THE CHINESE UNIVERSITY OF HONG KONG
INTERNATIONAL SUMMER SCHOOL (JULY SESSION)
Tentative
January 2016
29 JUNE – 1 AUGUST 2016
Course
FINA3020 International Finance
Class Time
Tuesdays, Wednesdays and Thursdays (9:30 a.m. – 12:15 p.m.)
Teacher
Professor Chuck C. Y. Kwok
Distinguished Business Partnership Foundation Fellow, Professor of International
Business, Moore School of Business, University of South Carolina
Visiting Professor, The Chinese University of Hong Kong
Email
To be provided
Office Hours
By appointment
COURSE DESCRIPTION
This course aims to analyse international monetary relations and problems. Major areas of discussion include
basic concepts and analysis of the balance of payments, the foreign exchange market, determination of spot
and forward exchange rates, international capital flows, the payments adjustment mechanism, international
monetary problems and arrangements, and international debt and its development.
COURSE PREREQUISITE
Prerequisite: FINA2010 or 2011 or 2110 or 2310 or permission from instructor.
Students who take this course generally have taken a basic finance course. Judging from past years’
experience, students who lack the background of a basic finance course generally do not perform well in the
final examination unless they are willing to spend extra hours and effort to read some basic finance
textbooks on their own before or during this course.
COURSE OBJECTIVES
This course discusses global financial markets and how corporations make financial decisions in the present
global financial environment. The objectives of the course are:
•
•
•
•
•
•
•
To understand how the international monetary system functions.
To equip students with skills in identifying and managing foreign exchange risks.
To enable students to identify channels in raising capital in global markets.
After completing this course, the student will be able to:
Forecast foreign exchange rates given information of economic fundamentals
Develop strategies in reducing foreign exchange risk of a given company
Identify possible financing sources in global markets and compare costs of capital from different
markets in order to lower a company’s financing cost
Design a swap contract to lower a company’s financing cost and reduce exchange rate and interest rate
risks simultaneously
To enhance students’ interest and better appreciation of the course contents, the course is taught using a
combination of lectures, simulation games, video presentation, case presentation, and class discussion.
ISS2016_July_FINA3020
P.1 of 6
TEXTBOOK
Cheol Eun and Bruce Resnick, International Finance, 7th Edition, Boston: McGraw- Hill Irwin, 2014
(ISBN 978-0-07-786160-5). Boston, MA: Irwin McGraw-Hill. Alternatively, you may purchase the Global
Edition (7th Edition) of this book if it is available to you. The textbook website is
http://www.mhhe.com/er7e.
CASES
There will be three cases used in this course: Lufthansa, Walt Disney Company's Yen Financing and
Dorchester. Two of the cases, Lufthansa and Dorchester, are made available to the students on the
Blackboard.
William Allen and Carl Kester, "The Walt Disney Company's Yen Financing", Harvard Business School Case
(9-287-058). This case may be ordered using the link https://cb.hbsp.harvard.edu/cbmp/access/37555699.
If you have not registered with Harvard Business Online, you will be required to do so. For technical
assistance, please view the Quick Tips section or contact Harvard Business School Publishing at
1~800~810~8858 or 617~783~7700. They are open 8am~6pm Eastern Standard Time. They can also be
reached at techhelp@hbsp.harvard.edu.
LECTURE NOTES
The class notes are posted on the Blackboard. They are pdf files of the class ppt presentation. I cannot share
with you the original ppt files since they contain copyrighted materials from the publisher.
TEACHING AIDS
Videotapes will be shown to illustrate the operation of various aspects of international financial markets.
Simulation games will be played in class to illustrate interesting international finance topics and to
encourage interaction among students in class.
EVALUATION
Class Participation
15%
Case Report
10
Quiz
25
Final Examination
50
Total
100%
Class Participation:
The teacher places great emphasis on class participation because it is essential for wonderful learning
experience. If you are not ready to meet the following expectations, please do not register for this
course.
To enhance learning from one another (not just the instructor), students are expected to participate actively
in class discussion. Those who do not contribute much in class discussion will be given a relatively low
participation grade even if they are physically present all the time.
ISS2016_July_FINA3020
P.2 of 6
Students are expected to attend each class regularly and punctually. Students who are late to class will
interrupt class discussion and hurt the learning atmosphere. These students’ participation grades will
be reduced significantly even if they are active contributors to class discussion. Students should be
respectful toward their colleagues and the teacher. Breaks will be provided; please do not move in and out
of the classroom while the class is in session. If students have opinion, they may raise their hands to
express. They should not chat with their fellow students during the lecture.
Format of Examination:
A variety of question types such as multiple choices, fill‐in‐the‐blanks and problems will be seen. A sample
of examination questions is already included in the files made available to the students. You are responsible
for the lecture materials as well as the assigned readings although the latter may not be fully covered in
class.
During the test and the final examination, students are not allowed to use electronic devices (such as iPad,
laptop, cellular phones) which can record texts. For calculations, students need to have a hand-held
calculator that can perform simple scientific functions (such as power and logarithm), without text input
capability. Financial calculators are fine but not necessary. Such calculators are also needed for classroom
exercises.
Please make sure that you are physically present in class on the test and examination dates. No make-up
tests or examinations will be given.
ASSIGNMENTS
1.
Problems
Assigned problems are posted on the Blackboard. You do not need to hand in your work. Answers are
already included in the files made available to the students. Do try to solve the problems before
checking the answers. You will see some “familiar faces” in the examinations.
2.
Case Report
Form teams of 5 (or 6) people. Each team should hand in a typewritten report on the Dorchester case.
TENTATIVE OUTLINE
Topics
Readings
Dates
I. Introduction
A. Overview
B. International Monetary Environment
Chapter 1
Chapter 2
6/29
6/30
Chapter 4
Chapter 5
Chapters 8-10
6/30, 7/5
7/6
7/7, 7/12
7/12
7/13
7/13
II. Foreign Exchange Management
A. Foreign Exchange Market
B. Foreign Exchange Forecasting
C. Foreign Exchange Risk Management
Case Discussion: Lufthansa
*Quiz: Covering Parts I through III.C
Foreign Exchange Simulation Game
III. International Financing Strategies
A. International Financial Markets
Chapter 11
B. Sourcing Debt Internationally
Chapter 12
C. Swap and Interest Rate Risk Management
Chapter 14
D. Sourcing Equity Internationally
Chapter 13
*Case Discussion: The Walt Disney Company's Yen Financing
ISS2016_July_FINA3020
7/14
7/14
7/19
7/20
7/21
P.3 of 6
IV. International Investment Decision
A. Foreign Market Entry Modes
B. Foreign Direct Investment
C. International Capital Budgeting
D. Political Risk Management
Case Discussion: Dorchester
Chapter 16
Chapter 16
Chapter 18
Chapter 16
V. Conclusions
*Final Examination
7/21
7/27
7/26
7/27
7/28
7/28
8/1
Honesty in Academic Work
Attention is drawn to University policy and regulations on honesty in academic work, and to the disciplinary
guidelines and procedures applicable to breaches of such policy and regulations. Details may be found at
http://www.cuhk.edu.hk/policy/academichonesty/.
With each assignment, students will be required to submit a signed declaration
(http://www.cuhk.edu.hk/policy/academichonesty/Eng_htm_files_(2013-14)/p10.htm) that they are aware of
these policies, regulations, guidelines and procedures.
•
In the case of group projects, all students of the same group should be asked to sign the declaration,
each of whom is responsible and liable to disciplinary actions should there be any plagiarized
contents in the group project, irrespective of whether he/she has signed the declaration and whether
he/she has contributed directly or indirectly to the plagiarized contents.
•
For assignments in the form of a computer-generated document that is principally text-based and
submitted via VeriGuide, the statement, in the form of a receipt, will be issued by the system upon
students’ uploading of the soft copy of the assignment.
Assignments without the properly signed declaration will not be graded by teachers.
Only the final version of the assignment should be submitted via VeriGuide.
The submission of a piece of work, or a part of a piece of work, for more than one purpose (e.g. to satisfy the
requirements in two different courses) without declaration to this effect shall be regarded as having
committed undeclared multiple submission. It is common and acceptable to reuse a turn of phrase or a
sentence or two from one’s own work; but wholesale reuse is problematic. In any case, agreement from the
course teacher(s) concerned should be obtained prior to the submission of the piece of work.
ISS2016_July_FINA3020
P.4 of 6
Brief Biography of Professor Chuck C.Y. Kwok
Professor Kwok is Distinguished Business Partnership Foundation Fellow and Professor of
International Business at the University of South Carolina. He received his undergraduate and master
degrees in Sociology at the Chinese University of Hong Kong. He came to the United States in 1981 to
study at the University of Texas at Austin, receiving a Ph.D. degree with a major in International Business
in 1984.
Professor
Kwok's
research
concentrates on international finance
and international business education.
He is one of the pioneers conducting
interdisciplinary study on how national
culture influences various financial
practices around the world. He has
published over fifty refereed journal
articles as well as five books and
monographs. He was ranked among the
list
of
most
contributing
to
prolific
the
scholars
Journal
of
International Business Studies (the leading journal in international business). His academic papers have
received a number of awards, including the prestigious Moskowitz Prize, given by the Center for
Responsible Business, University of California, Berkeley in 2011.
He has been consistently invited as a visiting professor at prestigious institutions around the
world, including the Peking University (Beijing University, PRC), the Chinese University of Hong Kong
(Hong Kong, PRC), Jiaotong University (Shanghai, PRC), Wirtschaftsuniversitat Wien (Austria), and the
Monterrey Institute of Technology (ITESM, Mexico). He was given the International Professional Award
by the South Carolina Governor, David Beasley, at the Governor’s International Gala in 1998. In December
1999, he was awarded the honor of Guest Professorship by the Peking University, PRC. In 2007, he was
invited to join as a member of the Center for China Financial Research at the Peking University. In 2012, he
was given the Best Teaching Award of the Beijing International MBA program of the Peking University.
He has been teaching various international finance and China business courses at both master and
doctoral levels at the University of South Carolina since Fall, 1984. He received the College of Business
Administration's Alfred Smith Award for Excellence in Teaching in 1991, Outstanding Professor Award of
the Master of International Business Program (USC) in 1993, 1994 and 1995, and the Outstanding Professor
Award of the Professional MBA Program in 1996, 1999 and 2000. He also received the Outstanding
Faculty Award of the International MBA-Vienna program in 2000 and 2003. He was elected “Teacher of
the Year 2002/2003” of the Vienna Executive MBA program jointly offered by the University of Minnesota
and Wirtschaftsuniversitat Wien. He was recognized as the Outstanding Executive IMBA USC Professor
in 2008. In 2007-2009, he helps link together the Chinese University of Hong Kong and USC. The
interaction between the administration of the two universities results in the launching of an innovative
ISS2016_July_FINA3020
P.5 of 6
International Business & Chinese Enterprise degree program in Fall 2009. He was a recipient of the
International Advocate Award of the University of South Carolina in 2009.
He has served on five journal editorial boards, including that of the Journal of International Business
Studies. He was Vice President-Administration of the Academy of International Business for the two-year
term of 1995 to 1996. He has been consistently serving on the conference program committees of various
academic associations such as the Academy of International Business, the Financial Management
Association, the Academy of Management, and the Decision Sciences Institute. He also reviews articles for
other journals such as the American Economic Review, Journal of Banking and Finance, Financial Management,
Journal of Financial Research, Pacific Basin Finance Journal, Canadian Journal of Administrative Science and so
forth. At the University of South Carolina, he served on the 24-Person University Tenure and Promotion
Committee from 2007-2009. He was the coordinating director of the Ph.D. program in International
Finance from 1995-2008. He has served as the chairperson of several departmental and college committees.
He also serves as a faculty advisor of student organizations at USC.
ISS2016_July_FINA3020
P.6 of 6