EECS 1710 Lecture Notes - Lecture 31: New York Stock Exchange, Japanese Yen
24 Jun 2018
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EECS 1710 Lecture 31 Notes
Introduction
Impact of the Euro
That listing allows Japanese investors to obtain the stock locally and to avoid the higher
transaction costs of purchasing it from the New York Stock Exchange (NYSE).
Since the stock listed on the Tokyo exchange is denominated in Japanese yen, Japanese
investors who are buying or selling this stock need not convert to or from dollars.
If Dow plans to expand its business in Japan, it may consider a secondary offering of
stock in Japan.
Since its stock is already listed there, it may be easy for Dow to place additional shares
in that market and thereby raise equity funding for its expansion.
The conversion of many European countries to a single currency (the euro) has resulted
in more stock offerings in Europe by U.S.- and European based MNCs.
In the past, an MNC needed a different currency in every country where it conducted
business and therefore borrowed currencies from local banks in those countries.
Now it can use the euro to finance its operations across several European countries and
may be able to obtain all the financing it needs with a single, euro-denominated stock
offering.
The MNC can then use a portion of its revenue (in euros) for paying dividends to
shareholders who have purchased the stock.
The euro also allows European investors to purchase stocks across many European
countries without being exposed to exchange rate risk.
Issuance of Foreign Stock in the United States
Non-U.S. corporations that need large amounts of funds sometimes issue stock in the
United States (these are called Yankee stock offerings) because the U.S. new-issues
market is so liquid.
Document Summary
That listing allows japanese investors to obtain the stock locally and to avoid the higher transaction costs of purchasing it from the new york stock exchange (nyse). The euro also allows european investors to purchase stocks across many european countries without being exposed to exchange rate risk. Issuance of foreign stock in the united states. Non-u. s. corporations that need large amounts of funds sometimes issue stock in the. United states (these are called yankee stock offerings) because the u. s. new-issues market is so liquid. In other words, a foreign corporation is most likely to sell an entire issue of stock in the. In other, smaller markets, it will be more difficult to sell the entire issue. Listing allows japanese investors to obtain the stock locally and to avoid the higher transaction costs of purchasing it from the new york stock exchange (nyse).
