فوركس ساتو

22 August 2009

National University of Singapore
School of Business
Department of Finance and Accounting
FNA 3115 International Financial Management 

Lecturer:     Dr. Sungil Cho

Session:    Semester 2, 2005/2006
Course Description:

This course is an introduction to international finance and international financial management. The purpose of this course is as follows:

The first half of the course will focus on the understanding of environment of International financial management so that students will be able to analyze the effect of changes in international economic environment. To achieve this, students need to understand the balance of payment and its economic linkage, the foreign exchange market, and the exchange rate determination, including currency futures and options markets. Students should be able to relate international parity conditions to exchange rate forecasting.

The second half of the course will focus on developing the capability to apply the basic understanding of modern corporate finance theory to the financial management of the multinational corporation. The emphasis will be on foreign investment decision making process, which includes the topics like foreign exchange risk management, cost of capital and capital budgeting for the multinational corporations as well as international portfolio investment. In this course, students are assumed to have the basic understanding of the modern finance theory from the previous coursework. (Prerequisite: corporate finance or equivalent.) 
Textbook:

Eiteman, Stonehill and Moffet, Multinational Business Finance, 10th edition. Addison Wesley, 2004.
Reference book:

Alan C. Shapiro, Multinational Financial Management, 7th edition, Wiley, 2003.

Ross, S., Westerfield, R. and B. Jordan, Essentials of Corporate Finance, Irwin (a textbook from the Financial Management course) or any textbook on introductory finance or investment.
Suggested sources for current issues:

•    Wall Street Journal, The Economist, Financial Times, Straits Times, Business Times.  (Full text via FACTIVA)
•    Business Week, CNBC.
•    http://www.oanda.com/   - Forex rate, news and forecasts.  
Sources for economic and financial data:

•    International Financial Statistics, IMF (CDROM available at Central Library Information Desk)
•    SOURCEOECD - Organization for Economic Cooperation and Development, OECD: Macroeconomic data and country report for OECD countries
•    PROQUEST ABI/Inform
•    FACTIVA: For newspaper articles.
•    OSIRIS: Company information

Grading:

The following weight scheme will be used to determine your final grade:                   
    Homework Assignments                       10%
    Midterm Test                                            30%
           Final Test                                             30%                           Group Project Reports and Discussions        30%      
Homework Assignments:
Each student will be asked to answer homework assignment questions at random during the class, which will make up the grade for homework assignments. Thus, each student should always be ready to answer questions on the assigned homework. At the end of the class, I will collect them simply to give you the incentive to do them by yourself, which will help you to understand the textbooks and prepare for the tests.
Group Project:
Students would form groups and are required to submit written case reports for the two cases assigned. The written case reports should be handed in to the instructor at the start of the class in which the case is scheduled to be discussed. The case reports should be no longer than 15 pages (double space with at least 10 pitch), accompanied by a title page that provide group member’s names.
Eah of the two reports and discussions would carry weightage of 15%. Students are responsible for selecting 4 to 5 members (including yourself). The names of the group members should be submitted to the instructor latest by 23 January 2006.
Case 1:  Exchange Rate Policy at the Monetary Authority of Singapore
Case 2: Foreign Exchange Hedging Strategies at General Motors
Class Schedule: 
      * The following schedule is a tentative one and it is subject to change by the
         instructor.
Week 1:  Financial Goals and Corporate Governance &
               The International Monetary System (Chapter 1 & 2)
[Supplementary reading]
- Singapore FX system
- Euro
  Europe’s new currency: Gambling on the Euro, The Economist, Jan. 2, 1999.
  Europe and the Euro: The death of the stability pact; The Economist, Nov 29, 2003.
  The European Central Bank: Haughty indifference, or masterly inactivity, The Economist, Jul.
       16, 2005.
- Currency board
  Illustrative Case: The Argentina Crisis of 2002, pp. 180-185, textbook by Eiteman et al.
Week 2: The Balance of Payment (Chapter 3)
[Supplementary reading]
- Macroeconomic Accounting Identities
  The International Flow of Goods, Services, and Capital, pp. 175-182, Reference book by
       Shapiro
- U.S. trade and budget deficit
  Forever Free: Can America go on borrowing abroad indefinitely? The Economist Sep. 24,
       2005.
  The Price of Privilege: Too much foreign money is bad for America’s economy, The
       Economist, Sep. 24, 2005
  The Great Thrift Shift, The Economist, Sep. 24, 2005
  Rebalancing Act, The Economist, Sep. 24, 2005.
   Tables and Charts: US Trade and Budget Deficits, and the Fall of the Dollar
     http://www.globalpolicy.org/socecon/crisis/tables.htm
Week 3: The Foreign Exchange Market &
               Foreign Currency Derivatives (Chapter 4 & 5)

[Supplementary reading]
- Foreign exchange market

Week 4: Holiday (Chinese New Year)
Week 5: International Parity Conditions (Chapter 6)

[Supplementary reading]
- Purchasing power parity
  Big MacCurrencies, Economist, Apr. 27, 2002.
  Finance And Economics: Burgers or beans? The Starbucks index; The Economist, Jan 17,
       2004.
Week 6: Foreign Exchange Rate Determination (Chapter 7
[Repot on Case 1 is due]
[Supplementary reading]
- China’s Foreign Exchange Rate
   China and World Economy: From T-shirts to T-bonds, The Economist, Jul. 30, 2005.
   The Revaluation of the Yuan: How far will it go? The Economist, Jul. 23, 2005.
Week 7: Mid-term Break
Week 8: Mid-term Test
Week 9: Transaction Foreign Exchange Exposure, Operating Foreign Exchange
               Exposure & Accounting Foreign Exchange Exposure (Chapter 8, 9 & 10)
Week 10: Global Cost and Availability of Capital, Sourcing Equity Capital &
                Financial Structure and International Debt (Chapter 11, 12 & 13)
[Supplementary reading]
- Chapters on Estimating Cost of Capital, any textbook on financial management.
Week 11: Interest Rate and Currency Swap (Chapter 14)
Week 12: Multinational Capital Budgeting (Chapter 18)
[Supplementary reading]
- Chapters on Basics of Capital Budgeting, any textbook on financial management.
Week 13: Political Risk Assessment and Management (Chapter 16)
[Supplementary reading]
- Estimating Cost of Capital
  The Discount Rate in Emerging Markets: A Guide, Spring/Summer, 2004, Journal of Applied Corporate Finance.
Week 14: International Portfolio Theory and Diversification (Chapter 20)                & Group Report Presentation and Review
[Repot on Case 2 is due]

Week 15: Final Test