Course Description

This course considers financial issues associated with the operation of a firm in the international environment.  The course will focus on the three complications that make corporate financial decision making more complex for internationally oriented firms than purely domestic firms, namely exchange rates, international taxation, and geographic/political risk.  Specifically, the course will examine the following issues: exchange rate basics and forecasting, the identification, measurement, and management of exchange rates exposure; the basic issues in international taxation; the evaluation cross-border projects, the possibilities for financing in a global market, and methods for evaluating the performance of foreign operations.  While the course focus on understanding the basic theory behind these issues, it also examines empirical evidence and examples of firms' real world activities with the goal of preparing a student for a career dealing with financial decision making in an international environment. The course is mostly lecture style with some discussion of topics through case studies.  The student requirements are two exams, three problem sets and three case studies, and a capstone modeling/valuation project that they work on over the semester.

Course Grading

Each student will be responsible for writing two exams.  The first will be TUESDAY MARCH 4, 2008 during class and the second is the during the final exam period, TUESDAY MAY 6, 2008  at 1:00 pm.  Students will also be responsible, as part of a project group, for handing in three quantitative problem sets and several case study write-ups, including a cap stone case study.  The final grade will be determined by the following weights:

The group participation score is based upon an evaluation by your group members at the end of the final exam. General class participation, such as attending class and actively discussing materials and other issues in class will be evaluated by the instructor over the term and used in borderline cases.  Please note in advance of taking the course that about 50% of the grade is determined by group activities.

Auditing

Auditing is allowed only if space if available and with the permission of the professor. To receive an official audit for this course on your transcript, you must attend at least 10 sessions and complete and turn in at least one case study and at least half of the questions on two problem sets.

Course Materials

The core materials for the course consist of a textbook and reserve readings (also some readings on the web).  Lecture notes will be available on the course web page on the Monday morning each week prior to class.  Other items generated from my printer, such as problem sets and case questions, solutions and classnotes will also be available on the course web page.  Some additional readings on materials related to the course over the term may be provided throughout the course. The textbook for the course is:

International Financial Management, (4^th) Edition, by Eun and Resnick, Irwin, 2006 (IFM)

I also highly recommend that you dust off an introductory corporate finance book, as it will occasionally prove useful throughout the term.   

For those students wishing to have additional discussions on the topics covered in the course as well as some material on related topics not covered in this course, I recommend the following additional texts on international financial management: 

      Multinational Financial Management, by A.C. Shapiro, Published by Wiley.

      Multinational Finance, by K. Butler, Published by Southwestern.

Any of these should be available for order through an on-line bookstore or can be found in the Books for Finance Students section of my website.

In addition to the text book and some required readings in the course pack, people interested in a career in international finance will wish to stay on top of current issues by following additional sources of information.  I highly recommend that all students read:

Please click here for student subscription info.

Groups

Each member of the class is expected to join a project group consisting of three to four students.  This group will prepare problem sets and homework cases (note: a student may elect to submit a minority, opinion on an issue if desired).  Groups should be formed in the first week of the term as the first problem set is assigned after the first lecture.  Once a group is formed, it can only be changed with the permission of the instructor and all parties involved, so please choose your groups carefully.  Problems such as free riding, shirking, etc., can and do arise in groupwork, so be sure that you and your group internalize such issues when forming.  As an attempt to control such deviant behavior, group members will be asked to confidentially evaluate the participation of the other group members at the end of the year.  These evaluations will play a role in the class participation portion of the grade.  Note that this approach is not perfect and problems occasionally do arise; however, group work is common in this field and you need to get used to dealing with group dynamics. Each group should choose a unique name to identify themselves and use this on all turned in problem sets and cases.  Problems sets and cases may be required to be submitted electronically.

Exam Policy

Scheduling conflicts with exam dates must be cleared well in advance with the instructor.  Rescheduled exams must be taken earlier than the scheduled exam.

Cases and Problem Sets

Finance is an analytic field, and as such, this course will require students to do calculations and numerical analysis.  There will be several homework cases and problem sets throughout the term.  These are to be handed in at the time and date as it appears on the course schedule.  You should try to keep homework and case write-ups short and to the point (2 – 3 pages is about all that I will read plus possible additional supporting documents, i.e. spreadsheets etc).  Concise writing is an important skill in the financial world.  A few of the cases will be the topic of a class discussion for part of the next session and a copy of the write-up must be turned at the beginning of class.  For the problem sets and non-discussed cases, an instructor’s solution will be provided.  As with the real world, the purpose of the cases is to understand issues, not specific answers, and as such, they are somewhat ambiguous.  There are no "right answers" to the cases, only good arguments and weak arguments for taking particular actions or decisions.

Capstone Case

Early in the term, I will hand out a capstone case for the course, GM’s Plant X – Brazil that each research group will have the remainder of the semester to work on.  It is project evaluation case that requires the students to build a fully developed set of financials for the project in an Excel spreadsheet (Balance Sheet, Income Statement, Statement of Cash Flows, Debt Amortization, etc).  During the first part of the semester, students get to work on developing their financial model building skills.  Groups are required to turn in a functioning set of financial statements by noon on FRIDAY MARCH 14, 2008.  Subsequent to that date, the model will be used to financially evaluate the viability of the project from the point of view of the parent, General Motors, USA.  Discussions/presentations of the evaluation of the project using the model will be the topic of the last lecture in the course on April 22, 2008, at which time the final write ups are due.  This capstone casework will count for 10% of the course grade.   

Contact

My office hours are Monday 10:30 - 12:00 pm and Wednesday 10:45 – 12:15 pm in my office, Rm 704, Suite 704 BOB (1717 Mass). You can also stop by at other times for short questions.  For longer contacts, please call to make an arrangement.  My office phone is 663-7731.  I also use e-mail and often prefer to answer questions this way.  My email address is bodnar@jhu.edu.  If I am in the office, I typically respond to email within a few hours.  The course will also have a webpage with an announcement page.  The course webpage can be found on my webpage at http://www.sais-jhu.edu/faculty/bodnar.  Access information for course downloads will be provided to the students on the first day of class.

page last updated on 1/19/08