Reading Assignments. Text: Alan C. Shapiro, Multinational Financial
Management, 9th Edition, Wiley. 2009. ISBN 978-0-470-41501-6. Reference and
outside ...
Boston University Metropolitan College MET AD 763 Multinational Finance
Dr. Abbass Bozorg Summer 2013
Office Hours: Monday and Wednesday 5:00 – 6:00 pm. And by appointment Course Objective The primary objective of the course is to become acquainted with the problems, techniques, and policies of financial decision making in a multinational enterprise. Decision making in an international environments requires an understanding of foreign exchange markets, what makes currencies fluctuate, and how to measure and manage the exposure of a firm's value to such currency fluctuations. The first part of the course concentrates on the operation, mechanics, and structure of the international financial system, emphasizing its private and public institutions, foreign exchange markets, capital flows, speculation, and analysis of alternative foreign investments. The second part concentrates on the financial planning for multinational corporations, analysis of sources and uses of corporate funds abroad. Reading Assignments Text: Alan C. Shapiro, Multinational Financial Management, 9th Edition, Wiley 2009. ISBN 978-0-470-41501-6 Reference and outside reading Rudiger Dornbusch, Open Economy Macroeconomics, Basic Books. Francisco Rivera-Batiz and Luis Rivera-Batiz, International Finance and Open Economy Macroeconomics, Second Edition, Prentice Hall, 1993. Bruno Solnik, International Investments, Addison-Wesley. Donald R. Lessard, eds. International Financial Management: Theory and Application, John Wiley & Sons.
Joel M. Stern and Donald H. Chew, eds. New Developments in International Finance, Basil Blackwell. Jagdeep S. Bhandari and Bluford H. Putnam, eds. Economic Interdependence and Flexible Exchange Rates, MIT Press. Gunter Dufey and Ian Giddy, The International Money Market, Prentice-Hall. Daily reading of the Financial Times is strongly recommended. You are also encouraged to read the Wall Street Journal, and the weekly newsmagazine the Economist. Grading Assignments Exam I Exam II Final Exam Case Analysis & Class Participation
20% 10 30 30 10
Course Outline Week One & Two (May 21-30) I.
Introduction: 1.
The nature and scope of international financial management. AS Ch. 1 Donald R. Lessard, "Finance and Global Competition: Exploiting Financial Scope and Coping with Volatile Exchange Rates," Stern and Chew, pp. 3-26.
2. II.
International Trade (Notes will be put on reserve)
International Financial Environment: 1. International Monetary Arrangements AS Ch. 3 -Rivera-Batiz Ch. 9 2. Balance of Payments and Exchange-Rate Determination AS Ch. 2 & 5 -Rivera-Batiz, Ch. 13 Assignment 1
Exam I
III.
The Foreign Exchange Markets AS Ch. 7 -Rivera-Batiz, Ch. 1 & 8 -Solnik, Ch. 1 Assignment 2
Weeks Three & Four: (June 4 - 13) 1. Currency Futures and Options Markets AS Ch. 8 & 9 Solnik Ch. 12& 13 2. International Parity Conditions and Forecasting Foreign Exchange Rate AS Ch. 4 -Rivera-Batiz Ch. 4 -Solnik, Ch. 2 , "International parity Conditions an Exchange Risk: A Review," in Lessard, pp. 174-183. Dooly, M. and P. Isard, "Capital Controls, Political Risks, and Deviations from Interest Parity," in Lessard, pp. 185-196. Assignment 3
Exam II Weeks: Five and Six (June 18 - 27) III.
Foreign Exchange Risk Management: 1. Foreign Exchange Risk and Exposure: a. Accounting Exposure AS Ch. 10 b. Economic and Transaction Exposure AS Ch. 11 *Cases: -Rolls Royce Australia: The Uncovered Transaction. -Imperial Power Corporation Cases 1 & 2 -Solnik Ch. 14 -Cornell, B. and A. C. Shapiro, "Managing Foreign Exchange Risks," in Stern and Chew, pp. 44-60
IV.
International Financial Markets & Foreign Investment: 1. The Euromarkets AS Ch. 13 2. The Cost of Capital and Strategy
12 13
AS Ch. 14 *Problem Set # 6 -Solnik Ch. 16, 17
3. International Portfolio Investment AS Ch. 15 -Solnik Ch. 6, 7, 9 & 10 -Rivera-Batiz Ch. 8 4. Foreign Direct Investment & Capital Budgeting AS Ch. 16 *Case: Imperial Power-Spain: International Capital Budgeting. -Shapiro, A.C. "International Capital Budgeting," in Stern and Chew, pp. 165-180. -Rutterford, J. "An International Perspective on Capital Structure Puzzle," in Stern and Chew, pp. 194-209. Lessard, D., "Evaluating International Projects: An Adjusted Present Value Approach," in Lessard, pp.570-584. 5. Political Risk and Strategy: AS Ch. 6 -Shapiro, A.C., "International Banking and Country Risk Analysis," in Stern and Chew, pp. 211-220. VI. Evaluation and Control of Foreign Operations: 1. Performance Evaluation and Control -Shapiro, A.C., The Evaluation and Control of Foreign Affiliates," in Stern and Chew pp. 134-146. -Lessard, D.R. and David Sharp, "Measuring the performance of Operations Subject to Fluctuating Exchange Rates," in Stern and Chew pp. 121-133 Final Exam
METROPOLITAN COLLEGE
Statement on Communication Skills For use by faculty in their syllabi. June 18, 2003
Communication Skills required of Metropolitan College Students Metropolitan College students, in addition to achieving mastery of subject matter and professional terminology, must be proficient in written and spoken English in order to achieve success in their academic studies and professional careers. Please be advised that papers and oral presentations that do not meet the high normative standards of university education will be downgraded or returned for revision. Help is available at every stage of the writing process and with oral communication and presentations. Please ask your instructor, academic advisor or check the MET website www.bu.edu/met/students. Also, please also see the Student Code of Conduct www.bu.edu/met/students/conduct_code.html
