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William Patterson University Cotsakos College of Business Department of Economics, Finance and Global Business International Financial Management -Finance 4000-060 Gokul Anand Bahadur Catalogue Description International financial management deals with the functioning of the corporation in the global economy. Topics include foreign exchange risk, political risk, long term investment and financial decisions, working capital management and valuation of operations and taxation. Also investigation of the local and global interaction of multinational corporations with diverse cultures and societies- Prerequisite FIN 3200 Required Text: Multinational Business Finance (11th Edition) Eiteman, Stonehill and Moffett (Pearson Publishers) Contact Information Instructor A. bahadurg@wpunj.edu Course Objectives: 1. Students will become familiar with the concepts in the global financial system necessary for understanding the decision-making process and issues of the various market participants. 2. Students will learn the major determinants of the exchange rate and risk exposure of multinational corporations, as well as the means of managing the risk. 3. Students will learn how to analyze the financial options of multinational corporations and how they manage multinational operations. 4. Students will develop the skills to analyze the key issues regarding the Foreign Direct investment decision. Student Learning Outcomes: During the course students will learn how to: 1. Use the concepts of exchange rate fluctuations to explain real world phenomena 2 Identify components of the business environment (economic, political, regulatory, legal, technological, social and cultural) throughout the world and understand their differences and similarities between global, regional, national and local levels as these affect the value of currencies (UG- Goal 5.1) 3. Evaluate the importance of foreign exchange risk management for multinational corporations 4. Understand the key elements of foreign direct investment and evaluate the pros and cons of the global financing COURSE REQUIREMENTS: Readings: You are expected to read the entire chapters assigned from the text and the readings outside the text. Examinations: There will be two examinations. Each exam will be worth 100 points. Homework Assignments: There will be 5 homework assignments during the semester They will be worth 20 points each. Homework must be submitted on the date they are due. Late homework will not receive credit. Papers and Reports: Two short papers on the topics listed below will be required for the course. Each will be worth 40 points. Due dates will be indicated. 1. Write a 500-word essay on recent trends towards nationalism, the factors that motivate the trend , the impact on global community and the possible actions of the global institutions to address these 2. Write a 500-word essay explaining the EURO and its future. They must be free of spelling and grammatical errors. Direct quotations must be footnoted and placed in quotation marks. Data and distinctive ideas takes from sources (even if you paraphrase them) must be identified by footnotes. Failure to cite source material will be considered plagiarism and will be result in failure in the course. Discussions participation: There will be two three discussion questions (DQ) posed and you are expected to offer your initial response as well as comment on 2 to 3 responses posted by your colleagues; each DQ will be worth (40 points ) * Letter grades will be assigned using a standard scale. Typically, I use curving, depending on the overall class performance. Letter grades will be calculated only at the end of the semester based on the total numerical scores of all components Instructor Approach to Teaching and Mentoring International Finance is a field which demands hands on analysis. For that reason, the instructor will involve the students in class and outside of class discussions. That is, you will be asked to solve problems with your colleagues and analyze your procedure. You will be asked to solve problems in class and teach your colleagues with my support. The instructor believes strongly in how you think and your procedure rather than the answer. You must show your work on tests and assignments. Only shown work receives credit. COURSE OUTLINE Topic Outline I. The International Financial Environment a. The Multinational Corporation (Read Ch. 1and Ch.4) b. The Multinational monetary environment (Read Ch. 2) c. The Balance of payments (Read Ch. 3) II. Foreign Exchange a. Foreign Currency Mechanics (Read Ch. 5) b. Exchange Derivatives and Parity (Read Ch. 6,7 and 8) c. Exchange Rate Determination (Read Ch. 9) III. Measuring and Managing Foreign Exchange Exposure a. Transaction Exposure (Read Ch. 10) b. Operating Exposure (Read Ch. 11) c. Accounting Exposure (Read Ch. 12) d. Interest rate exposure IV. Financing the Global firm and Foreign Investment Decisions a. Global cost and funding sources (Read Ch. 13 and 14) b. Political risk management (Read Ch. 17) c. Multinational tax management (Read Ch. 15) d. Multinational capital budgeting (Read Ch. 18) V. Managing Multinational Operations a. Repositioning of funds (Read Ch. 21) b. Working capital management (Read Ch. 22) c. Export and import financing (Read Ch. 23) Weekly Work Assignments and Activities Week 1: Welcome and class Housing keeping Items Week 2: The multinational corporation Read Chapter 1 Week 3: The Multinational Corporation – continued Read Chapter 4 PAPER 1 Due Week 4: The international Monetary System Read chapter 2 Work Assigned Week 5: The Balance of payments Read Chapter 3 Work Assigned Discussion Question Week 6: Foreign Exchange Rate Mechanics Read Chapter 5 Work Assigned: Problems 5/4, 5/10 and 5/13 Week 7: Exchange rate Parity Conditions Read Chapter 6 Work Assigned: Problems 6/1, 6/6, 6/9 and 6/19 Week 8: F/X Derivatives and Options Read Chapter 7 and 8 Work Assigned: Problems 7/4 and 7/8 Week 9 : Foreign Exchange Rate Forecasting Read Chapter 9 Work Assigned: review the US Dollar/ Euro Power point presentation PAPER 2 – Due EXAMINATION 1 Week 10 : Transaction Exposure Read chapter 10 Work Assigned: Problems 10/3, 10/10 and 10/11 Week 11 Discussion Question 2 Week 12 : Translation Exposure Read chapter 11 Work assigned: Problems 11/8 and 11/9 Week 13: Operating Exposure Read Chapter 12 Work assigned: Problems 12/1 and 12/3 Discussion Question 3 Week Selected sections from various chapters EXAMINATION 2
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