EUN RESNICK BREAN – ERRATA –3 August 2005

Chap / Page / Item / Error Correction
1 / 9 / Web-link in margin / … NOT …
1 / 13 / Web-link in margin / The website of the European Union with links to extensive institutional information and economic data.
NOT … et cetera
2 / 31 / Web-link in margin / … NOT …
2 / 33 / Web-link in margin / … NOT …
2 / 50 / Web-link in margin / …NOT …
2 / 55 / Internet Exercise 1 / … NOT …
3 / 57 / Section 3.1 / Title: Canada’s Balance of Payments … NOT … Cost of Capital
3 / 63 / Para 3, Sent 4 / … presented in Exhibit 3.3 … NOT … Exhibit 3.7
3 / 66 / Exhibit 3.8b / See correct Exhibit 3.8b, attached
4 / 74 / Fist full sent. / US$1.2 trillion … NOT … US $1.2 trillion dollars.
4 / 76 / Web-link in margin / …NOT …
4 / 76 / Web-link in margin / ...
NOT …
4 / 79 / Exhibit 4.3 / Turnovers in US$ millions … NOT US$ (000)
4 / 84 / Web-link in margin /
… NOT …
4 / 89 / Example 4.3 / The cross-rate formula and the American and European quotes … the bid price should be no lower than S(€/£)b = 1.6939 * 0.8631 = 1.4620.
NOT … the bid price should be no lower than S(€/£)a = 1.6949 * 0.8740 = 1.4813.
4 / 96 / Example 4.6 / Calculation of forward premium via indirect quote …
-0.0157 … NOT … 0.0157\
4 / 96 / Example 4.6
Last para. / … forward premium is -0.0157 or -1.57 percent.
… Canadian dollar is trading at a 1.57 percent discount …
NOT …
… forward premium is -0.0157 or -1.75 percent.
… Canadian dollar is trading at a 1.75 percent discount …
5 / 103 / Footnote 1. / (i$ - i£) = [(F-S)/S](1 + i£) … NOT … (i$ - i£) = [(F-S)/S](1 - i£)
5 / 104 / Example 5.1 / Step 4. … Sell £ 486,364 … NOT …Sell £ 454,545
5 / 104 / Exhibit 5.2 / In Column 3 (CF1), Step 2: DELETE S1(1+i£)
In Column 3 (CF1), Step 3: £486,364 … NOT … - £486,364
5 / 106 / Equation 5.10 / (Fb/Sa)(1+ i£b) – (1+ i$a) … NOT … (Fb/Sa)(1+ i£b) – (1+ i£a)
5 / 106 / Bottom / (1+ i$a) >(1+ i$) … NOT … (1+ i£a) > (1+ i$)
5 / 108 / Para 3, Sent 3 / … exchange rate should be $2.00 per pound… NOT … exchange rate should be $1.50 per pound
… $2/£ = $200/ £100 … NOT … $1/£ = $200/ £100
5 / 108 / Last line / If the price of the commodity basket is higher in Canada, say $300, then PPP dictates that the exchange rate should be higher, that is, $3/£.
NOT … If the price of the commodity basket is higher in the United States, say $300, then PPP dictates that the exchange rate should be higher, that is, $2/£.
5 / 109 / Footnote 6 / Reference to Equation 5.13 … NOT … Equation 5.12.
5 / 117 / Web-link in margin / … NOT …
5 / 119 / Web-link in margin / … NOT …
5 / 120 / Web-link in margin / … NOT …
5 / 125 / Problem 1
Sentence 4 / … The Treasurer of Weston’s … NOT …The Treasurer of IBM
5 / 126 / Problem 4 / Suppose the current spot exchange rate is €0.65/$ … NOT …€ 1.65/$
6 / 146 / Para 1, Sent 2 / INSERT (3) between “or” and “lend”
7 / 157 / Para 3, Sent 3 / As of June 2003 … NOT … At year-end 2002 …
US$45,402 … NOT $45,400
8 / 176 / Para 4, Sent 1 / … stood at $31,500 billion … NOT $32,260 billion
8 / 176 / Para 4, Sent 4 / Over the eight-year period, their total market capitalization increased 76 percent, from $17,911 billion to $31,500 billion.
NOT … Over the five-year period, their total market capitalization increased 75 percent, from $17,956 billion to $31,506 billion.
8 / 176 / Para 5, Sent 3 / … a 21-percent increase … NOT … a 7-percent increase
8 / 184 / Web-link in margin /
... NOT …
10 / 234 / Example 10.5 / (5th paragraph, 4th sentence)
… a contractual rate of $1.20/€1 … NOT … $0.8333/€1
10 / 242 / Problem 3 / LIBOR + 0.125 … NOT LIBOR “less than/greater than”
LIBOR + 1 … NOT LIBOR “less than/greater than”
LIBOR + 0.625 … NOT LIBOR “less than/greater than”
11 / 254 / Para 1, Sent 4 / … Switzerland has the lowest, 0.85 …NOT … United States has the lowest, 0.86
11 / 254 / Para 3, Sent 1 / Lastly, Exhibit 11.6 … NOT … Lastly, Exhibit 11.7
11 / 254 / Para 3, Sent 3 / In Exhibit 11.6 … NOT … In Exhibit 11.4
11 / 254 / Para 4, Sent 1 / In Exhibit 11.6 … NOT … In Exhibit 11.7
11 / 261 / Para 5, Sent 2 / … set of assets … NOT … set of asserts
11 / 265 / first words of text / 0.320 for the latter … NOT … 0.087 for the latter.
11 / 273 / Problem 3 / Sentence 2: Swiss stock … NOT French stock
Sentence 3: Swiss franc … NOT French franc
11 / 273 / Problem 6 / Sentence 1: “From Exhibit 11.6” … NOT “From Exhibit 11.4”
11 / 274 / Problem 7 / Sentence 3:“provided in Exhibit 11.6” … NOT “Exhibit 11.4”
12 / 301 / Problem 3 / Sentence 3: … the exchange rate will be $1.60/£ … NOT … $2.60/£
12 / 301 / Mini Case / … assume the euro is expected to depreciate …NOT … assume the pound is expected to depreciate
… $1.60 per euro … NOT … $1.60 per pound
… euro cost … NOT … pound cost
… € 341 (= $512/$1.50) … NOT … £ 341 (= $512/$1.50)
… expected euro inflation rate … NOT … the British inflation rate
13 / 304 / Web-link in margin /
NOT …
13 / 308 / International Finance in Practice / Paragraph 5, Sentence 2: American dollar-denominated
NOT … American dollar – denominated …
Paragraph 9: “The bank is short American dollars.”
NOT … “The bank is short of American dollars.”
13 / 323 / Question 7 / Preamble, 4th sentence … “Airbus can buy a six-month put option on Canadian dollars with a strike price of €0.65/C$ (NOT €1.45/C$) for a premium of €0.02 per Canadian dollar.”
Preamble, 4th sentence … “Currently the six-month interest rate is 5 percent” … NOT …“Currently, six-month interest, rate is 5 percent… ”
In Question 7 a, “Compute the guaranteed euro proceeds from the sale to Air Canada if Airbus decides to hedge using a forward contract. (NOT … Compute the guaranteed euro proceeds to Air Canada if Airbus decides to hedge using a forward contract.)
14 / 325 / Throughout / This chapter deals with translation exposure from the Canadian perspective. In all references to the “dollar” ($), it is to the Canadian dollar. For convenience, we us “dollar” and $ rather than as Canadian dollar and C$ unlike in other contexts in which the Canadian dollar / US dollar distinction must be explicit.
14 / 325 / Para 4, sent 3 / … a €70 million mortgage … NOT … a €70 mortgage
14 / 336 / Para 1, sent 6 / … there is no longer any translation exposure associated with the Swiss franc.
NOT … there is no longer any translation exposure associated with the American dollar or the Swiss franc.
15 / 348 / Exhibit 15.3 / Average Annual Column (extreme right column) revised.
See attachment
16 / 380 / Example 16.1 / Para 3, sentence 5: … expected return on the S&P 500 is 13 percent … NOT 14 percent …
16 / 395 / Example 16.2 / A Numerical Illustration (erroneously typed twice)
17 / 411 / Para 5 / C$40(1 + πd)t = …, NOT … C$40(1 = πd)t = …
17 / 411 / Para 8 / Dt = € 4,920,000/… NOT … Dt = € 4,920,000/ …
17 / 411 / Para 13, Sent 5 / … (1.03)2-1 …, NOT … (1.03)2-1 …
17 / 411 / Exhibit 17.2 / Heading of Column 4: … (1.03)t-1 … NOT … (1.031t-1)
17 / 411 / Exhibit 17.2 / Heading of Column 6: … (1.02)t-1 … NOT … (1.03)t-1

Eun / Resnick / Brean International Financial Management: Canadian Perspectives

Exhibit 3.8 b at Page 66