FIN 1401 International Finance (54905)-Spring 1997 R. Nelson Prerequisites: FIN 1301 Text: Multinational Business Finance, Seventh Edition Eiteman, Stonehill and Moffett Addison Wesley; 1995 Additional Readings (on reserve in library) Grade Criteria: Three "Regular" Exams: 65% (I& II = 20% each, III = 25%) Three In-class "Exercises": 15% (5% each) Case Analyses (and attendance and participation) : 20% Sample Grading Scale: 80 - 82.4 = B- 82.5 - 87.4 = B 87.5 - 89.9 = B+ Course Objective: The primary objectives of this course are the examination of a) the international financial environment (including the balance of payments process and the foreign exchange markets) and b) the international finance function within a multinational firm. We will employ a combination of lectures, text problems and cases, as well as additional readings. Examinations will cover assigned text material, problems and cases covered in class, additional readings , as well as specific information (not necessarily in the text or readings) presented in class lectures. OVERVIEW OF COURSE CONTENT: I. Overview of International Monetary System; Balance of Payments Process; Foreign Exchange and Currency Options Markets. II. Exchange Rate "Exposure" Measurement and Management (Transaction and Accounting); Sourcing Debt and Equity Internationally; Interest Rate Risk Mgt. III. Capital Budgeting at the International Level; Political Risk Assessment (& Management); International Portfolio Investment Management. CLASS SCHEDULE Week Of Text Material Jan 9 Introduction Jan 14 Chpt 2: International Monetary System Jan 21 Chpt 3: Balance of Payments Process Jan 28 Exercise I (Balance of Payments Acct.) Chpt 4: Foreign Exchange Market (Intro.) Feb 4 Exercise II (Foreign Exch. Transactions) Chpt 5: Exchange Rate Forecasting and Covered Interest Arbitrage Feb 11 Foreign Exchange Markets (Continued) Feb 13 Exam I Feb 18 Chpt 7: Transaction Exposure Feb 25 Chpt 9: Accounting Exposure Exercise III (Exposure Management) Mar 4 Chpt 12& 13: Debt/Equity Financing Mar 11 Chpt 14 Interest Rate Risk Mgt. Mar 13 Exam II (Mar 17 - Mar 21) Spring Break! Mar 25 Chpt 18& 19: Capital Budgeting Political Risk Management Apr 1 Capital Budgeting (Casework) Apr 8 Chpt 20 Portfolio Investment Apr 15 Casework on International Portfolio Mgt Apr 22 Chpt 23 Advanced Currency Risk Mgt. Tuesday Apr 29 (3 - 5 p.m.) Exam III