Exchange Rate and Expropriation Risk in Multinational Capital Budgeting: A Stochastic Calculus Approach

摘要: Multinational companies undertake their capital budgeting decisions within a harsh environment of volatile exchange rates and political risks as well other factors. This paper develops framework, by applying geometric Brownian motion process to model the rate behaviour Poisson reflect arrival an expropriation hostile government. A practical example stochastic is given in this paper. The solution could be used multinational managers decision tool, especially for those where risk cause concern.