MGF 685 - International Financial Management - Fall 2023
F1F – Mon, Wed from 3:30pm to 4:50pm, Jacobs 106
F2F – Mon, Wed from 12:30pm to 1:50pm, Alfiero 103
Instructor: Veljko Fotak, PhD
Phone: (716) 645-1541
Office: Jacobs 236
Email: veljkofo@buffalo.edu
Office Hours in person: Tuesday (5pm-7pm), or by appointment (appointment is… better…)
Office Hours via Zoom: by appointment
Syllabus
Course Overview
This course focuses on financial decision making in an international context, from the vintage
point of a corporate manager. The emphasis is on the theory and analytical tools related to real-world
global decision making. The topics covered cut across the areas of investments, capital structure and
financing, and risk management. In particular, we will first frame our discussion within an institutional
background, focusing on international monetary systems and the impact of the balance of payments.
We will then talk about foreign exchange determinants and forecasting, parity conditions, foreign
exchange derivatives (futures, options, and swaps), and risk management in the context of multinational
operations. In the latter part of the course, we will discuss corporate governance within an international
perspective, international financial markets (banking, bonds, and equity), international portfolio
investments, FDI and international mergers and acquisitions, cross-border financing, and international
taxation. Through the course, we will discuss current developments and events linked to the covered
topics.
After completing this course, you should be able to understand the risk factors inherent in
multinational operations and evaluate the different risk management tools and options available. Also,
you should be able to identify the opportunities and benefits of international expansion, from
diversification of investments and financing sources, to the harvesting of local knowledge and
competitive advantages. The goal of the course is to provide you with a framework you can apply to
your decision making when facing decisions affecting cross-border operations. The course will also serve
as a basis for the understanding of current global trends, risks, and opportunities.
Course Format, Assignments, and Learning Goals
This course is primarily designed around lectures. While lectures are based on pre-planned
material, I plan on customizing my approach based on the level of progress of the class. I welcome
suggestions regarding additional topics to be covered, from current events to theoretical issues. I also
encourage those of you who have relevant experience, at work or otherwise, to share your perspectives.
Class lectures and reading assignments (textbook and journal articles) are aimed at providing
the basic knowledge of the institutional environment, theories, and techniques relevant to financial
management in an international context.
We will also discuss a handful of case studies in class, to tie the textbook theory to real-world
experiences. Working on those case studies prior to class is extremely important, if we are all to benefit
from an interesting in-class conversation. The purpose of the case studies is to illustrate applications of
theories and techniques to real-world scenarios.
The course will also cover quantitative techniques, mostly in the context of foreign exchange
risk management. Homework assignments will provide a chance to practice quantitative analysis.
When you have questions about any aspect of the class – be it scheduling, exam material,
lecture content, reading material, or anything else – please feel free to ask, at any time. In some cases, I
might not be able to answer right away – due to class scheduling issues – or I might ask you to discuss
the issue outside of class – for example, if the topic is not part of the planned class material and requires
a lengthy reply.
Contact Information and How to Reach Me
My contact information is on top of the syllabus. I check my email more often than my voicemail, so email is the fastest way to get in touch with me. If I don’t reply within 48 hours, it probably
means there is some breakdown in communication – I would suggest you email me again, or call me.
My office hours are listed above, but we will do everything virtually, so please contact me to schedule. I
will not be in on scheduled school holidays. I am also available by appointment.
My Philosophy
I will assume it is your goal to learn the material. I will do my best to facilitate your learning, to
guide you through the material, and to provide as much clarity as I can in the challenging sections. I
believe that we can all have some fun in the process.
I do not believe in mandating class attendance. I will strive to make the in-class experience both
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useful and interesting enough to motivate you to come. I strongly encourage you to attend—and to
cover the lecture beforehand, so you can come prepared, with questions.
UBlearns
I will be using UBlearns to deliver class-related material. That includes lecture recordings, lecture
slides (PPT), problem sets, additional readings, changes in the calendar and schedule – and other
relevant material. Please note, in particular, that scheduling changes will be communicated (1) in class
and (2) on UBlearns. I might NOT send emails about such items, as mass emails is, in my experience,
prone to all sorts of problems – from pesky, overzealous spam filters to non-updated contact
information. Hence, it is your responsibility to check UBlearns regularly (at least once a week) for
updates.
Lecture Slides
The lecture slides are outlines of the lectures, not complete notes. The slides will be posted
ahead of the relevant class period (I will do my best to have them there at least 24 hours in advance, but
it won’t always be possible). Occasionally, I will update the lectures – generally, if I spot mistakes or
inaccuracies. New versions will be marked as v2, v3, etc. For the lecture slides I have used, aside from
my own material, content developed by Professors Eun, Resnick, and Fernando.
Textbook and Additional Reading
The textbook we will use in class is International Financial Management, by Cheol S. Eun, Bruce
G. Resnick, Tuugi Chuluun, 9th Edition (ISBN: 1260013871; McGraw-Hill/Irwin Series in Finance,
Insurance, and Real Estate; Copyright Year: 2021). My lectures are planned under the assumption that
you are reading the required material AHEAD of class. Lectures and textbook material are NOT
substitutes.
Note that changes between editions are minimal. If you prefer using older editions of the
textbook, you can do so and save some money. Also, please note that the tenth edition of the textbook
has just been released. I have not yet received it and I have not had a chance to review it. If you have
the tenth edition, I suspect you should be fine for the course—but, I am commenting without having
seen the new version.
You DO NOT need any access codes or digital material associated with the textbook for this
course.
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Additional reading material will be assigned and discussed as the semester proceeds and it will
include academic papers and articles from the press. Electronic version of the reading material or links
and download instructions will be provided on UBlearns. Some of it is pre-planned and marked on the
tentative calendar, some of it is not, as it will revolve around current events.
Problem Sets
Problem sets are based on both problems from the textbook and additional questions and
exercises. Problem sets are a chance for you to sharpen your quantitative skills and to prepare for
exams, but they are not graded—you do not need to hand them in.
I will provide solutions to all the problem sets. I would like to stress, however, that completing
the problem sets on your own and on time is an important part of the learning process. Further,
quantitative exercises on exams will closely resemble the exercises on the problem sets.
The ‘forecast’ exercise, while listed as a homework assignment, is optional and anonymous.
Case Studies
Further information on the class project will be given during the first weeks of the semester. The
reason for not providing such information up-front is that I want to tailor the case studies to the final
enrollment numbers. Just to give you an idea – we will probably cover two cases. The cases will require
a mix of quantitative analysis and qualitative discussion. I will provide “questions” and “topics” to
address. You will be required to hand in a write-up of the cases (your analysis and conclusions) and I will
expect participation in the in-class discussion that will follow. You can work on the cases individually or
in groups (I encourage the latter option). Depending on how quickly we cover the in-class material, we
might cover a fourth case, but it is unlikely.
The cases will have to be purchase from Harvard Business Press. They are available in electronic
format and the cost ranges, for most of them, between $5 and $15.
Grading
You will be graded on the basis of your case study written analysis, which will constitute 30% of
your total grade. There will be one 70-minute exam worth 30% of your final grade. There will be a twohour final exam worth 40% of your final grade. In summary, the scoring for the class is:
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Task
Points
Case Studies
Midterm
Final Exam
Total
30
30
40
100
The scale used for grading is as follows:
Grade
A
AB+
B
BC+
C
D
F
Min Total Points
92.00
90.00
87.00
83.00
80.00
77.00
70.00
60.00
0.00
Max Total Points
100.00
91.99
89.99
86.99
82.99
79.99
76.99
69.99
59.99
So, for example, you need to earn 92 points or more for an A. I might curve up, if the class
average is low. I will not curve down. I expect the median grade to be about ‘B’. It is your responsibility
to find out about drop/withdrawal dates and make sure that you withdraw on time, if you so decide.
Regarding “incomplete” grades (“I”), please read the full Incomplete Policy:
http://grad.buffalo.edu/succeed/current-students/policy-library.html#i-grade
Exams
Exams will be a mixture of multiple-choice questions, open-ended questions, and quantitative
problems. For quantitative problems, you will need to show your work (the final answer is not enough).
Please see below for my policy on calculators and note-cards. The quantitative problems on exams will
resemble those on the homework assignments.
Calculators and Other Equipment on Exams: You can use calculators – simple or financial – in
class. If you are in doubt about your ‘device’, please come see me before the first exam. No other
devices are going to be allowed during exams – no phones, laptops, tablets, etc.
Study Guides: I will post on UBlearns detailed study guides for the midterm and final exams.
These will be available at least a week before the exam. An example of an old study guide is available on
UBlearns.
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Note Cards on Exams: On the exams, student will be able to use a formula card (one 4” x 6”
index card). These can have anything the students wish written, typed or reproduced on them. The card
must, however, only be two-sided, and must not include taped or stuck-on notes.
Technology Recommendations
To effectively participate in this course, regardless of mode of instruction, the University
recommends you have access to a Windows or Mac computer with webcam and broadband. Your best
opportunity for success in the blended UB course delivery environment (in-person, hybrid, and remote)
will require these minimum capabilities listed on the following website: buffalo.edu/ubit/serviceguides/hardware/getting-started-with-hardware/purchasing-or-using-an-existing-computer.html
We will use Zoom occasionally. Make sure you sign-in using SSO (If you don’t know what that
means, please look at the “Signing into Zoom SSO” document on UBlearns). You might also be using
Zoom to meet with your classmates, so you will need a PC with video/audio capabilities. You are not
required to broadcast video during Zoom sessions, if that is your preference.
Late Assignments and Missed Exams
Late case studies will NOT be accepted, as it makes no sense to hand in a case study after the inclass discussion. In case of a valid reason for the delay (serious illness, family emergency, or a legitimate
conflict with recognized University activities), you will be allowed to recover the missing portion of the
grade in the final (for example: normally, the final exam accounts for 40% of your total grade; if you miss
a case worth 5% of the final grade with a valid reason, the final exam would then account for 45% of
your total grade).
Students are expected to take exams at the times scheduled. Possible exceptions include serious
illness, family emergency, or a legitimate conflict with recognized University activities. If these apply,
you must contact me to request a makeup; the reason for the request must be verifiable. Make
arrangements as soon as you know of the conflict - BEFORE the exam, if possible. If your reasons are
legitimate, you will be given the option to either take the exam at a mutually agreeable time outside of
class or to not take the exam and increase the weight of the final exam in your class grade
proportionally.
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Classroom Conduct
Students should observe starting and ending times of class. Please, refrain from using any noisy
device (cell phones should be turned off). You can use laptops or other electronic devices in class to
enhance your learning experience. But I reserve the right to ask you to stop using your equipment if
your actions are disturbing your fellow students (this includes excessively loud and persistent typing).
You are welcome to record or tape the lectures, if that helps you study (but use of the material is strictly
personal and should not be shared, posted, or otherwise reproduced). Students who engage in
disruptive behavior will be asked to leave.
Academic Dishonesty
Academic dishonesty will not be tolerated. Students should carefully read the statement on
academic integrity. Academic misconduct includes, amongst other things, cheating on assignments or
examinations, plagiarizing, and sabotaging another’s work. Students found guilty of academic
misconduct in any portion of the academic work face penalties ranging from lowering of the course
grade to receiving a grade of F or N for the entire course.
I encourage you to study together, which includes working on homework assignments. Yet,
when you do work with someone, make subsequently sure you are capable of solving each problem on
your own.
In case of disputes, I might ask you to verify your knowledge via an oral examination. The
examination would last no more than 30 minutes, take place over Zoom, and be taped, to
allow/facilitate eventual appeals.
The school’s policy on academic integrity is also available online at:
https://grad.buffalo.edu/succeed/current-students/policy-library.html#academic-integrity .
Please, note also our new policy on Course Piracy:
All materials prepared and/or assigned by me for this course are for the students’ educational
benefit. Other than for permitted collaborative work, students may not photograph, record,
reproduce, transmit, distribute, upload, sell or exchange course materials, without my prior
written permission. “Course materials” include, but are not limited to, all instructor-prepared and
assigned materials, such as lectures; lecture notes; discussion prompts; study aids; tests and
assignments; and presentation materials such as PowerPoint slides, Prezi slides, or transparencies;
and course packets or handouts. Public distribution of such materials may also constitute
copyright infringement in violation of federal or state law. Violation of this policy may additionally
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subject a student to a finding of “academic dishonesty” under the Academic Integrity Policy
and/or disciplinary charges under the Student Code of Conduct.
Feedback and Disputes
I encourage you to provide feedback, suggestions, and opinions regarding any aspects of the
class, including, but not limited to, the lecture material, homework assignments, exams, and, of course,
the instructor. You can do so as you prefer – email, phone, in person, etc.
I will also make sure to provide you with the means to offer anonymous feedback.
In case of a dispute of grades, I will ask you to come see me outside of class. In case a question should
be found unclear or otherwise ‘unfair’, I commit to giving full credit to the entire class.
Accommodations for Students with Disabilities
If you have any disability which requires reasonable accommodations to enable you to
participate in this course, please contact the Office of Accessibility Resources in 60 Capen Hall, 716-6452608 and also the instructor of this course during the first week of class. The office will provide you with
information and review appropriate arrangements for reasonable accommodations, which can be found
on the web at: http://www.buffalo.edu/studentlife/who-we-are/departments/accessibility.html.
Public Health Compliance in Classroom setting
Please familiarize yourself with the updated health behavior expectation as indicated in the
Student Compliance Policy for COVID-19 Public Health Behavior Expectations
(https://www.buffalo.edu/studentlife/who-we-are/departments/conduct/coronavirus-studentcompliance-policy.html). In addition, please review the updated fall health and safety guidelines.
Diversity and Inclusiveness
Openness and tolerance for diverse perspectives—taking the initiative to try to understand
points of view that are different from our own:
Not respecting individual differences (for example culture, gender, sexual orientation, race,
religion, disability status, or age) is perceived as intolerant. Not respecting others in general is a negative
attribute and detrimental to the class. Examples of violations: not respecting or facilitating the input of
individuals from different cultural backgrounds, making racist, sexist or otherwise insulting or
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derogatory comments about a class member; bullying a classmate or engaging in any actions that create
a hostile learning environment.
Please visit http://www.buffalo.edu/inclusion/resources/IXResources.html, which details
resources, services, events and support related to equity and inclusion for students.
UNIVERSITY SUPPORT SERVICES
The Center for Excellence in Writing provides support for written work, and several tutoring
centers on campus provide academic success support and resources
(http://www.buffalo.edu/writing/students/graduate.html)
UB is committed to providing a safe learning environment free of all forms of discrimination and
sexual harassment, including sexual assault, domestic and dating violence and stalking. If you have
experienced gender-based violence (intimate partner violence, attempted or completed sexual assault,
harassment, coercion, stalking, etc.), UB has resources to help. This includes academic accommodations,
health and counseling services, housing accommodations, helping with legal protective orders, and
assistance with reporting the incident to police or other UB officials if you so choose. Please contact UB’s
Title IX Coordinator at 716-645-2266 for more information. For confidential assistance, you may also
contact a Crisis Services Campus Advocate at 716-796-4399.
Please be aware UB faculty are mandated to report violence or harassment on the basis of sex
or gender. This means that if you tell me about a situation, I will need to report it to the Office of Equity,
Diversity and Inclusion. You will still have options about how the situation will be handled, including
whether or not you wish to pursue a formal complaint. Please know that if you do not wish to have UB
proceed with an investigation, your request will be honored unless UB's failure to act does not
adequately mitigate the risk of harm to you or other members of the university community. You also
have the option of speaking with trained counselors who can maintain complete confidentiality. UB’s
Options for Confidentially Disclosing Sexual Violence provides a full explanation of the resources
available, as well as contact information. You may call UB’s Office of Equity, Diversity and Inclusion at
716-645-2266 for more information, and you have the option of calling that office anonymously if you
would prefer not to disclose your identity.
As a student you may experience a range of issues that can cause barriers to learning or reduce
your ability to participate in daily activities. These might include strained relationships, anxiety, high
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levels of stress, alcohol/drug problems, feeling down, health concerns, or unwanted sexual experiences.
Counseling, Health Services, and Health Promotion are here to help with these or other issues you may
experience. You learn can more about these programs and services by visiting
https://www.buffalo.edu/studentlife/who-we-are/departments.html or by contacting:
Counseling Services:
120 Richmond Quad (Ellicott Complex, North Campus), phone 716-645-2720
202 Michael Hall (South Campus), phone: 716-829-5800
Health Services:
3435 Michael Hall (South Campus), phone: 716- 829-3316
Health Promotion:
114 Student Union (North Campus), phone: 716- 645-2837
Additional Useful Links
•
Academic calendar: http://registrar.buffalo.edu/calendars/academic/index.php
•
Reference the university website for cancellations/delays due to weather or other unforeseen
events: http://emergency.buffalo.edu/
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Please note also the school’s policy on Controlled Enrollment Courses:
Enrollment in a controlled enrollment course [CEC] is restricted by the available student positions,
and self-registration for a CEC in any fall or spring semesters is available only to students taking
that course for the first time. Repeat enrollment may be difficult or impossible in a fall or spring
semester; a student seeking to repeat a CEC should plan to register for and do this in a UB summer
session. Repeat enrollment is enrollment by a student who previously enrolled in the course at UB or
transferred an equivalent course to UB and for which course the student has a grade of ‘A’, ‘B’, ‘C’,
‘D’, ‘F’ or qualified value thereof [e.g., ‘A-’, ‘D+’], or a grade of ‘P’, ‘S’, ‘U’, ‘I’, ‘J’, ‘N’, or ‘R’. A student
may self-register to repeat a CEC in a fall or spring term only if the student’s grade of record for the
previous enrollment is ‘W’, i.e., administrative withdrawal. Students may petition for enrollment in
such a designated spring course by the third week of the preceding fall semester, and in a fall course
by the third week of the preceding spring semester
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TENTATIVE Calendar – changes are possible and even likely. Please keep checking UBlearns
Textbook
Reading
Lecture
Mon
Intro
Syllabus
Wed
Ch 1
0
1
Date
Day
8/28/2023
8/30/2023
9/4/2023
Mon
9/6/2023
Wed
9/11/2023
Mon
Schedule
Assignments
Additional Material
Topic
Welcome to IFM
Bitcoin; Yermack (2014)
Is Bitcoin a "real currency"? A Brief History of Money
NO CLASS
9/13/2023
Wed
Ch 1
Ch 1
Appendix
Ch 2
2
Foundations: International Monetary Systems
9/18/2023
Mon
Ch 2
2
Foundations: International Monetary Systems
9/20/2023
Wed
Ch 3
3
Balance of Payments
9/25/2023
Mon
Ch 5
4
9/27/2023
Wed
Ch 6
5
10/2/2023
Mon
Ch 6
5
10/4/2023
Wed
CASE STUDY 1
NO CLASS
10/9/2023
Mon
Wed
Ch 6
5
10/16/2023
Mon
CH 6
6
10/18/2023
Wed
Ch 7
7
10/23/2023
Mon
Ch 7
7
10/25/2023
Wed
10/30/2023
Mon
Ch 14
7
11/1/2023
Wed
Ch 8, 9
8
11/6/2023
Mon
Ch 8, 9
8
11/8/2023
Wed
Ch 4
9
Midterm
Mon
Foundations: Globalization and MNEs
Foundations: Globalization and MNEs
10/11/2023
11/13/2023
Forecast
2
Balance of Payments, Foreign Exchange
PS 1
Foreign Exchange, Parity Conditions
Parity Conditions
PS 2
Forecasting Forex
Parity Conditions, Forecasting
Credit Suisse and Wharton on
Technical Analysis; Menkhoff and Forecasting
Taylor (2007)
Derivatives
Derivatives
PS3
Ch 4
9
Ch 12
10
Derivatives
Managing Exposure
Ch 10
Managing Exposure
Country Risk
Law and Finance; The
Consequences of Legal Origin
Country Risk
11/15/2023
Wed
11/20/2023
Mon
CASE STUDY 2
11/22/2023
Wed
11/27/2023
Mon
Ch 12
10
11/29/2023
Wed
Ch 13
11
12/4/2023
Mon
Ch 15
12
12/6/2023
Wed
Ch 17
13
12/11/2023
Mon
Optional Review Session
12/13/2023
Wed
Final Exam (12:30pm section F2) at 3:30-6:00pm (2 hours exam, plus prep time), in Clemens 19
12/15/2023
Fri
International Bond Markets
NO CLASS
International Bond Markets
OECD Market Highlights
International Equity Markets
International Portfolios
PS 4
Cross-border Financing
Final Exam (3:30pm section F1) at 3:30-6:00pm (2 hours exam, plus prep time), in Jacobs 106
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