F494 – International Financial Management

Indiana University

Fall 2007   

Dr. Steven Cox

Course Objectives

This course is designed to give you an understanding of the international environment in which firms and individuals operate and an introduction to international financial management. The course will provide you with an overview of the international financial markets and the relationship between these markets.  You will learn what factors influence exchange rates and how exchange rates affect trade, why countries adopt a particular exchange rate system (i.e. such Europe’s adoption of the euro) and the implications of this decision, and how international arbitrage links prices, exchange rates and interest rates around the world.  Understanding these factors is important to the evaluation of a country’s economic risk. The course will examine how firms manage the risks of doing business internationally using financial instruments such as forward, futures, and options contracts.  The course will examine international investment decisions, and how firms finance their projects in international capital markets. 

Additional Recommended/Required Reading

It is important that you keep up with current events in this course. Good sources for current events relevant to international finance are the The Wall Street Journal, The New York Times, the London Financial Times, Business Week, and The Economist. Note that you can access the WSJ, Financial Times (under the United Kingdom category), New York Times, and other newspapers through the University Library’s Factiva database (click on “Databases and Electronic Journals” on left of webpage, then click on “F” at top of page, then click on “Factiva”).

Throughout the course additional reading material will be provided (or referenced). Some of the articles may come from student summaries of recent articles relating to international finance (see below). The content and class discussion of these readings may be included in the course exams.

Grading 

 Grading Scale 

Exams
Unexcused absences will result in zeros on exams. Exams may be a combination of multiple choice, problems, and short essays.  The first exam will be in class on September 26^th. The second exam will be in class on October 31^st. The third exam will be in class on December 12^th.       

Attendance
Attendance is expected. To encourage it, with the exception of the first class date and the three exam dates, attendance at each class meeting is worth 5 points. In each of these 12 class meetings signatures will be collected near the beginning and the end of class. Any student found to be signing for another student will be subject to the terms of the honor code (see below).  Partial attendance will result in a prorated score. There is no mechanism for excused absence.

Current Event Summaries

Each student will prepare four brief (one page) summaries of recent (post August 20, 2007) articles relating to international finance from The Wall Street Journal, The New York Times, the London Financial Times, Business Week, or The Economist  magazine. Each one page report should be prepared in Microsoft Word and emailed to me as an attachment at my e-mail address listed above. The paper should briefly summarize the article’s main point(s) and relate the topic to a chapter covered in the course. Papers are worth 10 points each and will be graded on both content and writing quality. Be sure to include the source of the article. If it is available electronically include a hyperlink or paste the article into the email. 

Honor Code

Honoring academic integrity is a priority of the Kelley School of Business.  Students are expected to do their own work. Cheating will be punished with a failing grade and could result in dismissal from the Kelley School of Business. Plagiarism on papers has become a serious issue facing the integrity of the Kelley School of Business degree, and it will not be tolerated. Please also refer to the statement on academic integrity created by your own Student Advisory Board of the Kelley School of Business Indianapolis (http://kelley.iupui.edu/undergrad/KelleyAcademicMisconduct.pdf)

Expectations

Remember that you are enrolled in the Kelley School of Business, an internationally recognized business school. Each of you can succeed in this class if you devote time and energy to learning the material. This is not a class where you can learn (and pass) by simply showing up. You will need to read the chapters prior to coming to class to fully understand the material covered in class, and you will need to practice the assigned problems so that you become proficient in dealing with international finance issues.

I encourage questions and commentary in class. My formal office hours are after class on Wednesdays. However, I am willing to meet by appointment and I encourage e-mails and phone calls (use my mobile phone number provided above).        

If unusual circumstances cause you to arrive late, please take a seat quietly so you do not disturb the class. Do not leave the classroom during class except if you are feeling ill. We will have a break in the middle of the class. Turn off your cell phones and IPods during class. If you are taking notes with a laptop your attention should be fully focused on the class. That is, you may not multi-task. Finally, do not talk while other people are talking. This is disrespectful to your fellow students.

Class Schedule

*To be announced

IUPUI Principles of Undergraduate Learning

Core Communication and Quantitative Skills

The ability of students to write, read, speak, and listen, perform quantitative analysis, and use information resources and technology-the foundation skills necessary for all IUPUI students to succeed. This set of skills is demonstrated, respectively, by the ability to:

·                     express ideas and facts to others effectively in a variety of written formats

These skills are addressed through essay questions on exams and through a term paper requirement.

·                     comprehend, interpret, and analyze texts

These skills are addressed throughout the course as the student is required to read materials covering international financial markets and management.  Knowledge regarding international finance concepts must be applied to analyze and solve problems.

·                     communicate orally in one-on-one and group settings;

This skill is reflected class discussions of cases and problems and in group project presentation.

·                     solve problems that are quantitative in nature, and

This skill is practiced repeatedly through homework assignments that require solving assigned problems, and through exam problems.

·                     make efficient use of information resources and technology for personal and professional needs.

This skill is utilized in the research necessary to complete the term paper.

Critical Thinking

The ability of students to analyze carefully and logically information and ideas from multiple perspectives. This skill is demonstrated by the ability of students to:

·                     analyze complex issues and make informed decisions;

·                     synthesize information in order to arrive at reasoned conclusions;

·                     evaluate the logic, validity, and relevance of data:

·                     solve challenging problems, and;

·                     use knowledge and understanding in order to generate and explore new questions.

Integration and Application of Knowledge

The ability of students to use information and concepts from studies in multiple disciplines in their intellectual, professional, and community lives. This skill is demonstrated by the ability of students to apply knowledge to:

·                     enhance their personal lives;

·                     meet professional standards and competencies, and;

·                     further the goals of society.

Intellectual Depth, Breadth, and Adaptiveness

The ability of students to examine and organize disciplinary ways of knowing and to apply them to specific issues and problems.

·                     Intellectual depth describes the demonstration of substantial knowledge and understanding of at least one field of study.

·                     Intellectual breadth is demonstrated by the ability to compare and contrast approaches to knowledge in different disciplines.

·                     Adaptiveness is demonstrated by the ability to modify one’s approach to an issue or problem based on the contexts and requirements of particular situations.

Understanding Society and Culture

The ability of students to recognize their own cultural traditions and to understand and appreciate the diversity of the human experience, both within the United States and internationally. This skill is demonstrated by the ability to:

·                     compare and contrast the range of diversity and universality in human history, societies, and ways of life;

·                     analyze and understand the interconnectedness of global and local concerns, and;

·                     operate with civility in a complex social world.

Values and Ethics

The ability of students to make judgments with respect to individual conduct, citizenship, and aesthetics. A sense of values and ethics is demonstrated by the ability of students to:

·                     Make informed and principled choices regarding conflicting situations in their personal and public lives and to foresee the consequences of these choices, and;

·                     recognize the importance of aesthetics in their personal lives and to society.