preface, xvii
About the Author, xxiii

Part 1: The International Financial Environment 1

1: Multinational Financial Management: An Overview 3

1-1 Managing the MNC, 4
1-1a How Business Disciplines Are Used to Manage the MNC, 4
1-1b Agency Problems, 4
1-1c Management Structure of an MNC, 6
1-2 Why MNCs Pursue International Business, 8
1-2a Theory of Comparative Advantage, 8
1-2b Imperfect Markets Theory, 8
1-2c Product Cycle Theory, 9
1-3 Methods to Conduct International Business, 10
1-3a International Trade, 10
1-3b Licensing, 10
1-3c Franchising, 10
1-3d Joint Ventures, 10
1-3e Acquisitions of Existing Operations, 11
1-3f Establishment of New Foreign Subsidiaries, 11
1-3g Summary of Methods, 12
1-4 Valuation Model for an MNC, 13
1-4a Domestic Valuation Model, 13
1-4b Multinational Valuation Model, 14
1-4c Uncertainty Surrounding an MNC’s Cash Flows, 17
1-4d How Uncertainty Affects the MNC’s Cost of Capital, 20
1-5 Organization of the Text, 20

2: International Flow of Funds 31

2-1 Balance of Payments, 31
2-1a Current Account, 31
2-1b Financial Account, 32
2-1c Capital Account, 33
2-2 Growth in International Trade, 34
2-2a Events That Increased Trade Volume, 34
2-2b Impact of Outsourcing on Trade, 36
2-2c Trade Volume among Countries, 37
2-2d Trend in U.S. Balance of Trade, 37
2-3 Factors Affecting International Trade Flows, 39
2-3a Cost of Labor, 40
2-3b Inflation, 40
2-3c National Income, 40

v
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vi Contents

2-3d Credit Conditions, 41

2-3e Government Policies, 41
2-3f Exchange Rates, 46
2-4 International Capital Flows, 49
2-4a Factors Affecting Direct Foreign Investment, 49
2-4b Factors Affecting International Portfolio Investment, 50
2-4c Impact of International Capital Flows, 50
2-5 Agencies that Facilitate International Flows, 51
2-5a International Monetary Fund, 52
2-5b World Bank, 53
2-5c World Trade Organization, 53
2-5d International Finance Corporation, 54
2-5e International Development Association, 54
2-5f Bank for International Settlements, 54
2-5g OECD, 54
2-5h Regional Development Agencies, 54

3: International Financial Markets 61

3-1 Foreign Exchange Market, 61
3-1a History of Foreign Exchange, 62
3-1b Foreign Exchange Transactions, 63
3-1c Foreign Exchange Quotations, 68
3.1d Derivative Contracts in the Foreign Exchange Market, 72
3-2 International Money Market, 73
3-2a Dollar-Denominated Bank Accounts in Europe and Asia, 74
3-2b Money Market Interest Rates among Currencies, 74
3-2c Risk of International Money Market Securities, 75
3-3 International Credit Market, 76
3-3a Syndicated Loans in the Credit Market, 76
3-4 International Bond Market, 76
3-4a Eurobond Market, 77
3-4b Development of Other Bond Markets, 78
3-4c Risk of International Bonds, 78
3-5 International Stock Markets, 79
3-5a Issuance of Stock in Foreign Markets, 79
3-5b Issuance of Foreign Stock in the United States, 79
3-5c How Governance Varies among Stock Markets, 81
3-5d Integration of International Stock Markets and Credit Markets, 82
3-6 International Financial Market Crises, 82
3-6a Contagion Effects, 83
3-7 How Financial Markets Serve MNCs, 85
Appendix 3: Investing in International Financial Markets, 93

4: Exchange Rate Determination 101

4-1 Measuring Exchange Rate Movements, 101
4-2 Exchange Rate Equilibrium, 102
4-2a Demand for a Currency, 103
4-2b Supply of a Currency for Sale, 104
4-2c Equilibrium Exchange Rate, 105
4-2d Change in the Equilibrium Exchange Rate, 106

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 Contents vii

4-3 Factors That Influence Exchange Rates, 108

4-3a Relative Inflation Rates, 108
4-3b Relative Interest Rates, 110
4-3c Relative Income Levels, 111
4-3d Government Controls, 112
4-3e Expectations, 112
4-3f Interaction of Factors, 113
4-3g Influence of Factors across Multiple Currency Markets, 115
4-3h Impact of Liquidity on Exchange Rate Adjustments, 115
4-4 Movements in Cross Exchange Rates, 116
4-5 Capitalizing on Expected Exchange Rate Movements, 118
4-5a Institutional Speculation Based on Expected Appreciation, 118
4-5b Institutional Speculation Based on Expected Depreciation, 119
4-5c Speculation by Individuals, 119
4-5d Carry Trades, 120

5: Currency Derivatives 131

5-1 Forward Market, 131
5-1a How MNCs Use Forward Contracts, 131
5-1b Bank Quotations on Forward Rates, 132
5-1c Premium or Discount on the Forward Rate, 133
5-1d Movements in the Forward Rate over Time, 134
5-1e Offsetting a Forward Contract, 134
5-1f Using Forward Contracts for Swap Transactions, 135
5-1g Non-deliverable Forward Contracts, 135
5-2 Currency Futures Market, 136
5-2a Contract Specifications, 136
5-2b Trading Currency Futures, 137
5-2c Credit Risk of Currency Futures Contracts, 138
5-2d Comparing Currency Futures and Forward Contracts, 138
5-2e How MNCs Use Currency Futures, 139
5-2f Speculation with Currency Futures, 140
5-3 Currency Options Market, 142
5-3a Currency Options Exchanges, 142
5-3b Over-the-Counter Currency Options Market, 142
5-4 Currency Call Options, 142
5-4a Factors Affecting Currency Call Option Premiums, 143
5-4b How MNCs Use Currency Call Options, 144
5-4c Speculating with Currency Call Options, 145
5-5 Currency Put Options, 148
5-5a Factors Affecting Currency Put Option Premiums, 149
5-5b How MNCs Use Currency Put Options, 149
5-5c Speculating with Currency Put Options, 150
5-6 Other Forms of Currency Options, 152
5-6a Conditional Currency Options, 152
5-6b European Currency Options, 154
Appendix 5A: Currency Option Pricing, 165
Appendix 5B: Currency Option Combinations, 169
Part 1 Integrative Problem: The International Financial Environment, 183

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viii Contents

Part 2: Exchange Rate Behavior 185

6: Government Influence on Exchange Rates 187

6-1 Exchange Rate Systems, 187
6-1a Fixed Exchange Rate System, 187
6-1b Freely Floating Exchange Rate System, 189
6-1c Managed Float Exchange Rate System, 190
6-1d Pegged Exchange Rate System, 191
6-1e Dollarization, 197
6-1f Black Markets for Currencies, 197
6-2 A Single European Currency, 197
6-2a Monetary Policy in the Eurozone, 198
6-2b Impact on Firms in the Eurozone, 198
6-2c Impact on Financial Flows in the Eurozone, 199
6-2d Impact of a Eurozone Country Crisis on Other Eurozone Countries, 199
6-2e Impact of a Country Abandoning the Euro, 201
6-3 Direct Intervention, 202
6-3a Reasons for Direct Intervention, 202
6-3b The Direct Intervention Process, 203
6-3c Direct Intervention as a Policy Tool, 205
6-3d Speculating on Direct Intervention, 206
6-4 Indirect Intervention, 208
6-4a Government Control of Interest Rates, 208
6-4b Government Use of Foreign Exchange Controls, 209
Appendix 6: Government Intervention during the Asian Crisis, 217

7: International Arbitrage and Interest Rate Parity 227

7-1 Locational Arbitrage, 227
7-1a Gains from Locational Arbitrage, 228
7-1b Realignment Due to Locational Arbitrage, 228
7-2 Triangular Arbitrage, 229
7-2a Gains from Triangular Arbitrage, 230
7-2b Realignment Due to Triangular Arbitrage, 232
7-3 Covered Interest Arbitrage, 233
7-3a Covered Interest Arbitrage Process, 233
7-3b Realignment Due to Covered Interest Arbitrage, 234
7-3c Arbitrage Example When Accounting for Spreads, 236
7-3d Covered Interest Arbitrage by Non-U.S. Investors, 236
7-3e Comparing Different Types of Arbitrage, 237
7-4 Interest Rate Parity (IRP), 238
7-4a Derivation of Interest Rate Parity, 238
7-4b Determining the Forward Premium, 239
7-4c Graphic Analysis of Interest Rate Parity, 241
7-4d Does Interest Rate Parity Hold?, 244
7-4e Considerations When Assessing Interest Rate Parity, 244
7-5 Variation in Forward Premiums, 245
7-5a Forward Premiums across Maturities, 245
7-5b Changes in Forward Premiums over Time, 246

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 Contents ix

8: Relationships among Inflation, Interest Rates,

and Exchange Rates 259
8-1 Purchasing Power Parity (PPP), 259
8-1a Interpretations of Purchasing Power Parity, 259
8-1b Derivation of Purchasing Power Parity, 261
8-1c Using PPP to Estimate Exchange Rate Effects, 262
8-1d Graphic Analysis of Purchasing Power Parity, 263
8-1e Testing the Purchasing Power Parity Theory, 266
8-1f Why Deviations from PPP Exist, 267
8-2 International Fisher Effect, 268
8-2a Deriving a Country’s Expected Inflation Rate, 268
8-2b Estimating the Expected Exchange Rate Movement, 270
8-2c Implications of the International Fisher Effect, 270
8-2d Derivation of the International Fisher Effect, 272
8-2e Graphic Analysis of the International Fisher Effect, 275
8-2f Testing the International Fisher Effect, 276
8-2g Limitations of IFE Theory, 277
8-2h Comparison of IRP, PPP, and IFE Theories, 277
Part 2 Integrative Problem: Exchange Rate Behavior, 288
Midterm Self-Exam, 289

Part 3: Exchange Rate Risk Management 297

9: Forecasting Exchange Rates 299

9-1 Why Firms Forecast Exchange Rates, 299
9-2 Forecasting Techniques, 301
9-2a Technical Forecasting, 301
9-2b Fundamental Forecasting, 301
9-2c Market-Based Forecasting, 305
9-2d Mixed Forecasting, 307
9-3 Assessment of Forecast Performance, 309
9-3a Measurement of Forecast Error, 309
9-3b Forecast Errors among Time Horizons, 309
9-3c Forecast Errors among Currencies, 310
9-3d Comparing Forecast Errors among Forecast Techniques, 310
9-3e Graphic Evaluation of Forecast Bias, 311
9-3f Statistical Test of Forecast Bias, 313
9-3g Shifts in Forecast Bias over Time, 313
9-4 Accounting for Uncertainty Surrounding Forecasts, 313
9-4a Sensitivity Analysis Applied to Fundamental Forecasting, 314
9-4b Interval Forecasts, 314

10: Measuring Exposure to Exchange Rate Fluctuations 325

10-1 Relevance of Exchange Rate Risk, 325
10-2 Transaction Exposure, 326
10-2a Estimating “Net” Cash Flows in Each Currency, 328
10-2b Transaction Exposure of an MNC’s Portfolio, 329
10-2c Transaction Exposure Based on Value at Risk, 331

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x Contents

10-3 Economic Exposure, 334

10-3a Exposure to Foreign Currency Depreciation, 335
10-3b Exposure to Foreign Currency Appreciation, 336
10-3c Measuring Economic Exposure, 336
10-4 Translation Exposure, 339
10-4a Determinants of Translation Exposure, 339
10-4b Exposure of an MNC’s Stock Price to Translation Effects, 341

11: Managing Transaction Exposure 355

11-1 Policies for Hedging Transaction Exposure, 355
11-1a Hedging Most of the Exposure, 355
11-1b Selective Hedging, 355
11-2 Hedging Exposure to Payables, 356
11-2a Forward or Futures Hedge on Payables, 356
11-2b Money Market Hedge on Payables, 357
11-2c Call Option Hedge on Payables, 358
11-2d Comparison of Techniques for Hedging Payables, 360
11-2e Evaluating Past Decisions on Hedging Payables, 363
11-3 Hedging Exposure to Receivables, 363
11-3a Forward or Futures Hedge on Receivables, 364
11-3b Money Market Hedge on Receivables, 364
11-3c Put Option Hedge on Receivables, 364
11-3d Comparison of Techniques for Hedging Receivables, 367
11-3e Evaluating Past Decisions on Hedging Receivables, 370
11-3f Summary of Hedging Techniques, 370
11-4 Limitations of Hedging, 371
11-4a Limitation of Hedging an Uncertain Payment, 371
11-4b Limitation of Repeated Short-Term Hedging, 371
11-5 Alternative Methods to Reduce Exchange Rate Risk, 373
11-5a Leading and Lagging, 373
11-5b Cross-Hedging, 374
11-5c Currency Diversification, 374
Appendix 11: Nontraditional Hedging Techniques, 388

12: Managing Economic Exposure and Translation Exposure 393

12-1 Managing Economic Exposure, 393
12-1a Assessing Economic Exposure, 393
12-1b Restructuring to Reduce Economic Exposure, 394
12-1c Limitations of Restructuring Intended to Reduce Economic Exposure, 398
12-2 A Case Study on Hedging Economic Exposure, 398
12-2a Savor Co.’s Assessment of Economic Exposure, 398
12-2b Using a Financing Strategy to Hedge Economic Exposure, 400
12-3 Managing Exposure to Fixed Assets, 400
12-4 Managing Translation Exposure, 401
12-4a Hedging Translation Exposure with Forward Contracts, 401
12-4b Limitations of Hedging Translation Exposure, 402
Part 3 Integrative Problem: Exchange Risk Management, 411

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 Contents xi

Part 4: Long-Term Asset and Liability Management 413

13: Direct Foreign Investment 415

13-1 Motives for Direct Foreign Investment, 415
13-1a Revenue-Related Motives, 415
13-1b Cost-Related Motives, 416
13-1c Comparing Benefits of DFI among Countries, 418
13-2 Benefits of International Diversification, 418
13-2a Diversification Analysis of International Projects, 420
13-3 Host Government Impact on DFI, 422
13-3a Incentives to Encourage DFI, 422
13-3b Barriers to DFI, 422
13-4 Assessing the Feasibility of Potential DFI, 424
13-4a A Case Study of Assessing Potential DFI, 424
13-4b Evaluating DFI Opportunities That Pass the First Screen, 426

14: Multinational Capital Budgeting 435

14-1 Subsidiary versus Parent Perspective, 435
14-1a Tax Differentials, 435
14-1b Restrictions on Remitted Earnings, 436
14-1c Exchange Rate Movements, 436
14-1d Summary of Factors That Distinguish the Parent Perspective, 436
14-2 Input for Multinational Capital Budgeting, 437
14-3 Multinational Capital Budgeting Example, 439
14-3a Background, 439
14-3b Analysis, 440
14-4 Other Factors to Consider, 442
14-4a Exchange Rate Fluctuations, 442
14-4b Inflation, 445
14-4c Financing Arrangement, 446
14-4d Blocked Funds, 448
14-4e Uncertain Salvage Value, 450
14-4f Impact of Project on Prevailing Cash Flows, 451
14-4g Host Government Incentives, 451
14-4h Real Options, 452
14-5 Adjusting Project Assessment for Risk, 452
14-5a Risk-Adjusted Discount Rate, 452
14-5b Sensitivity Analysis, 453
14-5c Simulation, 456
Appendix 14: Incorporating International Tax Law in Multinational
Capital Budgeting, 468

15: International Corporate Governance and Control 475

15-1 International Corporate Governance, 475
15-1a Governance by Board Members, 475
15-1b Governance by Institutional Investors, 476
15-1c Governance by Shareholder Activists, 476

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xii Contents

15-2 International Corporate Control, 477

15-2a Motives for International Acquisitions, 477
15-2b International Acquisition Process, 477
15-2c Barriers to International Corporate Control, 478
15-2d Model for Valuing a Foreign Target, 478
15-3 Factors Affecting Target Valuation, 480
15-3a Target-Specific Factors, 480
15-3b Country-Specific Factors, 481
15-4 A Case Study of Valuing a Foreign Target, 482
15-4a International Screening Process, 482
15-4b Estimating the Target’s Value, 483
15-4c Uncertainty Surrounding the Target’s Valuation, 484
15-4d Changes in Market Valuation of the Target over Time, 485
15-5 Disparity in Foreign Target Valuations, 486
15-5a Expected Cash Flows of the Foreign Target, 486
15-5b Exchange Rate Effects on Remitted Earnings, 486
15-5c Required Return of Acquirer, 487
15-6 Other Corporate Control Decisions, 487
15-6a International Partial Acquisitions, 487
15-6b International Acquisitions of Privatized Businesses, 488
15-6c International Divestitures, 488
15-7 Corporate Control Decisions as Real Options, 490
15-7a Call Option on Real Assets, 490
15-7b Put Option on Real Assets, 491

16: Country Risk Analysis 501

16-1 Country Risk Characteristics, 501
16-1a Political Risk Characteristics, 501
16-1b Financial Risk Characteristics, 504
16-2 Measuring Country Risk, 505
16-2a Techniques for Assessing Country Risk, 506
16-2b Deriving a Country Risk Rating, 507
16-2c Comparing Risk Ratings among Countries, 509
16-3 Incorporating Risk in Capital Budgeting, 510
16-3a Adjustment of the Discount Rate, 510
16-3b Adjustment of the Estimated Cash Flows, 510
16-3c Analysis of Existing Projects, 513
16-4 Preventing Host Government Takeovers, 514
16-4a Use a Short-Term Horizon, 514
16-4b Rely on Unique Supplies or Technology, 514
16-4c Hire Local Labor, 514
16-4d Borrow Local Funds, 514
16-4e Purchase Insurance, 515
16-4f Use Project Finance, 515

17: Multinational Capital Structure and Cost of Capital 525

17-1 Components of Capital, 525
17-1a Retained Earnings, 525
17-1b Sources of Debt, 526
17-1c External Sources of Equity, 527
17-2 The MNC’s Capital Structure Decision, 528
17-2a Influence of Corporate Characteristics, 529

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 Contents xiii

17-2b Influence of Host Country Characteristics, 529

17-2c Response to Changing Country Characteristics, 530
17-3 Subsidiary versus Parent Capital Structure Decisions, 531
17-3a Impact of Increased Subsidiary Debt Financing, 531
17-3b Impact of Reduced Subsidiary Debt Financing, 531
17-3c Limitations in Offsetting a Subsidiary’s Leverage, 532
17-4 Multinational Cost of Capital, 532
17-4a MNC’s Cost of Debt, 532
17-4b MNC’s Cost of Equity, 532
17-4c Estimating an MNC’s Cost of Capital, 533
17-4d Comparing Costs of Debt and Equity, 533
17-4e Cost of Capital for MNCs versus Domestic Firms, 534
17-4f Cost-of-Equity Comparison Using the CAPM, 536
17-5 Cost of Capital Across Countries, 537
17-5a Country Differences in the Cost of Debt, 538
17-5b Country Differences in the Cost of Equity, 540

18: Long-Term Debt Financing 551

18-1 Debt Denomination Decisions of Foreign Subsidiaries, 551
18-1a Foreign Subsidiary Borrows Its Local Currency, 551
18-1b Foreign Subsidiary Borrows Dollars, 553
18-2 Debt Denomination Analysis: A Case Study, 553
18-2a Analyzing Debt Denomination Alternatives, 554
18-3 Strategies to Hedge Foreign Financing, 555
18-3a Using Currency Swaps, 555
18-3b Using Parallel Loans, 556
18-4 Debt Maturity Decision, 559
18-4a Assessment of the Yield Curve, 559
18-4b Financing Costs of Loans with Different Maturities, 560
18-5 Fixed-Rate versus Floating-Rate Debt Decision, 561
18-5a Financing Costs of Fixed-Rate versus Floating-Rate Loans, 561
18-5b Hedging Interest Payments with Interest Rate Swaps, 562
Part 4 Integrative Problem: Long-Term Asset and Liability Management, 573

Part 5: Short-Term Asset and Liability Management 575

19: Financing International Trade 577

19-1 Payment Methods for International Trade, 577
19-1a Prepayment, 577
19-1b Letters of Credit, 578
19-1c Drafts, 580
19-1d Consignment, 581
19-1e Open Account, 581
19-1f Impact of the Credit Crisis on Payment Methods, 581
19-2 Trade Finance Methods, 581
19-2a Accounts Receivable Financing, 582
19-2b Factoring, 582
19-2c Letters of Credit, 583
19-2d Banker’s Acceptances, 583
19-2e Medium-Term Capital Goods Financing (Forfaiting), 586
19-2f Countertrade, 586

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xiv Contents

19-3 Agencies that Facilitate International Trade, 587

19-3a Export-Import Bank of the United States, 587
19-3b Private Export Funding Corporation, 589
19-3c Overseas Private Investment Corporation, 589

20: Short-Term Financing 595

20-1 Sources of Foreign Financing, 595
20-1a Internal Short-Term Financing, 595
20-1b External Short-Term Financing, 596
20-2 Financing with a Foreign Currency, 596
20-2a Motive for Financing with a Foreign Currency, 597
20-2b Potential Cost Savings from Financing with a Foreign Currency, 597
20-2c Risk of Financing with a Foreign Currency, 598
20-2d Hedging the Foreign Currency Borrowed, 599
20-2e Reliance on the Forward Rate for Forecasting, 600
20-2f Use of Probability Distributions to Enhance the Financing Decision, 601
20-3 Financing with a Portfolio of Currencies, 602

21: International Cash Management 611

21-1 Multinational Working Capital Management, 611
21-1a Subsidiary Expenses, 611
21-1b Subsidiary Revenue, 612
21-1c Subsidiary Dividend Payments, 612
21-1d Subsidiary Liquidity Management, 612
21-2 Centralized Cash Management, 612
21-2a Accommodating Cash Shortages, 613
21-3 Optimizing Cash Flows, 614
21-3a Accelerating Cash Inflows, 614
21-3b Minimizing Currency Conversion Costs, 614
21-3c Managing Blocked Funds, 616
21-3d Managing Intersubsidiary Cash Transfers, 617
21-4 Investing Excess Cash, 617
21-4a Benefits of Investing in a Foreign Currency, 617
21-4b Risk of Investing in a Foreign Currency, 618
21-4c Hedging the Investment in a Foreign Currency, 619
21-4d Break-Even Point from Investing in a Foreign Currency, 620
21-4e Using a Probability Distribution to Enhance the Investment Decision, 621
21-4f Investing in a Portfolio of Currencies, 622
21-4g Dynamic Hedging, 624
Part 5 Integrative Problem: Short-Term Asset and Liability Management, 631
Final Self-Exam, 633

Appendix A: Answers to Self-Test Questions, 643

Appendix B: Supplemental Cases, 656
Appendix C: Using Excel to Conduct Analysis, 676
Appendix D: International Investing Project, 684
Appendix E: Discussion in the Boardroom, 687
Appendix F: Use of Bitcoin to Conduct International Transactions, 695
Glossary, 698
Index, 705

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 Dedication

This text is dedicated to Best Friends Animal Society in Kanab, Utah, for its commitment
to, compassion for, and care of more than 1,500 animals, many of which were previously
homeless. Best Friends has established an ambitious campaign to save all healthy dogs
and cats in the United States by 2025—that is, to prevent healthy cats and dogs from being
euthanized due to excessive population.
Most of the royalties the author receives from this edition of the text will be invested in
a fund that will ultimately be donated to Best Friends Animal Society and other humane
societies. In the last several years, this fund has donated more than $500,000 to Best Friends
to support a new healthcare facility for Best Friends, sponsor a Public Broadcasting Service
(PBS) documentary on the efforts of Best Friends to help animal societies, save dogs that
were abandoned during Hurricane Harvey in Houston during 2017, and create an online
information network in 2019 for people who want to help dogs. This fund has also donated
more than $100,000 to other animal care societies, including Friends of Greyhounds
(Fort Lauderdale, FL), Florida Humane Society (Pompano Beach, FL), Greyhound Pets of
America in Central Florida (Melbourne, FL), Tri-County Humane Society (Boca Raton,
FL), and Doris Day Animal League (Washington, DC).

xv
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 Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Preface

Businesses evolve into multinational corporations (MNCs) so that they can capitalize on
international opportunities. Their financial managers must be able to evaluate the inter-
national environment, recognize opportunities, implement strategies, assess exposure to
risk, and manage that risk. The MNCs most capable of responding to changes in the inter-
national financial environment will be rewarded. The same can be said for the students
today, who may become the future managers of MNCs.

Intended Market
International Financial Management, 14th Edition, presumes an understanding of basic
corporate finance. It is suitable for both undergraduate- and master’s-level courses in inter-
national financial management. For master’s courses, the more challenging questions,
problems, and cases in each chapter are recommended, along with special projects.

Organization of the Text

International Financial Management, 14th Edition, is organized to provide a background
on the international environment and then to focus on the managerial aspects from a cor-
porate perspective. Managers of MNCs will need to understand the environment before
they can manage within it.
The first two parts of the text establish the necessary macroeconomic framework. Part 1
(Chapters 1 through 5) introduces the major markets that facilitate international business.
Part 2 (Chapters 6 through 8) describes relationships between exchange rates and economic
variables and explains the forces that influence these relationships.
The rest of the text develops a microeconomic framework with a focus on the manage-
rial aspects of international financial management. Part 3 (Chapters 9 through 12) explains
the measurement and management of exchange rate risk. Part 4 (Chapters 13 through 18)
describes the management of long-term assets and liabilities, including motives for direct
foreign investment, multinational capital budgeting, country risk analysis, and capital
structure decisions. Part 5 (Chapters 19 through 21) concentrates on the MNC’s man-
agement of short-term assets and liabilities, including trade financing, other short-term
financing, and international cash management.
Each chapter is self-contained so that professors can use classroom time to focus on
the more comprehensive topics while relying on the text to cover other concepts. The
management of long-term assets (Chapters 13 through 16 on direct foreign investment,
multinational capital budgeting, multinational restructuring, and country risk analysis)
is covered before the management of long-term liabilities (Chapters 17 and 18 on capital
structure and debt financing) because short-term managerial decisions are intended to
facilitate the long-term strategies that have been implemented. For professors who prefer to
cover the MNC’s management of short-term assets and liabilities before the management of
long-term assets and liabilities, the parts can be rearranged because they are self-contained.
Professors may limit their coverage of chapters in some sections where they believe
the text concepts are covered by other courses or do not need additional attention beyond
that found in the text. For example, they may give less attention to the chapters in

xvii
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xviii Preface

Part 2 (Chapters 6 through 8) if their students take a course in international economics.

If professors focus on the main principles, they may limit their coverage of Chapters 5,
15, 16, and 18. In addition, they may give less attention to Chapters 19 through 21 if they
believe that the text description does not require elaboration.

Approach of the Text

International Financial Management, 14th Edition, focuses on financial management
­decisions that maximize the value of multinational corporations. The text offers a variety
of methods to reinforce key concepts, allowing instructors to select those methods and
features that best fit their teaching styles.
■■ Part-Opening Diagram. A diagram is provided at the beginning of each part to
­illustrate how the key concepts covered in that part are related.
■■ Objectives. A bulleted list at the beginning of each chapter identifies the key
­concepts in that chapter.
■■ Examples. The key concepts are thoroughly described in the chapter and supported
by examples.
■■ Web Links. Websites that offer useful related information regarding key concepts are
provided in each chapter.
■■ Summary. A bulleted list at the end of each chapter summarizes the key concepts.
This list corresponds to the list of objectives at the beginning of the chapter.
■■ Point/Counterpoint. A controversial issue is introduced, along with opposing
­arguments, and students are asked to offer their opinions.
■■ Self-Test Questions. A “Self-Test” at the end of each chapter challenges students on
the key concepts. The answers to these questions are provided in Appendix A.
■■ Questions and Applications. A substantial set of questions and other applications at
the end of each chapter test the student’s knowledge of the key concepts in the chapter.
■■ Critical Thinking Question. At the end of each chapter, a critical thinking question
challenges students to use their skills to write a short essay on a key topic discussed
in the chapter.
■■ Continuing Case. At the end of each chapter, the continuing case allows students
to use the key concepts to solve problems experienced by a firm called Blades, Inc.
(a producer of roller blades). By working on cases related to the same MNC over a
school term, students recognize how an MNC’s decisions are integrated.
■■ Small Business Dilemma. The Small Business Dilemma at the end of each chapter
places students in a position where they must use concepts introduced in the chapter
to make decisions about a small MNC called Sports Exports Company.
■■ Internet/Excel Exercises. At the end of each chapter are exercises that expose the
­students to applicable information available at various websites, enable the applica-
tion of Excel to related topics, or both.
■■ Integrative Problem. An integrative problem at the end of each part weaves together
the key concepts introduced in the various chapters within that part.
■■ Midterm and Final Examinations. A midterm self-exam is provided at the end of
Chapter 8, which focuses on international macro and market conditions (Chapters
1 through 8). A final self-exam is provided at the end of Chapter 21, which focuses
on the managerial chapters (Chapters 9 through 21). Students can compare their
answers to those in the answer key provided.
■■ Supplemental Cases. Supplemental cases allow students to apply chapter concepts to
a specific situation of an MNC. All supplemental cases are located in Appendix B.
■■ Running Your Own MNC. This project allows each student to create a small
­international business and apply key concepts from each chapter to run the business

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
 Preface xix

throughout the school term. The project is available on the textbook companion site
(see the “Online Resources” section).
■■ International Investing Project. This project (located in Appendix D) allows students
to simulate investing in stocks of MNCs and foreign companies; it requires them
to assess how the values of these stocks change during the school term in response
to international economic conditions. The project is also available on the textbook
companion site (see the “Online Resources” section).
■■ Discussion in the Boardroom. Located in Appendix E, this project allows students
to play the role of managers or board members of a small MNC that they created
and to make decisions about that firm. This project is also available on the textbook
companion site (see the “Online Resources” section).
■■ The wide variety of end-of-chapter and end-of-part exercises and cases offer many
opportunities for students to engage in teamwork, decision making, and communication.

Changes to this Edition

All chapters in the 14th edition have been updated to include recent developments in inter-
national financial markets, and in the tools used to manage MNCs. In particular, more
emphasis has been given to the following concepts:
■■ Sources of uncertainty when attempting to value an MNC
■■ Tradeoffs on any international trade policy
■■ Implicit barriers to entry in some international markets
■■ Challenges faced by central banks that attempt to manipulate their local currency’s value
■■ Dilemmas experienced by some countries that participate in European Union
(which led to Brexit)
■■ Theory versus reality for relationships between the Fisher effect, purchasing power
parity (PPP), and the international Fisher effect (IFE)
■■ Using the value at risk method to assess exchange rate risk
■■ Using sensitivity analysis to account for uncertainty
■■ Tradeoffs from hedging exchange rate risk
■■ Tradeoffs involved in international restructuring
■■ International market for corporate control
■■ Properly accounting for country risk in international capital budgeting
■■ How an MNC’s capital structure used in a foreign country depends on that
country’s characteristics
■■ How an MNC’s cost of capital used in a foreign country depends on that country’s
characteristics
■■ MNCs’ use of foreign debt as a long-term hedge against exchange rate risk

New to this Edition: MindTap

MindTap™, Cengage’s fully online, highly personalized learning experience combines
readings, multimedia activities, and assessments into a singular Learning Path. MindTap™
guides students through their course with ease and engagement with a learning path that
includes an Interactive Chapter Reading, Algorithmic Practice Problems, and Homework
Assignments powered by Aplia. These homework problems include rich explanations
and instant grading, with opportunities to try another algorithmic version of the prob-
lem to bolster confidence with problem solving. Instructors can personalize the Learning
Path for their students by customizing the robust suite of resources and adding their own
content via apps that integrate into the MindTap™ framework seamlessly with Learning
Management Systems.

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
xx Preface

Supplements to the Text

To access student and instructor resources, please visit http://www.cengage.com/finance
/madura/ifm/14e.

Instructor Supplements
The following supplements are available to instructors.
■■ Instructor’s Manual. Revised by the author, the Instructor’s Manual contains the
chapter theme, topics to stimulate class discussion, and answers to end-of-chapter
Questions, Case Problems, Continuing Cases (Blades, Inc.), Small Business
Dilemmas, Integrative Problems, and Supplemental Cases.
■■ Test Bank. The expanded test bank, which has also been revised by the author,
contains a large set of questions in multiple-choice or true/false format, including
content questions as well as problems.
■■ Cognero™ Test Bank. Cengage Learning Testing Powered by Cognero™ is a ­f lexible
online system that allows you to author, edit, and manage test bank content from
multiple Cengage Learning solutions; create multiple test versions in an instant;
deliver tests from your learning management system (LMS), your classroom, or
wherever you want. The Cognero™ Test Bank contains the same questions that
are found in the Microsoft® Word Test Bank. All question content is now tagged
according to Tier I (Business Program Interdisciplinary Learning Outcomes) and
Tier II (Finance-specific) standards topic, Bloom’s Taxonomy, and difficulty level.
■■ PowerPoint Slides. The PowerPoint Slides provide a solid guide for organizing
lectures. In addition to the regular notes slides, a separate set of exhibit-only PPTs
is available.

Additional Course Tools

■■ Cengage Learning Custom Solutions. Whether you need print, digital, or hybrid course
materials, Cengage Learning Custom Solutions can help you create your ­perfect
learning solution. Draw from Cengage Learning’s extensive library of texts and collec-
tions, add your own original work, and/or create customized media and technology
to match your learning and course objectives. Our editorial team will work with you
through each step, allowing you to concentrate on the most important thing—your
students. Learn more about all our services at www.cengage.com/custom.

Acknowledgments
Several professors reviewed previous versions of this text and influenced its content and
organization. They are acknowledged below in alphabetical order.
Tom Adamson, Midland University Bruce D. Bagamery, Central Washington
Raj Aggarwal, University of Akron University
Richard Ajayi, University of Central James C. Baker, Kent State University
Florida Gurudutt Baliga, University of Delaware
Alan Alford, Northeastern University Laurence J. Belcher, Stetson University
Yasser Alhenawi, University of Evansville Richard Benedetto, Merrimack College
H. David Arnold, Auburn University Bharat B. Bhalla, Fairfield University
Robert Aubey, University of Wisconsin Rahul Bishnoi, Hofstra University

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Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.
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 Languages - Study Materials
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Section 1: Experimental procedures and results

Learning Objective 1: Best practices and recommendations
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 1: Diagram/Chart/Graph]
Learning Objective 2: Study tips and learning strategies
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Learning Objective 3: Historical development and evolution
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Learning Objective 4: Literature review and discussion
• Best practices and recommendations
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Learning Objective 5: Key terms and definitions
• Case studies and real-world applications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 5: Practical applications and examples
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Practical applications and examples
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 7: Diagram/Chart/Graph]
Note: Theoretical framework and methodology
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Statistical analysis and interpretation
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Statistical analysis and interpretation
• Comparative analysis and synthesis
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Introduction 2: Research findings and conclusions
Important: Practical applications and examples
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Key Concept: Problem-solving strategies and techniques
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 12: Diagram/Chart/Graph]
Note: Ethical considerations and implications
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 13: Diagram/Chart/Graph]
Example 13: Problem-solving strategies and techniques
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Practice Problem 14: Study tips and learning strategies
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Remember: Fundamental concepts and principles
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Comparative analysis and synthesis
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
[Figure 17: Diagram/Chart/Graph]
Example 17: Fundamental concepts and principles
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Current trends and future directions
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Practice Problem 19: Comparative analysis and synthesis
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 20: Diagram/Chart/Graph]
Abstract 3: Assessment criteria and rubrics
Important: Ethical considerations and implications
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Practical applications and examples
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Interdisciplinary approaches
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Research findings and conclusions
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Statistical analysis and interpretation
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Practice Problem 25: Case studies and real-world applications
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Critical analysis and evaluation
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 27: Historical development and evolution
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 28: Key terms and definitions
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Current trends and future directions
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 30: Diagram/Chart/Graph]
Chapter 4: Statistical analysis and interpretation
Definition: Interdisciplinary approaches
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Problem-solving strategies and techniques
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 32: Statistical analysis and interpretation
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Remember: Assessment criteria and rubrics
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 34: Diagram/Chart/Graph]
Note: Experimental procedures and results
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 35: Study tips and learning strategies
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Fundamental concepts and principles
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 37: Fundamental concepts and principles
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 38: Case studies and real-world applications
• Case studies and real-world applications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Definition: Case studies and real-world applications
• Fundamental concepts and principles
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Discussion 5: Key terms and definitions
Practice Problem 40: Key terms and definitions
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Important: Theoretical framework and methodology
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Important: Case studies and real-world applications
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Practice Problem 43: Practical applications and examples
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Key terms and definitions
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Remember: Best practices and recommendations
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Definition: Case studies and real-world applications
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 47: Interdisciplinary approaches
• Research findings and conclusions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 48: Diagram/Chart/Graph]
Key Concept: Literature review and discussion
• Historical development and evolution
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Remember: Historical development and evolution
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Review 6: Statistical analysis and interpretation
Practice Problem 50: Ethical considerations and implications
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Remember: Critical analysis and evaluation
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Case studies and real-world applications
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 53: Diagram/Chart/Graph]
Example 53: Best practices and recommendations
• Interdisciplinary approaches
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Important: Statistical analysis and interpretation
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Study tips and learning strategies
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Practice Problem 56: Comparative analysis and synthesis
• Experimental procedures and results
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Critical analysis and evaluation
• Current trends and future directions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Literature review and discussion
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Key Concept: Literature review and discussion
• Key terms and definitions
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Exercise 7: Theoretical framework and methodology
Practice Problem 60: Ethical considerations and implications
• Critical analysis and evaluation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Ethical considerations and implications
• Literature review and discussion
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
[Figure 62: Diagram/Chart/Graph]
Remember: Problem-solving strategies and techniques
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Definition: Experimental procedures and results
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Statistical analysis and interpretation
• Practical applications and examples
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Important: Literature review and discussion
• Statistical analysis and interpretation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Note: Key terms and definitions
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 67: Diagram/Chart/Graph]
Example 67: Historical development and evolution
• Statistical analysis and interpretation
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Key Concept: Research findings and conclusions
• Assessment criteria and rubrics
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Example 69: Literature review and discussion
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Practice 8: Assessment criteria and rubrics
Key Concept: Statistical analysis and interpretation
• Case studies and real-world applications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Practice Problem 71: Experimental procedures and results
• Problem-solving strategies and techniques
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
[Figure 72: Diagram/Chart/Graph]
Example 72: Study tips and learning strategies
• Best practices and recommendations
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Remember: Literature review and discussion
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Note: Critical analysis and evaluation
• Learning outcomes and objectives
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Example 75: Assessment criteria and rubrics
• Study tips and learning strategies
- Sub-point: Additional details and explanations
- Example: Practical application scenario
Formula: [Mathematical expression or equation]
Note: Theoretical framework and methodology
• Theoretical framework and methodology
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
Important: Experimental procedures and results
• Ethical considerations and implications
- Sub-point: Additional details and explanations
- Example: Practical application scenario
- Note: Important consideration
Formula: [Mathematical expression or equation]
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