Bekaert, G., & Hodrick, R. (2012). International financial management (2nd ed.). Upper Saddle River, NJ: Prentice Hall.

Transcription

1 MBA 6651, International Finance Course Syllabus Course Description Presents a study of economics in the international context of foreign exchange and currency markets and their impact on international economics. The interrelationship of exchange rates and economic factors are also discussed. Course Textbook Bekaert, G., & Hodrick, R. (2012). International financial management (2nd ed.). Upper Saddle River, NJ: Prentice Hall. Course Learning Outcomes Upon completion of this course, students should be able to: 1. Examine the concept of the current account balance. 2. Employ the current account balance to extend national income accounting to open economies. 3. Apply national income accounting to the interaction of saving, investment, and net exports. 4. Evaluate and discuss the national money markets in which interest rates are determined. 5. Compare how monetary policy and interest rates feed into the foreign exchange market. 6. Discuss the concept of the real exchange rate. 7. Analyze the factors that affect real exchange rates and relative currency prices in the long run. 8. Explain the role of the real exchange rate in determining the aggregate demand for a country's output. 9. Demonstrate causes and effects of balance of payments crises. 10. Evaluate how alternative multilateral systems for pegging exchange rates work. 11. Explain how the goals of internal and external balance motivate economic policy makers in open economies. 12. Summarize how the monetary and fiscal policies of a large country such as the United States are transmitted abroad. 13. Analyze the economic function of international portfolio diversification. 14. Explain factors leading to the explosive recent growth of international financial markets. 15. Analyze problems in the regulation and supervision of international banks and nonbank financial institutions. Credits Upon completion of this course, the students will earn three (3) hours of college credit. Course Structure 1. Unit Learning Outcomes: Each unit contains Learning Outcomes that specify the measurable skills and knowledge students should gain upon completion of the unit. 2. Unit Lesson: Each unit contains a Unit Lesson, which discusses unit material. 3. Reading Assignments: Each unit contains Reading Assignments from one or more chapters from the textbook. 4. Key Terms: Key Terms are intended to guide students in their course of study. Students should pay particular attention to Key Terms as they represent important concepts within the unit material and reading. 5. Unit Assignments: Students are required to submit for grading Unit Assignments in each unit. Specific information and instructions regarding these assignments are provided below. Grading rubrics are included with each unit. Specific information about accessing these rubrics is provided below. 6. Portfolio: Students are required to submit for grading a Portfolio in Unit VIII. Specific information and instructions regarding this assignment are provided below. A grading rubric is included with this assignment. Specific information for accessing this rubric is included below. MBA 6651, International Finance 1

2 7. Ask the Professor: This communication forum provides you with an opportunity to ask your professor general or course content related questions. 8. Student Break Room: This communication forum allows for casual conversation with your classmates. CSU Online Library The CSU Online Library is available to support your courses and programs. The online library includes databases, journals, e-books, and research guides. These resources are always accessible and can be reached through the library webpage. To access the library, log into the mycsu Student Portal, and click on CSU Online Library. You can also access the CSU Online Library from the My Library button on the course menu for each course in Blackboard. The CSU Online Library offers several reference services. and telephone ( ) assistance is available Monday Thursday from 8 am to 5 pm and Friday from 8 am to 3 pm. The library s chat reference service, Ask a Librarian, is available 24/7; look for the chat box on the online library page. Librarians can help you develop your research plan or assist you in finding relevant, appropriate, and timely information. Reference requests can include customized keyword search strategies, links to articles, database help, and other services. Unit Assignments Unit III Case Study Flame Fixtures, Inc. Case Study Business Application of Purchasing Power Parity Flame Fixtures, Inc., is a small U.S. business in Arizona that produces and sells lamp fixtures. Its costs and revenues have been very stable over time. Its profits have been adequate, but Flame has been searching for a means of increasing profits in the future. It has recently been negotiating with a Mexican firm called Corón Company, from which it will purchase some of the necessary parts. Every three months, Corón Company will send a specified number of parts with the bill invoiced in Mexican pesos. By having the parts produced by Corón, Flame expects to save about 20 percent on production costs. Corón is only willing to work out a deal if it is assured that it will receive a minimum specified amount of orders every three months over the next 10 years, for a minimum specified amount. Flame will be required to use its assets to serve as collateral in case it does not fulfill its obligation. The price of the parts will change over time in response to the costs of production. Flame recognizes that the cost to Corón will increase substantially over time as a result of the very high inflation rate in Mexico. Therefore, the price charged in pesos likely will rise substantially every three months. However, Flame feels that, because of the concept of purchasing power parity (PPP), its dollar payments to Corón will be very stable. According to PPP, if Mexican inflation is much higher than U.S. inflation, the peso will weaken against the dollar by that difference. Since Flame does not have much liquidity, it could experience a severe cash shortage if its expenses are much higher than anticipated. The demand for Flame s product has been very stable and is expected to continue that way. Since the U.S. inflation rate is expected to be very low, Flame likely will continue pricing its lamps at today s prices (in dollars). It believes that by saving 20 percent on production costs it will substantially increase its profits. It is about ready to sign a contract with Corón Company. Guidelines for Case Study: For this assignment, you are to evaluate the mini case study. The central issue in your analysis should be to describe what the case tells us about the theory and practice of International Finance Management. In analyzing the case, you should draw upon class readings, internet resources as well as personal experiences that may be relevant. Some general questions that you may want to consider include the following: What are the issues? Who are the actors? What are the organizational forces? What are the external forces? What theoretical perspectives or models help you understand what happened in the case? How? MBA 6651, International Finance 2

3 What does the case tell us about: The environment within which International Finance occurs? The nature of the International Finance Management system and the policy making process? The decision making process? Leadership and management? Administrative ethics? What recommendations would I make? How would I propose to do things differently? Once you have thoroughly analyzed the Case Study, you should compose a minimum two-page response with appropriate APA citations. Unit V Article Critique For this assignment, choose a peer-reviewed article to critique related to International Debt Financing or a sub-topic related to this unit. Use the databases within the CSU Online Library, or use another source that contains peer-reviewed articles. The purpose of this assignment is for you to practice reviewing articles that contribute to the industry. The authors of these articles are researchers and professionals who have shared or experimented with ideas that demonstrate potential to improve the industry. As a professional in the industry, it is in your best interest to review the literature and trends. This provides you with the opportunity to read about what was successful and how it was accomplished. Plus, it allows you to analyze what was unsuccessful, how you can improve it, or at least how you can avoid repeating the mistakes of others. Use these skills to contribute to Research Papers and other scholarly writings. If you have not already, hopefully, you will contribute to the industry by publishing an article and sharing with your community of peers. As you read the article you choose for this assignment, consider the following questions: How could the topic of this article apply to your personal or professional life? How could it apply to an organization you have observed? The article you choose must meet the following requirements: be peer reviewed, relate to the concepts within this course, and be at least ten pages in length. The writing you submit must meet the following requirements: Your writing must be at least two pages in length. Identify the main topic/question. Identify the author s intended audience. Critique the article and share your thoughts what appears to be valid and invalid? Do you agree with the author s assertions? Why, or why not? Try to find an article that can tie into your portfolio project for the course. Further information and research on important concepts and topics will allow you to attain a better analysis of the MNC for your portfolio project. Format your Article Critique using APA style. Use your own words, and include citations and references as needed to avoid plagiarism. Unit VI Article Critique For this assignment, choose a peer-reviewed article to critique related to International Equity Financing or a sub-topic related to this unit. Use the databases within the CSU Online Library, or use another source that contains peer-reviewed articles. The purpose of this assignment is for you to practice reviewing articles that contribute to the industry. The authors of these articles are researchers and professionals who have shared or experimented with ideas that demonstrate potential to improve the industry. As a professional in the industry, it is in your best interest to review the literature and trends. This provides you with the opportunity to read about what was successful and how it was accomplished. Plus, it allows you to analyze what was unsuccessful, how you can improve it, or at least how you can avoid repeating the mistakes of others. Use these skills to contribute to Research Papers and other scholarly writings. If you have not already, hopefully, you will contribute to the industry by publishing an article and sharing with your community of peers. As you read the article you choose for this assignment, consider the following questions: How could the topic of this article apply to your personal or professional life? How could it apply to an organization you have observed? MBA 6651, International Finance 3

4 The article you choose must meet the following requirements: be peer reviewed, relate to the concepts within this course, and be at least ten pages in length. The writing you submit must meet the following requirements: Your writing must be at least two pages in length. Identify the main topic/question. Identify the author s intended audience. Critique the article and share your thoughts what appears to be valid and invalid? Do you agree with the author s assertions? Why, or why not? Try to find an article that can tie into your portfolio project for the course. Further information and research on important concepts and topics will allow you to attain a better analysis of the MNC for your portfolio project. Format your Article Critique using APA style. Use your own words, and include citations and references as needed to avoid plagiarism. Unit VII Case Study Sabre Computer Corporation Case Study Cost of Capital Sabre Computer Corporation is a U.S.-based company that plans to participate in joint ventures in Mexico and in Hungary. Each joint venture involves the development of a small subsidiary that helps produce computers. Sabre s main contributions are the technology and a few key computer components used in the production process. The joint venture in Mexico specifies joint production of computers with a Mexican company owned by the government. The computers have already been ordered by educational institutions and government agencies throughout Mexico. Sabre has a contract to sell all the computers it produces in Mexico to these institutions and agencies at a price that is tied to inflation. Given the very high and volatile inflation levels in Mexico, Sabre wanted to ensure that the contracted price would adjust to cover rising costs over time. The venture will require a temporary transfer of several managers to Mexico plus the manufacturing of key computer components in a leased Mexican plant. Most of these costs will be incurred in Mexico and will therefore require payment in pesos. Sabre will receive 30 percent of the revenue generated (in pesos) from computer sales. The Mexican partner will receive the remainder. The joint venture in Hungary specifies joint production of personal computers with a Hungarian computer manufacturer. The computers will then be marketed to consumers throughout Eastern Europe. Similar computers are produced by some competitors, but Sabre believes it can penetrate these markets because its products will be competitively priced. Although the economies of the Eastern European countries are expected to be somewhat stagnant, demand for personal computers is reasonably strong. The computers will be priced in Hungary s currency, the forint, and Sabre will receive 30 percent of the revenue generated from sales. Guidelines for Case Study: For this assignment, you are to evaluate the mini case study. The central issue in your analysis should be to describe what the case tells us about the theory and practice of International Finance Management. In analyzing the case, you should draw upon class readings, internet resources as well as personal experiences that may be relevant. Some general questions that you may want to consider include the following: What are the issues? Who are the actors? What are the organizational forces? What are the external forces? What theoretical perspectives or models help you understand what happened in the case? How? What does the case tell us about: The environment within which International Finance occurs? The nature of the International Finance Management system and the policy making process? The decision making process? Leadership and management? Administrative ethics? What recommendations would I make? How would I propose to do things differently? MBA 6651, International Finance 4

5 Once you have thoroughly analyzed the Case Study, you should compose a minimum two- page response to the following questions: 1. What are the organizational and external forces at work within this case? 2. Explain the environment within which this International Finance situation is occurring. 3. How might Sabre Computer Corporation finance their exports? Which methods of payments would be most beneficial for the organization? Within the confines of this case study, describe what occurs with the management of accounts during international cash transfers involving network capital. Portfolio Unit I Portfolio Assignment Choose a company Throughout this course, you will be following a Multinational Corporation (MNC) and performing a series of reports, case studies, and activities that intend for you to see how an organization operates on the international level. You may choose an MNC of your preference (to be approved by your professor) or from a list of pre-approved MNCs below: 1. American International Group 2. Capital One 3. Coca-Cola 4. Royal Dutch Shell 5. Wal-Mart These are only but a small fraction of the number of MNCs globally. If you want to see a full list, use a search engine to find an organization of your preference. For your first assignment, you are to choose an MNC that you want to research throughout the course and submit it for topic approval. Your topic approval should include the name of the MNC and a description of why the organization is considered an MNC, You should also choose an objective from this unit and perform a minimum 200 word analysis of how the objective applies to your chosen MNC. Unit II Portfolio Assignment For your second assignment, you are to perform some preliminary investigation into the MNC you chose by performing a brief survey and creating a portfolio. Start with the history of the organization and provide some brief background into how the organization entered the international stage and how globalization has played a part in the organization s growth. When creating the portfolio, you should provide examples of the types of transactions the MNC has made within foreign exchange markets and if there are netting arrangements the organization has made. You should also investigate the purpose of the company s actions and what this will mean for them in short-term and long-term arrangements with other corporations. For example: Did they have to purchase stock of a company Will they owe significant monies due to the foreign exchange deal Will this affect their cash flow Will the appreciation or depreciation of exchange rates affect their transaction These are just a few questions to get your mind jogging on this topic. Based upon your readings, you should be able to come up with some questions of your own that are more specific to the company you chose, and the types of transactions MBA 6651, International Finance 5

6 they make within the forex market. This assignment is important to understanding interactions companies make within international markets and how this affects everyone, down to the end-user. For an example of this, refer to Example 2.5 in Chapter 2 of the textbook. This Survey and Company Portfolio should be written in at least two pages, double spaced, with Times New Roman 12 pt. font. You should also use appropriate APA style writing and citations. Unit IV Portfolio Assignment For this unit, you are to submit an outline draft of the presentation you will submit in Unit VIII. The draft should contain brief introductions to the following areas: 1. Diversification 2. Investment 3. Management 4. Exchange rates 5. Currency forecast You will be discussing the organization s involvement in these areas in detail within Unit VIII; however, for purposes of this draft you are to submit the following items: A brief description of each term. A general description on how these affect an organization. How you think the organization you chose weighs in on these topics o For this portion, you should use the information you have on your organization to estimate or forecast what you believe the appropriate actions should be in these areas. At least three references with an annotated bibliography for each. o For information on annotated bibliographies, please view The Writing Center s tutorial and example document: Annotated bibliography example. Your draft should utilize APA style writing. Your outline draft and annotated bibliography should be at least two pages in length. You should contain enough information that your professor knows where you are going with your project and can provide guidance if necessary. Unit VIII Portfolio PowerPoint Presentation For your final submission, you are to create a presentation on the Multinational Corporation you have been following throughout this course. Your Unit VIII Portfolio submission should contain the following criteria: 1. Diversification 2. Investment 3. Management 4. Exchange rates 5. Currency forecast This criteria then needs to be broken up into the following sub-components, for which you are to develop your presentation: 1. Diversification: Analyze and explain the steps taken by the organization to diversify their assets and integrate themselves into the growing global economy. 2. Investment: Determine how the organization borrowed and financed debt and equity within foreign and domestic markets. Discuss the impact upon their overall investments. 3. Management: Examine how the organization managed their assets and liabilities and how this affected their profitability and growth. MBA 6651, International Finance 6

7 4. Exchange rates: Evaluate the effect of real exchange rates and the risk thereof, on the profitability of the organization, including the use of purchasing power parity. 5. Currency forecast: Discuss the effects of foreign currency swaps upon the organization and how this influenced their business decision making. You should create a PowerPoint Presentation on the Multinational Corporation you chose within the first couple units. The presentation should be a minimum of 25 slides and contain all the necessary information. Any charts, graphs, or pictures should be appropriately cited using APA style writing. APA Guidelines The application of the APA writing style shall be practical, functional, and appropriate to each academic level, with the primary purpose being the documentation (citation) of sources. CSU requires that students use APA style for certain papers and projects. Students should always carefully read and follow assignment directions and review the associated grading rubric when available. Students can find CSU s Citation Guide by clicking here. This document includes examples and sample papers and provides information on how to contact the CSU Success Center. Grading Rubrics This course utilizes analytic grading rubrics as tools for your professor in assigning grades for all learning activities. Each rubric serves as a guide that communicates the expectations of the learning activity and describes the criteria for each level of achievement. In addition, a rubric is a reference tool that lists evaluation criteria and can help you organize your efforts to meet the requirements of that learning activity. It is imperative for you to familiarize yourself with these rubrics because these are the primary tools your professor uses for assessing learning activities. Rubric categories include: (1) Assessment (Written Response) and (2) Assignment. However, it is possible that not all of the listed rubric types will be used in a single course (e.g., some courses may not have Assessments). The Assessment (Written Response) rubric can be found embedded in a link within the directions for each Unit Assessment. However, these rubrics will only be used when written-response questions appear within the Assessment. Each Assignment type (e.g., article critique, case study, research paper) will have its own rubric. The Assignment rubrics are built into Blackboard, allowing students to review them prior to beginning the Assignment and again once the Assignment has been scored. This rubric can be accessed via the Assignment link located within the unit where it is to be submitted. Students may also access the rubric through the course menu by selecting Tools and then My Grades. Again, it is vitally important for you to become familiar with these rubrics because their application to your Assessments and Assignments is the method by which your instructor assigns all grades. Communication Forums These are non-graded discussion forums that allow you to communicate with your professor and other students. Participation in these discussion forums is encouraged, but not required. You can access these forums with the buttons in the Course Menu. Instructions for subscribing/unsubscribing to these forums are provided below. Once you have completed Unit VIII, you MUST unsubscribe from the forum; otherwise, you will continue to receive updates from the forum. You will not be able to unsubscribe after your course end date. Click here for instructions on how to subscribe/unsubscribe and post to the Communication Forums. Ask the Professor This communication forum provides you with an opportunity to ask your professor general or course content questions. Questions may focus on Blackboard locations of online course components, textbook or course content elaboration, additional guidance on assessment requirements, or general advice from other students. MBA 6651, International Finance 7

8 Questions that are specific in nature, such as inquiries regarding assessment/assignment grades or personal accommodation requests, are NOT to be posted on this forum. If you have questions, comments, or concerns of a nonpublic nature, please feel free to your professor. Responses to your post will be addressed or ed by the professor within 48 hours. Before posting, please ensure that you have read all relevant course documentation, including the syllabus, assessment/assignment instructions, faculty feedback, and other important information. Student Break Room This communication forum allows for casual conversation with your classmates. Communication on this forum should always maintain a standard of appropriateness and respect for your fellow classmates. This forum should NOT be used to share assessment answers. Grading Portfolio Assignments 10%) = 30% Case Studies 10%) = 20% Article Critiques 10%) = 20% Unit VIII Portfolio PowerPoint Presentation = 30% Total = 100% Course Schedule/Checklist (PLEASE PRINT) The following pages contain a printable Course Schedule to assist you through this course. By following this schedule, you will be assured that you will complete the course within the time allotted. MBA 6651, International Finance 8

9 MBA 6651, International Finance Course Schedule By following this schedule, you will be assured that you will complete the course within the time allotted. Please keep this schedule for reference as you progress through your course. Unit I The Multinational Corporation Unit Study Guide Chapter 1: Globalization and the Multinational Corporation Chapter 2: The Foreign Exchange Market Portfolio Assignment Unit II Managing Risk Within the Foreign Exchange Markets Unit Study Guide Chapter 3: Forward Markets and Transaction Exchange Risk Chapter 4: The Balance of Payments Portfolio Assignment Unit III Purchasing Power Parity: Managing Global Exchange Rates Unit Study Guide Chapter 5: Exchange Rate Systems Chapter 8: Purchasing Power Parity and Real Exchange Rates Case Study MBA 6651, International Finance 9

10 MBA 6651, International Finance Course Schedule Unit IV Exchange Rates: Managing and Forecasting Risk Unit Study Guide Chapter 9: Measuring and Managing Real Exchange Risk Chapter 10: Exchange Rate Determination and Forecasting Portfolio Assignment Unit V Managing Debt on an International Level Unit Study Guide Chapter 11: International Debt Financing Article Critique Unit VI Financing Investments on an International Level Unit Study Guide Chapter 12: International Equity Financing Article Critique MBA 6651, International Finance 10

11 MBA 6651, International Finance Course Schedule Unit VII Financing Trade and Capital on a Global Scale Unit Study Guide Chapter 18: Financing International Trade Chapter 19: Managing Net Working Capital Case Study Unit VIII Foreign Currency Trends and Forecast Unit Study Guide Chapter 20: Foreign Currency Futures and Options Chapter 21: Interest Rate and Foreign Currency Swaps Portfolio PowerPoint Presentation MBA 6651, International Finance 11