Introduction to Corporate Finance

(avery) #1
Ross et al.: Fundamentals
of Corporate Finance, Sixth
Edition, Alternate Edition

VIII. Topics in Corporate Finance


22. International Corporate Finance


© The McGraw−Hill^779
Companies, 2002

Exchange Rates


An exchange rateis simply the price of one country’s currency expressed in terms of
another country’s currency. In practice, almost all trading of currencies takes place in
terms of the U.S. dollar. For example, both the Swiss franc and the Japanese yen are
traded with their prices quoted in U.S. dollars. Exchange rates are constantly changing.
Our nearby Work the Webbox shows you how to get up-to-the-minute rates.


Exchange Rate Quotations Figure 22.1 reproduces exchange rate quotations as they
appeared in The Wall Street Journalin 2001. The first column (labeled “U.S. $ equiv.”)
gives the number of dollars it takes to buy one unit of foreign currency. Because this
is the price in dollars of a foreign currency, it is called a director American quote


CHAPTER 22 International Corporate Finance 753

FIGURE 22.1


Source: Reprinted by permission of The Wall Street Journal,© 2001 Dow Jones & Company, Inc., September 5,


  1. All Rights Reserved Worldwide.


Exchange Rate Quotations

exchange rate
The price of one
country’s currency
expressed in terms of
another country’s
currency.
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