This course is designed to acquaint students with tools and techniques used to manage the finance function of a multinational corporation (MNC). Topics included in this course are: financial environment in which an MNC operates, exchange rate determination, measurement and management of various exchange rate exposure, international capital budgeting, multinational cost of capital and capital structure of an MNC.
Introduction to Finance, FIN201.
- It is the student’s responsibility to gather information about the assignments and covered topics during the lectures missed. Regular class attendance is mandatory. Points will be taken off for missing classes. Without 70% of attendance, sitting for final exam is NOT allowed. According to IUB system students must enter the classroom within the first 20 minutes to get the attendance submitted.
- The date and syllabus of quiz, midterm and final exam is already given here, however, announcements will be given ahead of time. There is NO provision for make-up quizzes.
- The reading materials for each class will be given prior to that class so that student may have a cursory look into the materials.
- Class participation is vital for better understanding of sociological issues. Students are invited to raise questions.
- Students should take tutorials with the instructor during the office hours. Prior appointment is required.
- Students must maintain the IUB code of conduct and ethical guidelines offered by the School of Business.
- Students must refrain from any type of cheating and/or plagiarism in a course. Any student acting otherwise will receive an “F” grade in the course. School of Business, IUB, maintains a zero tolerance policy regarding violation of academic integrity.
- Students are not allowed to keep bags, handouts, books, mobile phones, smart watches or any other smart electronic devices with them during any exam. Students are advised to keep everything in the front of the class room before the exam starts. Please note that, just carrying any smart electronic devises (even if the devise is turned off or put it in silent mode) during the exam will be considered as “cheating”. Moreover, during the exam, anything written on hand palms (or anywhere else) and carrying paper materials (whatever is written) will be considered as “cheating”. Any sorts of “cheating” will result in an “F” grade with no exception. During the exam, students are only allowed to carry pen, pencil, eraser, sharpener, ruler, highlighter and calculator in a clear plastic bag.
| Type of Evaluation | Nos. | Weight |
| Class Attendance and Participation | 100% | 5 |
| Quiz (Best two will be counted) | 3 | 15 |
| Project and Presentation | 01 | 15 |
| Midterm Exam | 01 | 30 |
| Final Exam | 01 | 35 |
| Total | 100% |
[Class attendance is mandatory; failure to do so may deduct the final marks]
The following chart will be followed for grading. This has customized form the guideline provided by the school of Business.
| A | A- | B+ | B | B- | C+ | C | C- | D+ | D | F |
| 90-100 | 85-89 | 80-84 | 75-79 | 70-74 | 65-69 | 60-64 | 55-59 | 50-54 | 45-49 | 0-44 |
* Numbers are inclusive
The course will be based mostly on the following books [some other books and journals may be referred time to time]:
- International Financial Management by Jeff Madura, 11th Edition.
MORE READINGS:
- Foundations of Multinational Financial Management by Alan C. Shapiro, Fourth Edition.
- All other supporting materials (e.g. academic research papers) will be provided in the class.
Link to virtual learning system: http://103.254.86.4/sb/ (School of Business – Faculty name- Login as a guest- password is 1234).
| Sessions | Topic | Learning Outcomes | Readings |
| Session -1 | Introduction | Introduction to International Financial
Management Explanation of Course Outline |
Course
Outline |
| Session -2 | International Financial
Management: An Overview |
To know the management goal and organizational structure of the MNC,
To understand the key theories that justify international business,
To have clear idea about the common methods used to conduct international business
To learn a model for valuing the MNC. |
Jeff Madura,
Chapter1
Pages 3-28
Handout available on virtual learning system |
| Session -3 | International Financial
Management: An Overview |
To know the management goal and organizational structure of the MNC,
To understand the key theories that justify international business,
To have clear idea about the common methods used to conduct international business
To learn a model for valuing the MNC. |
Jeff Madura,
Chapter1
Pages 3-28
Handout available on virtual learning system |
| Session -4 | International Financial | To know the management goal and organizational structure of the MNC, | Jeff Madura, Chapter1 |
| Management: An Overview |
To understand the key theories that justify international business,
To have clear idea about the common methods used to conduct international business
To learn a model for valuing the MNC. |
Pages 3-28
Handout available on virtual learning system |
|
| Session -5 | Exchange Rate
Determination
|
Understand how exchange rate movements are measured,
Understand how the equilibrium exchange rate is determined,
Understand factors that affect the equilibrium exchange rate,
Understand the movements in cross exchange rates,
Understand how financial institutions attempt to capitalize on anticipated exchange rate movements.
Relevant Problem Solving from Text
|
Jeff Madura,
Chapter4
Pages 99-122
Handout available on virtual learning system |
| Session -6 | Exchange Rate
Determination
|
Understand how exchange rate movements are measured,
Understand how the equilibrium exchange rate is determined,
Understand factors that affect the equilibrium exchange rate,
Understand the movements in cross exchange rates,
Understand how financial institutions attempt to capitalize on anticipated exchange rate movements.
Relevant Problem Solving from Text
|
Jeff Madura,
Chapter4
Pages 99-122
Handout available on virtual learning system |
| Quiz 1 | Fundamental of International Finance | ||
| Session-7 | Exchange Rate
Determination |
Understand how exchange rate movements are measured,
Understand how the equilibrium exchange rate is determined,
Understand factors that affect the equilibrium exchange rate,
Understand the movements in cross exchange rates,
Understand how financial institutions attempt to capitalize on anticipated exchange rate movements.
Relevant Problem Solving from Text |
Jeff Madura,
Chapter4
Pages 99-122
Handout available on virtual learning system |
| Session -8 | Exchange Rate
Determination |
Understand how exchange rate movements are measured,
Understand how the equilibrium exchange rate is determined,
Understand factors that affect the equilibrium exchange rate,
Understand the movements in cross exchange rates,
Understand how financial institutions attempt to capitalize on anticipated exchange rate movements.
Relevant Problem Solving from Text |
Jeff Madura,
Chapter4
Pages 99-122
Handout available on virtual learning system |
| Session -9 | Currency
Derivatives
|
Understand how forward contracts are used to hedge based on anticipated
exchange rate movements
To have in depth knowledge about how currency futures contracts are used to speculate or hedge based on anticipated exchange rate movements
To have in depth knowledge about |
Jeff Madura,
Chapter 5
Pages 123- 172
Handout available on virtual learning |
|
Quiz 2 |
how currency options contracts are used to speculate or hedge based on anticipated exchange rate movements.
Relevant Problem Solving from Text
Concepts of Exchange rate determination |
system | |
| Session -10 | Currency
Derivatives |
Understand how forward contracts are used to hedge based on anticipated
exchange rate movements
To have in depth knowledge about how currency futures contracts are used to speculate or hedge based on anticipated exchange rate movements
To have in depth knowledge about how currency options contracts are used to speculate or hedge based on anticipated exchange rate movements.
Relevant Problem Solving from Text |
Jeff Madura,
Chapter 5
Pages 123- 172
Handout available on virtual learning system |
| Session -11 | International
Arbitrage and Interest Rate Parity
Project |
To understand the conditions that will result in various forms of international arbitrage and the realignments that will occur in response,
To have clear idea about the concept of interest rate parity
Understand the variation in forward rate premiums across maturities and over time.
Relevant Problem Solving from Text International Financial Operations in MNCs in Bangladesh |
Jeff Madura,
Chapter 7
Pages 211- 240
Handout available on virtual learning system |
| Session -12 | International
Arbitrage and Interest Rate Parity
|
To understand the conditions that will result in various forms of international arbitrage and the realignments that will occur in response,
To have clear idea about the concept of interest rate parity |
Jeff Madura,
Chapter 7
Pages 211- 240
Handout |
|
|
Understand the variation in forward rate premiums across maturities and over time.
Relevant Problem Solving from Text |
available on virtual learning system | |
| Session -13 | International
Arbitrage and Interest Rate Parity |
To understand the conditions that will result in various forms of international arbitrage and the realignments that will occur in response,
To have clear idea about the concept of interest rate parity
Understand the variation in forward rate premiums across maturities and over time.
Relevant Problem Solving from Text |
Jeff Madura,
Chapter 7
Pages 211- 240
Handout available on virtual learning system |
| Session -14 | Midterm Exam | CHAPTERS 1, 4 , 5 & 7 | |
| Session -15 | Relationships among Inflation,
Interest Rates, and Exchange Rates |
To have clear understanding about the purchasing power parity (PPP) theory and its implications for exchange rate changes,
To understand the international Fisher effect (IFE) theory and its implications for exchange rate changes
To learn to compare the PPP theory, the IFE theory, and the theory of interest rate parity (IRP), which was introduced in the previous chapter
Relevant Problem Solving from Text
|
Jeff Madura,
Chapter 8
Pages 241- 280
Handout available on virtual learning system |
| Session -16 | Relationships among Inflation, Interest Rates, and Exchange
Rates |
To have clear understanding about the purchasing power parity (PPP) theory and its implications for exchange rate changes,
To understand the international Fisher effect (IFE) theory and its implications for exchange rate changes |
Jeff Madura,
Chapter 8
Pages 241- 280
Handout available on |
|
To learn to compare the PPP theory, the IFE theory, and the theory of interest rate parity (IRP), which was introduced in the previous chapter
Relevant Problem Solving from Text
Relevant Problem Solving from Text
|
virtual learning system | ||
| Session -17 | Relationships among Inflation, Interest Rates, and Exchange
Rates |
To have clear understanding about the purchasing power parity (PPP) theory and its implications for exchange rate changes,
To understand the international Fisher effect (IFE) theory and its implications for exchange rate changes
To learn to compare the PPP theory, the IFE theory, and the theory of interest rate parity (IRP), which was introduced in the previous chapter
Relevant Problem Solving from Text
|
Jeff Madura,
Chapter 8
Pages 241- 280
Handout available on virtual learning system |
| Session -18 | Forecasting
Exchange Rates |
To understand how firms can benefit from forecastingexchange rates
To have clear concept regarding the common techniques used for forecasting
To acquire skills about how forecasting performance can be evaluated
Relevant Problem Solving from Text |
Jeff Madura,
Chapter 9
Pages 283- 310
Handout available on virtual learning system |
| Session -19 | Forecasting
Exchange Rates |
To understand how firms can benefit from forecastingexchange rates
To have clear concept regarding the common techniques used for forecasting
To acquire skills about how |
Jeff Madura,
Chapter 9
Pages 283- 310
Handout available on |
| forecasting performance can be evaluated
Relevant Problem Solving from Text |
virtual learning system | ||
| Session -20 | Forecasting
Exchange Rates |
To understand how firms can benefit from forecastingexchange rates
To have clear concept regarding the common techniques used for forecasting
To acquire skills about how forecasting performance can be evaluated
Relevant Problem Solving from Text |
Jeff Madura,
Chapter 9
Pages 283- 310
Handout available on virtual learning system |
| Session -21 | Multinational
Capital Budgeting
Quiz 3 |
To understand how to compare the capital budgeting analysis of an MNC’s subsidiary versus its parent
To have clear idea about how multinational capital budgeting can be applied to determine whether an international project should be implemented
To understand how multinational capital budgeting can be adapted to account for special situations such as alternative exchange rate scenarios or when subsidiary financing is considered
To know how the risk of international projects can be assessed Relevant Problem Solving from Text
Forecasting Techniques
|
Jeff Madura,
Chapter 14
Pages 421- 456
Handout available on virtual learning system |
| Session -22 | Multinational
Capital Budgeting |
To understand how to compare the capital budgeting analysis of an MNC’s subsidiary versus its parent
To have clear idea about how multinational capital budgeting can be |
Jeff Madura,
Chapter 14
Pages 421- 456
|
| applied to determine whether an
international project should be implemented
To understand how multinational capital budgeting can be adapted to account for special situations such as alternative exchange rate scenarios or when subsidiary financing is considered
To know how the risk of international projects can be assessed
Relevant Problem Solving from Text |
Handout available on virtual learning system | ||
| Session -23 | Multinational Cost of Capital and Capital Structure | To understand the key components of an MNC’s capital
To know the factors that affect an MNC’s capital structure
To know about the interaction between a subsidiary and parent in capital structure decisions
To understand how the cost of capital is estimated
To have clear idea about why the cost of capital varies among countries.
Relevant Problem Solving from Text |
Jeff Madura,
Chapter 17
Pages 507- 530
Handout available on virtual learning system |
| Session -24 | Multinational Cost of Capital and Capital Structure | To understand the key components of an MNC’s capital
To know the factors that affect an MNC’s capital structure
To know about the interaction between a subsidiary and parent in capital structure decisions
To understand how the cost of capital is estimated
To have clear idea about why the cost |
Jeff Madura,
Chapter 17
Pages 507- 530
Handout available on virtual learning system |
Students who are willing to audit the course are welcome during the first two classes and are advised to contact the instructor after that.
Plagiarism- that is the presentation of another person’s thoughts or words as though they were the students’ own – must be strictly avoided. Cheating and plagiarism on exam and assignment are unacceptable.
Please see the green book for further information about academic regulation and policies, including withdrawal and grading, apples and penalties for pilgrims and academic misconduct.
Students with disabilities are required to inform the School of Business/ Department of Economics of any specific requirement for classes or examination as soon as possible.