The purpose of this text is
to analyze the key financial markets and instruments that facilitate trade and investment
activity on a global scale. It spans two key areas: First-the economic determinants of
prices, price changes and price relationships in the major financial markets; Second-the
policy issues that result from private enterprises and public policymakers.
Includes more discussion of
the Financial Crises around the world, using recent cases including the collapse of pegged
rates, the ramifications of floating the baht and the contagious possibilities to other
world markets. Expanded discussion of the pricing and policy challenges in the development
of the European Monetary Union. Learning objectives have been added to help students focus
on the key goals of the text. Additional questions have been added to the end of chapter
material in each chapter. Each chapter typically includes a discussion of the historical
origins of a market and/or the present institutional organization of the market. The
institutional setting is an important part of understanding how a market works, and why
the market might not behave in the precise way predicted by an economic model. Author
takes the view that theory can be practical, but that theories require testing. As such,
the chapters present the results of empirical regularities in international finance and
see what puzzles remain to be solved. Graphs and real life data are extensively used to
visually communicate important information, such as the pattern of cash flows associated
with contracts, or to explain the results of a financial strategy or risk management
technique. Real world boxes from the popular press and from actual companies show how
concepts are applied. End of chapter problems are accompanied by extensive references for
readers interested in greater information about the subject.
Table of Contents
I. Introduction and Overview
1. Introduction to the Study of International Financial Markets
2. An Overview of International Monetary Systems and Recent Developments in International
Financial Markets
II. Foreign Exchange Markets
3. Market Structure and Institutions
4. International Parity Conditions: Purchasing Power Parity
5. International Parity Conditions: Interest Rate Parity and the Fisher Parities
6. Spot Exchange Rate Determination
7. Foreign Exchange Market Efficiency
8. Exchange Rate Forecasting
III. Offshore Financial Markets
9. The Eurocurrency Market
10. The Eurobond Market
IV. Derivative Security Markets: Futures, Options, and Swaps
11. Currency and Interest Rate Futures
12. Currency and Interest Rate Options
13. Currency and Interest Rate Swaps
V. International Asset Portfolios
14. Bond Portfolios
15. Equity Portfolios
VI. International Asset Portfolios and Financial Risk Management
16. Measuring and Managing the Risk in International Financial Positions
VII. Regulatory Issues
17. Giving Direction to International Financial Markets: Regulation and Intervention in
the Competitive Marketplace
696 pages