Beruflich Dokumente
Kultur Dokumente
Management
(FINA521LEC1810)
Prerequisite: None
Administrative Information:
Class Duration:
Day/Time:
Location:
Campus Phone:
Telephone:
Instructional Material:
Jeff Madura, International Financial Management, 10th Edition, ISBN
-13:978-1-4390-3833-8
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This class will mainly rely on lecture with problems and exercises
worked outside of class by the student. The instructors role is to
supplement and enrich the information provided in the textbook.
To that end, current events and practical applications will be
presented to reinforce concepts presented in the text. Class
discussion is highly encouraged and time will be allocated to
answer questions, discuss, and reflect on information in the text.
Students role is to read the chapter in advance of the lecture and
study the textbook and the various readings provided during
class.
This course emphasizes the importance of relating theory to real
world applications so the project will be an integral part of this
course.
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Assignment
Given
Textbook
Reading
Date
Jan 07
Overview, International
Flow of Funds
HW 1
Jan 14
International Financial
Markets, Exchange Rate
Determination
HW 2
HW 1
Ch.3, 4
Jan 21
Currency Derivatives,
Government Influence on
Exchange Rates
HW 3
HW 2
Ch.5, 6
Jan 28
International Arbitrage
and Interest Rate Parity,
Among Inflation, Interest
Rates, and Exchange
Rates
HW 4
Presentation
-1
HW3
Ch.7, 8
Feb 04
Forecasting Exchange
Rates, Measuring
Exposure to Exchange
Rate Fluctuations
HW 5
Presentation
-2
HW 4
Ch.9, 10
Feb 11
Managing Transaction
Exposure, Managing
Economic Exposure and
Translation Exposure
HW 6
Presentation
3
HW 5
Ch.11, 12
Feb 18
Feb 25
Direct Foreign
Investment, Multinational
Capital Budgeting
HW 7
Presentation 4
HW6
Ch.13, 14
Mar 04
International Corporate
Governance and Control,
Country Risk Analysis
HW 8
Presentation
-5
HW 7
Ch.15, 16
10
Mar 11
Multinational Cost of
Capital and Capital
Structure, Long-Term
Financing
HW 9
Presentation
-6
HW 8
Ch.17, 18
11
Mar 18
Financing International
Trade, Short Term
Financing
HW 10
Presentation 7
HW 9
Ch. 19, 20
12
Mar 25
Final Exam
Lecture Topic
Assignment
Due
Week
Ch.1, 2
HW 10
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Assignments
100 points
200 points
250 points
Midterm Exam
250 points
Final Exam
1000 points
Total
Academic Integrity:
Academic honesty is non-negotiable. All assignments submitted in
fulfillment of course requirements must be the student's own work.
Plagiarism and/or any other form of academic dishonesty will not be
tolerated and will result in a grade of zero on the assignment. Students
should consult the Students Handbook on the University web-site or in
the University catalog.
Attendance, Absence, Lateness, Incomplete:
Learning Resources/Library:
Utilization of library resources is an indispensible part of your education at the
UNVA. Our librarians are available to assist you from 9:00 a.m. to 10 p.m.
seven days a week. Please take advantage of this opportunity for assistance
to your success while you are here at UNVA.
The UNVA library offers an extensive range of resources, particularly online, for
student use. Our library subscription journal databases include:
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Academic OneFile
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ERIC
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Health and Wellness Resource Center
Health Reference Center Academic
IBISWorld
InfoTrac Custom Newspapers
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Library, Information Science & Technology Abstracts
Literature Resource Center
Newsletters ASAP
ProQuest Psychology Journals
ProQuest Research Library
Student Resource Center Gold Edition
Teacher Reference Center
...and other article databases
The library also provides access to thousands of electronic books, including:
ebrary
EBL Books
Safari Business & Tech Books
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3.
Present a scenario and ask whether any type of international arbitrage is
possible. If so, how would it be executed and how would market forces be
affected?
Chapter 8 Relationships Among Inflation, Interest Rates, and
Exchange Rates
This chapter discusses the relationship between inflation and exchange
rates according to the purchasing power parity (PPP) theory. While PPP
is a relevant theory, it should be emphasized that PPP will not always
hold in reality. However, it provides a foundation in understanding how
inflation can affect exchange rates. The international Fisher effect (IFE)
is also discussed in this chapter. This theory is also very important. Yet,
it should again be emphasized that this theory does not always hold. If
the PPP and IFE theories held consistently, decision making by MNCs
would be much easier. Because these theories do not hold consistently,
an MNCs decision making is very challenging.
1.
Provide reasoning for why highly inflated countries tend to have
weak home currencies.
2.
Provide a simple explanation of the difference between interest
rate parity (from the previous chapter), PPP (from this chapter), and IFE
(from this chapter).
Chapter 9 Forecasting Exchange Rates
This chapter stresses the value of reliable forecasts, but suggests that
reliable forecasts cant always be obtained. Because no single forecast
technique has been singled out as superior, various techniques are
mentioned. Whatever techniques the MNC chooses, it should monitor
performance over time. This chapter illustrates how this evaluation can
be accomplished.
1. Which forecast technique would you use if you were hired by an MNC
to forecast exchange rates?
2. Do you think there will ever be a published technical forecasting
model that you could use in the future to most accurately forecast
exchange rates? Why or why not?
3. Recall the theories of purchasing power parity (PPP) and international
Fisher effect (IFE) in Chapter 8. If these theories were used to
forecast exchange rates, which techniques would they be classified
as? Why?
4. Assume there is a regression model that was able to identify the
factors which affected exchange rate movements in a recent
four-year period. Also, suppose that the sensitivity of the exchange
rates movements to each factor was precisely quantified. Is there
any reason not to expect superior forecasting results from this
method in the future? Elaborate.
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decision for the MNC. While there is no clear-cut solution, this chapter
illustrates how such a problem can be analyzed.
1. Why would U.S. firms consider issuing bonds denominated in a
foreign currency?
3. What are the desirable characteristics related to a currencys interest
rate (high or low) and value (strong or weak) that would make the
currency attractive from a borrowers perspective?
Chapter 19 - Financing International Trade
This chapter first suggests why international trade can be difficult.
Then, it explains the various ways in which banking institutions can
facilitate international trade by resolving problems faced by the
exporter and importer.
1. Assume that you receive a call from an old friend who has set up a
computer parts store. He says that he plans to begin exporting these
parts soon. What potential complications should he consider?
2. Why do exporters sometimes sell off their bankers acceptances?
Would they be better off obtaining a short term loan instead? What
information is necessary to answer this question?
3. What is the common role of a banking institution in international
trade besides financing?
Chapter 20 - Short Term Financing
This chapter explains short term liability management of MNCs. From
this chapter, students should learn that correct financing decisions can
reduce the firms costs. While foreign financing costs cannot usually be
perfectly forecasted, firms should evaluate the probability of reducing
costs through foreign financing.
1. If a firm consistently exports to a country with low interest rates and
needs to consistently borrow funds, explain how it could coordinate its
invoicing and financing to reduce its financing costs.
2. What is the risk of borrowing a low interest rate currency?
3. Assume that foreign currencies X, Y, and Z are highly correlated. If a
firm diversifies its financing among these three currencies, will it
substantially reduce its exchange rate exposure (as opposed to
borrowing all funds from one of these foreign currencies)?
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