International
Finance, FINC 562
Spring
2011 Professor Martin Evans
Prerequisite Financial
Markets FINC 551
Description:
This
module is about the international financial markets and their financial
instruments. The central themes are currency exchange rates, related
derivative
securities and international asset allocation. This module is designed
from the
viewpoint of someone that participates in the international financial
environment, whether this person is a CFO, General Manager or Treasurer
of an
international firm, an investment banker, an investor, or a consult.
Office hours: TBA at first class
Email: evansm1@georgetown.edu
Phone:
202-687-1570
Module mechanics: The module comprises of 7 weekly meetings.
Classes
will be mixed between a lecture format, case presentations, and case
discussions. There are three cases.
Grading: Your Grade for the Module will be
apportioned as
follows:
¥ Final Exam (Take Home) 50%
¥ Cases
40%
¥ Class Participation
10%
The final exam is cumulative and will cover
all
material in the module. Questions will be both qualitative and
quantitative.
Class participation will be judged according to your contribution to
the class,
not the number of comments.
Groups for
cases: For the cases,
students will
form groups of maximum size four. Each group will submit a
write-up for
the cases. Every student in the group must retain a copy of the
write-up
and bring it to the class where the case is discussed. As with actual
practice
in business, all of the cases are written to focus on issues, not
answers, and
as such are ambiguous. There are often no Òright
answersÓ to cases, only
good arguments and bad arguments for taking particular actions or decisions. There is sometimes a limited
amount of
quantitative information on which to make a decision and thus it is
often
impossible to compute a precise numerical answer, as might be done in
other
finance courses. Groups will also be asked to prepare a (short)
presentation on a particular aspect of cases.
Reading: The text for the course is a customized
version of International
Financial Management, 5Õth
Edition, by Eun and Resnick.
Instructions on
how to obtain an electronic copy of the text are available on this
Blackboard site. Lecture notes, any
additional readings, and case instructions will also be made available
via
Blackboard.
Class Attendance
and Academic Honesty: All
students are expected to adhere to the MSB policy on class attendance
and to
strictly abide by the MSB honor code.
Agenda
Date |
Topic |
Readings* |
Case Preparation |
Jan 11th. |
1.
Introduction 2.
The International Monetary System 3.
The Balance of Payments 4.
International Debt Dynamics |
Chapters 1 & 2. |
Case 1: Foreign Direct Investment and
Irelands Tiger Economy |
Jan 18th. |
1.
The Foreign Exchange Market 2.
Spot and Forward Rates 3.
Case 1: Presentations |
Chapter 3. |
Case 2: Murphy and Sons |
Jan 25th. |
1.
Exchange Rate Determination 2.
International Parity Conditions 3.
Case 2: Presentations |
Chapter 4. |
Case 3: Groupe
Ariel S. A. Parity Conditions |
Feb 1st. |
1.
International Equity Markets 2.
Portfolio Investment 3.
Case 3 Presentations |
Chapters 8 & 9. |
Case 4: Innocents Abroad: Currencies and
International Stock Returns |
Feb 8th. |
1.
Hedging with Forwards 2.
Hedging with Futures 3.
Case 4: Presentations |
Chapters 5 (on Futures), 6 & 7. |
Case 5: Lufthansa |
Feb 15th. |
1.
Pricing Currency Options 2.
Hedging with Currency Options 3.
Case 5: Presentations |
Chapter 5 (on Options) |
Case 6: Porsche Exposed |
Feb 22th. |
1.
International Capital Structure and the
Cost of Capital 2.
International Capital Budgeting 3.
Case 6: Presentations |
Chapters 10 & 11. |
|
* Note that the chapters
numbers refer to the chapters
in the customized text. NB