Title

Development And Evaluation Of International Financing Models

Comments

Authors: contact us about adding a copy of your work at STARS@ucf.edu

Keywords

Management

Abstract

This paper incorporates an ex ante analysis to evaluate various techniques for international financing. An ex post analysis would have demonstrated how the mean-variance model (in a revised form) can be applied to identify currency portfolios which exhibit the lowest expected financing cost for a given level of risk. However, this analysis requires the assumption that firms have perfect foresight regarding the variance-covariance matrix for exchange rate fluctuations. The ex ante analysis was instead used here to provide more realistic implications regarding the feasibility of applying the mean-variance model for international financing decisions. Results suggest that use of the historical variance-covariance matrix as a forecast input for international financing decisions is inadequate from a practical perspective, since it was often outperformed by naive models. Further research is needed to successfully operationalize the application of the mean-variance model to international financing decisions.

Journal Title

Management International Review

Volume

25

Issue/Number

4

Publication Date

1-1-1985

Document Type

Article

Language

English

First Page

17

Last Page

27

WOS Identifier

WOS:A1985AWT0100002

ISSN

0025-181X

Share

COinS