SAIS 380.761
Multinational Corporate Finance

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Syllabus

Prof Gordon Bodnar
Spring 2008

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Readings denoted with a (IFM) are from the textbook, those denoted (W) are on the web, and those with and (R) are on reserve in the library or via ERES (access word is euro08  i.e.,"euro zero eight").

DATE

LEC #

TITLE

READINGS

ASSIGNMENT

1/22

1

Exchange Rates, Real and Forecasted

• IFM Chpts. 5 and 6

 Problem Set #1 - Exchange Rates - Due 2/5 (classtime)  

1/29

2

Measuring Multinational Activities

• IFM Chpt. 10
• Accounting for Multinational Operations , Bodnar classnote (W)
• Nike 2007 Annual Report (10K section)   or go to download page

Problem Set #2 - International Measurement - Due 2/12 (classtime)

2/5

Exchange Rate Exposure

• Chpt 8 pp. 192 – 193, Chpt 9 pp. 225 - 228 
• Corporate Exposures to Exchange Rates, - classnote (W)
• On the Measurement of Operating Exposure to Exchange Rates: A Conceptual Approach," Flood and Lessard  (R)

EXTRA: Exchange Rate Exposure: A Simple Model -  by Bodnar and Marston (W)

2/12

Measuring Exposure and Deciding Whether to Manage It

• Chpt 9 pp. 228 - 234
• Identifying, Measuting and hedging Curerncy Risk at Merck, Lewent and Kearney (R)
• The Exchange Rate Exposure of U.S. Multinational Firms, Jorion (R)
• The Rationale for Risk Management, Smith et al., 1994. (R)

EXTRA:  Perils of the Hedge Highwire, Businessweek, (R)

Discussion Case #1: Jaguar plc, 1984 (R) - Due 2/19 (bring to class)

5

Discussion of Jaguar case (first half)
Managing Exposure - Transaction Exposure

• Chpt 8 pp. 194 – 211
• Techniques for Managing Economic Exposure, Bodnar classnote.

    Problem Set #3 - Hedging - Due FRIDAY 2/29  12:00pm

2/26

6

Managing Exposure - Operating Exposure

• IFM Chpt 9 pp. 234 – 240, Chpt 14, and Chpt 7 pp. 172 - 184
• Wharton 1998 Survey of Risk Management by US Non-Financial Firms (W)

EXTRA:

• The New Standard on Accounting for Derivative Instruments and Hedging  Activity, PwC, (R) 

 Sample Midterrm Exams

3/4

March 4 MIDTERM EXAM  in class (Lectures 1- 6) closed book   

3/11

7

International Taxation and Transfer Pricing

• IFM:Chpts. 21 and 19 pp. 476 – 480
• Taxation of International Operations, Baker, (R)
• Transfer Pricing,  Chpt 5 by Schadewald and Misey (W)

EXTRA:

• KPMG Corporate Tax Rate Survey 1993-2006 KPMG  
• KPMG Global Transfer Pricing Review, 2005  KPMG

Homework Case : Dallas Semiconductor (R) Due - 3/25 (classtime)

SPRING BREAK          

8

• IFM Chpt. 18 and 16
• Valuation in Emerging Markets - McKinsey Quarterly (OL)

 More Info on Political Risk Insurance:

• OPIC - US government political risk provider  - info and rates
• MIGA - World Bank political risk insurer - info center and providers
• AIG - their political risk brochure

4/1

9

International Investment Analysis –  Foreign Cost of Capital

• IFM Chpt. 15 and 17
• Globalization of Capital Markets and the Cost of Capital, Stulz, (R)
• Emerging Markets aren't as Risky as You Think - McKinsey Quarterly

Summary of wild ways to estimate cost of capital in EM when expected losses from EM risks are not accounted for in cash flows  - article

4/8

10

Discussion of Lafarge Case (first 75 minutes)
Evaluation of Performance of Foreign Operations

• Measuring the Performance of Operations Subject to Fluctuating Exchange Rates, Flood and Lessard, (R)

Discussion Case: GM case Part II - Due 4/22 (classtime)  

4/15

11

Global Financing Choices

• IFM Chpts. 11,12 and 13
• Guidelines for Global Financing Choices, Lessard and Shapiro, (R)

Extra:

• Summary of Global Capital Markets - 2007 - McKinsey Quarterly
• BIS Survey on International Securities and Derivatives

4/22

Discussion of GM Plant X - Brazil Case
Review for second exam

• GM case study submission part II

5/6

 Syllabus

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