International Financial Management
Stern School of Business – Undergraduate Division
Spring 2011
Instructor:
Class Hours
Office Hours:
David Gaddis Ross
See online schedule
TBD
OVERVIEW
This course provides a comprehensive view of how firms conduct their financial affairs
in an international setting. We will cover a broad range of topics, emphasizing those that
are specific to international finance. We will also touch upon related issues in other areas
of business.
The material can be grouped into the following general areas:
• How foreign exchange markets work, how currency exchange rates are
determined
• Managing exposure to exchange rate movements
• Raising capital in international money, bond, and equity markets
• Issues involved in making portfolio and business investments in foreign countries
• Managing the financial affairs of a global business
This sounds dry, but you will soon realize that the international dimension adds
considerable complexity to many business activities that would otherwise be
straightforward in a purely domestic context.
TEXTBOOK AND READINGS
The textbook may be obtained at the university bookstore or anywhere else you like:
Cheol S. Eun and Bruce G. Resnick, International Financial Management, 5th edition,
McGraw-Hill, 2009.
I may also assign readings from newspapers and the like. These will be distributed over
the course of the term.
1
REQUIREMENTS AND GRADING
Students will be required to complete two midterm exams (each contributing 20% to the
final grade), and a comprehensive final exam (45% of the final grade). Participation
contributes 10% to the final grade, and satisfactory completion of the homework
contributes 5%.
The grading will follow the standard policies of the Stern Finance department for
undergraduate courses.
Class Participation
Attendance is required and it is expected that students will come prepared. If you cannot
attend class for any reason at any time, you must notify me in advance.
Otherwise, the grading for participation is based on the common sense notion of “active
involvement.” It is not a contest to see who can speak the most in class. Rather, students
are expected to engage actively in class discussions. Quality and attitude are more
important than quantity. Asking questions of me or fellow students (where appropriate)
also counts.
Homework
I will assign homework problems from the textbook and elsewhere throughout the class.
Solutions will also be provided at a later date. Your homework grade is determined by the
degree to which you make an honest effort to get everything right. It is okay to make
mistakes. If you get stuck, just explain why.
You are welcome to talk about the homework with other students, but each student
should hand in a separate set of answers.
Cheating
Do not cheat. There are severe penalties for doing so.
2
Tentative Class Schedule
(Chapters #s from International Financial Management in Parentheses)
Week
Monday
Wednesday
1
Introduction (1, 2)
Foreign Exchange Markets (5)
2
Forecasting Exchange Rates (6)
Forecasting Exchange Rates (6)
3
Forecasting Exchange Rates (6)
Futures and Options on Foreign
Exchange (7)
4
Futures and Options on Foreign
Exchange (7)
Futures and Options on Foreign
Exchange (7)
5
President’s Day, 2/21
Futures and Options on Foreign
Exchange (7)
6
Midterm, 2/28
Interest Rate and Currency Swaps (14)
7
Interest Rate and Currency Swaps (14)
International Money Market (11)
8
International Bond Market (12)
International Equity Market (13)
9
International Portfolio Investment (15)
Cost of Capital for the Global Firm (17)
10
International Business Investment (18)
International Business Investment (18)
11
Midterm, 3/11
Managing Transaction Exposure (8)
12
Managing Economic Exposure (9)
Managing Accounting Exposure (11)
13
Multinational Cash Management (19)
International Taxation (21)
14
Regulatory Arbitrage
Regulatory Arbitrage
15
Corporate Governance (4)
3