国际商务international business (charles w.l. hill 第七版)chap011 the global capital market_精品.pptVIP

* Country Focus: The Search for Capital in the Czech Republic Summary This feature explores the difficulties firms face raising capital in the Czech Republic. Although the Czech Republic was initially seen as a vibrant economy following the collapse of communism, macroeconomic problems caused the country to fall out of favor with investors. In addition, the Prague stock exchange was the target of allegations of financial misconduct, a situation which effectively raised the cost of capital for Czech firms. Discussion of the feature can revolve around the following questions: 1. What are the advantages to Czech firms of listing their equity on the London stock exchange? Discussion Points: Because of the improprieties surrounding the Prague stock exchange, Czech firms have little choice but to go outside the country to raise capital. By listing on the London exchange, Czech firms have access to a wider pool of investors and a probably a lower cost of capital. 2. Can you see any disadvantages to this strategy? Discussion Points: Some students will probably point out that by making the decision to list on the London stock exchange, Czech companies are also making a commitment to ensuring that it is complying with British accounting methods, and so raises its cost of capital. * Foreign Exchange Risk And The Cost Of Capital Adverse exchange rates can increase the cost of foreign currency loans While it may initially seem attractive to borrow foreign currencies, when exchange rate risk is factored in, that can change Firms can hedge their risk by entering into forward contracts to purchase the necessary currency and lock in the exchange rate, but this will also raise costs Firms must weigh the benefits of a lower interest rate against the risk of an increase in the real cost of capital due to adverse exchange rate movements Implications For Managers Growth in global capital markets has created opportunities for firms to borrow or invest internationally Firm