Empirical reports of priced foreign exchange (FX) risk raise the question of whether managers should adjust their cost of equity estimates for FX risk. To study this question, we empirically compare the cost of equity estimates of several risk-return models, including some that have explicit FX...

In interactive trilateral foreign exchange (FX) exposure, a company's exposures to two foreign currencies depend on the two currencies' FX rate with each other. This study uses scenario analysis to get a better understanding of interactive FX exposure and potential financial hedging solutions. A...

Most managerial finance textbooks promote the “conventional wisdom” that leasing's main motivation is a shift in tax deductions from a lower tax rate lessee to a higher tax rate lessor, creating a benefit that is shareable via a negotiated lease payment amount. This critique clarifies two...

1. Multiphase continuum formulation for gas-solids reacting flows / Madhava Syamlal, Sreekanth Pannala -- 2. Hydrodynamic equations from kinetic theory / James Dufty, Aparna Baskaran -- 3. Kinetic theory for granular materials / Christine Hrenya -- 4. Interfacial interactions / Wei Ge, Ning...

Financial statements do not accurately reflect the impact of foreign exchange movements on a firm's economic value, particularly if foreign currency debt or derivatives are used to hedge long-term economic exposure. To help analysts and investors interpret financial reporting in this area, this...

Given mean-reverting equity and interest rate uncertainty, this study shows a relatively low economic cost of using a simple allocation strategy, buy-and-hold or constant-mix, instead of optimal reallocation. Moreover, given the decision to use one of the simple allocation strategies, the study...

Bodnaruk and Ostberg (2009) introduced a simple formula for applying Merton's (1987) incomplete-information adjustment to a stock's required rate of return. The adjustment, which is based on market capitalization, idiosyncratic risk, and extent of investor ownership, should in principle improve...

For individual stocks of 46 countries, this study investigates empirical differences in discount rate estimates between three risk-return models of interest to managers who perform discounted cash flow valuation analysis: (1) the traditional (local) CAPM; (2) the global CAPM (GCAPM), where the...

How should a multinational manager estimate the cost of capital for an overseas investment? We provide a guide, synthesizing various contributions in the literature, and considering both systematic risk and political risk. We use a country's sovereign credit default swap rate to proxy for the...

As managers expand their international business operations, they are confronted by the puzzling and vexing world of foreign exchange (FX) rates. This text is designed as a resource that can help managers quickly understand and navigate the FX market. The text may be used as an introductory...