《公司财务》讲义-英文(PPT).ppt
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1、公司财务讲义公司财务讲义-英英文文(PPT)2Valuing International Cash Flowsn M E ( Cj,t ) E ( Ej,t ) N j=1 nPV = t=1 ( 1 + r )tnE ( Cj,t ) = expected cash flows denominated in currency j to be received by parent in period t. E ( Ej,t ) = expected exchange rate at which currency j can be converted to RMB at the end of p
2、eriod t. r = weighted average cost of capital of parent. M = number of currencies. N = number of periods.3Regression Model and Expectation (1)nRegression: measure relationships between variables when establishing policies.nEXPt = b0 + b1 USDt-1 + b2 GNPt-1 + + ut.nEXPt = % change in China exports to
3、 the U.S. b0 = a constant. USD = % change in the value of U.S. dollar. b1 = regression coefficient measuring 1% change in USDt-1 will lead to x% change in EXPt. GNP = % change in the U.S. GNP. B2 = regression coefficient measuring 1% change in GNPt-1 will lead to x% change in EXPt. ut = an error ter
4、m.4Regression Model and Expectation (2)nIf b0 = 0.002, b1= 0.08, b2 = 0.36, USD1-1 = 5%, GNP1-1 = -1%, if insert these figures into the regression model, EXP1 = 3.84%. It means that one year later China exports to the U.S. will increase 3.84%.5Equilibrium Spot Exchange Raten E ( RMB / $1 ) S E0 D Q0
5、 Q of $nWhen D for $ = S of $, Q0 = the equilibrium quantity of $, E0 = the equilibrium spot exchange rate. 6Price Elasticity of Demand and Future Spot Exchange RatenE = ( Q / Q ) / ( P / P ). nE = price elasticity of demand. Q = quantity of goods demanded. P = price. Q = change in Q demanded for a
6、change in P ( P ). If E 1, total spending goes up when P declines. E for $ could have an impact on the future spot exchange rate of $ and RMB. 7Balance of Payments and Future Spot Exchange Rate (1)nCredits ( $ inflows ) Debits ( $ outflows )na: Exports of civilian b: Imports of civilian goods goodsn
7、c: Military sales d: Military purchase abroad abroad nTrade balance = a + c - ( b + d )8Balance of Payments and Future Spot Exchange Rate (2)ne: Exports of service f: Imports of services (investment income (investment income and fees earned, paid out, China foreign tourism in tourism abroad, China,
8、etc.) etc.) n g: Net unilateral transfers ( gifts )nCurrent account balance = a + c + e - ( b + d + f + g )9Balance of Payments and Future Spot Exchange Rate (3)nh: Foreign private i: China private investment in China investment abroadnj: Foreign official k: Chinese government lending in China lendi
9、ng abroadnCapital account balance = h + j - ( i + k )n l: Net increase in China official reservesnOfficial reserves balancenNote: Item h includes net errors and omissions. 10Balance of Payments and Future Spot Exchange Rate (4)nIf China has a trade surplus against the U.S., the value of RMB will be
10、higher than that of $, spot rate will change.11Inflation and Future Spot Exchange RatenE ( RMB / $1 ) S E1 S E0 D D Q1 Q of $nIf IF in China that in the U.S., supply of $ will move from S to S because the Chinese are likely to decrease their purchases of U.S. imports. Meanwhile, demand for $ will mo
11、ve from D to D because the Americans are likely to substitute China imports for U.S. products. Thus, spot exchange rate will move from E0 to E1. 12Interest Rate and Future Spot Exchange RatenAll other things being equal, when interest rate in China is greater than that in the U.S., investors will sw
12、itch from dollar to RMB to take advantage of the higher RMB interest rates. So, demand for $ and supply of $ will change, spot exchange rate will change.13National Income and Future Spot Exchange RatenAn increase in China income will lead to more China imports from the U.S. as Chinese people spend s
13、ome of income on U.S. products. This, however, would cause demand for $ and supply of $ to change and spot exchange rate to change.14Other Factors Affecting Future Spot Exchange RatenPolitical and economic environment: if political and economic environment in China is better than that in the U.S., t
14、he value of RMB will be higher than that of $, spot rate will change.nInvestments: if Americans invest in China, demand for $ and supply of $ will change, spot rate will change.15Depreciation Versus AppreciationnSuppose that on July 19, 2001, U.S. dollar devalued by 17% against RMB. If E0 = initial
15、RMB value of one dollar and E1 = post-devaluation RMB value of one dollar, then we know that ( E1 - E0 ) / E0 = -17%. Solving for E1 in terms of E0 yields E1 = 83% E0. Thus, the appreciation of RMB against U.S. dollar = ( E0 - E1 ) / E1 = ( E0 - 83% E0 ) / ( 83% E0 ) = 20.48%. 16Reasons for Governme
16、nt InterventionnReduce economic exposure a risk incurred by exchange rate fluctuations. nAdjust imports and exports. If RMB appreciates, China will lose comparative advantage in price against the U.S., thus reduce exports.nEliminate the impact of exchange rate fluctuations on inflation at home.17App
17、roach to Government InterventionnE ( RMB / $1 ) S E1 S E0 D D Q2 Q1 Q3 Q of $nTo maintain E0 in the face of E1, either the American government or the Chinese government or both must sell ( Q3 - Q2 ) dollars to purchase ( Q3 - Q2 ) E0 RMB, thereby eliminating the demand for ( Q3 - Q2 ) dollars, and s
18、imultaneously eliminating the excess supply of ( Q3 Q2 ) E0 RMB. 18Terms to Keep Existing Exchange RatenTerms = international reserve / balance-of-payments deficit.19Spot Quotations (1)nDirect quotation: RMB / $1.nIndirect quotation: $ / 1 RMB.nBid quote: buy quote. nAsk quote: sell quote. 20Spot Qu
19、otations (2)nAssume you have 10000 RMB. Also assume the Bank of Chinas bid rate for $1 is 8.4513 RMB and its ask rate is 8.4536 RMB. If you convert 10000 RMB into $, you get 10000 / 8.4536 = $1182.93. If you reconvert the $1182.93 back to RMB, you get only 1182.93 8.4513 = 9997.30 (RMB). The bid / a
20、sk spread = 10000 - 9997.30 = 2.7 (RMB). Or, the bid / ask spread = ( 8.4536 - 8.4513 ) / 8.4536 = 0.03%.21Forward QuotationsnOutright rate: actual rate. 90-day forward bid = 8.2142RMB / $1.nSwap rate: a forward differential = discount from, or a premium on, spot rate. If spot rate = 8.1023-30 RMB /
21、 $1, 90-day forward rate = 26-22, 90-day forward bid has 8.1026 - 8.1023 = 0.0003 RMB premium, 90-day forward ask has 8.1030 - 8.1022 = 0.0008 RMB discount.22Forward Rate Premium or DiscountnExchange for $1 RMB FP or FD Spot 8.4513 30-day forward 8.4511 -0.03% 90-day forward 8.4526 0.06% 180-day for
22、ward 8.4618 0.01%nFP = forward premium, FD = forward discount. FP or FD = ( forward - spot ) / spot ( 360 / days of forward ). 23Forward Rate Fluctuation and Cash FlowsnCash flow $ depreciation $ appreciation S P S P Export sales I I or D D D or I Local sales D D or I I I or D Local expenses D D I I
23、 Import expenses I I or D D D or InS = subsidiary in the U.S. P = parent in China. I = increase. D = decrease.24Cross Exchange RatenExchange rate of currency A to currency B = exchange rate of RMB to A / exchange rate of RMB to B. nIf the exchange rate of RMB to U.S. $ = 8.2798 RMB / $ 1, the exchan
24、ge rate of RMB to HK $ = 1.0627 RMB / HK$ 1, the exchange rate of U.S. $ to KH $ = 8.2798 / 1.0627 = 7.7913 (HK$s / U.S. $ 1).25Interest Rate Parity and Future Spot RatenIRP: r = ( 1 + if ) ( 1 + p ) - 1. Where r = rate of return from interest arbitrage ( buy foreign currency with home currency, inv
25、est it on foreign deposit, convert interest back to home currency ). if = interest rate of foreign currency. P = forward premium or discount. nSince r = ih ( interest rate of home currency ), p = ( 1 + ih ) / ( 1 + if ) - 1 ih - if. nIf 6-months iRMB = 5%, 6-months i$ = 6%, p -1%. Chinese investors
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