FIN 535 – International Finance
COURSE DESCRIPTION
Presents international financial tools, applications, and concepts used in formulating effective financial management strategies. Examines fundamental international financial relationships and transactions among firms, foreign exchange rate determination and forecasting, foreign exchange risk and exposure, balance of payment accounting, and evolution of the international monetary system. Analyzes special topics such as working capital management strategies, capital budgeting, cost of capital, and optimal capital structure in the context of international operations.

INSTRUCTIONAL MATERIALS
Required Resources Madura, J. (2012). International financial management (11th ed.). Mason, OH: South-Western, Cengage Learning. Supplemental Resources Al Nasser, O.M. (2010). How does foreign direct investment affect economic growth? The role of local conditions. Latin American Business Review 11, 111-139. Kornecki, L. & E. M. Ekanayake. (2011). Inward FDI stock in the U.S. economy and state based determinants. Advances in Management, 4(6), 13-24. Ranjan, V. & Agrawal, G. (2011). FDI inflow determinants in BRIC countries: A panel data analysis. International Business Research, 4(4), 255-263. United Nations. (2011). Foreign Direct Investments in LDCs: Lessons learned from the decade 20012010 and the way forward. United National Conference on Trade and Development.

COURSE LEARNING OUTCOMES
1. Compare multinational financial management to domestic financial management. 2. Apply the key trade theories and methods, and analyze the factors that influence trade and capital flows. 3. Evaluate the major international financial markets to determine effective methods for financing global business operations. 4. Analyze the economic variables that influence exchange rate movements and equilibrium price to anticipate fluctuations and minimize the negative impact on international business operations. 5. Formulate strategies to use currency derivatives for foreign exchange risk management and for speculation by multinational corporations. 6. Apply the concepts of international arbitrage, exchange rate trend analysis, Interest Rate Parity (IRP), Purchasing Power Parity (PPP), and the International Fisher Effect (IFE) theories to forecast exchange rate changes and market conditions. 7. Analyze the exchange rate risks associated with transaction, economic, and translation exposure in global markets, and develop risk management strategies to minimize the impact on international business operations. 8. Apply a hedging technique to manage the risks of transaction, economic, and translation exposures. 9. Evaluate capital budgeting projects (foreign investments and acquisitions) in order to make foreign investment decisions. 10. Conduct country risk analysis to support the formulation of foreign investment strategies. 11. Formulate an overall corporate financial strategy to support short-term and long-term financing of global operations including sources of capital, interest rate analysis, tax considerations, trade
©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 1 of 12

FIN 535 – International Finance finance, and working capital requirements. 12. Evaluate the sources of financing international trade and short-term liquidity needs. 13. Analyze international cash management techniques to optimize cash flows from multinational company perspectives. 14. Use technology and information resources to research issues in international finance. 15. Write clearly and concisely about international finance using proper writing mechanics.

WEEKLY COURSE SCHEDULE
The standard requirement for a 4.5 credit hour course is for students to spend 13.5 hours in weekly work. This includes preparation, activities, and evaluation regardless of delivery mode. Week 1 Preparation    Reading(s) o Chapter 1: Multinational Financial Management: An Overview Case Study o Blades, Inc. Case: Decision to Expand Internationally Preparation, Activities, and Evaluation Points

e-Activity o Use the Internet or Strayer Library to locate one article focusing on multinational financial management and one article focusing on domestic financial management. Be prepared to discuss Activities  Discussions Evaluation  2 Homework o Chapter 1: Problems 17, 21, 22, and 27 20

16

Preparation  Reading(s) o Chapter 2: International Flow of Funds o Chapter 3: International Financial Markets Case Studies o Blades, Inc. Case: Exposure to International Flow of Funds (Chapter 2) o Blades, Inc. Case: Decisions to Use International Financial Markets (Chapter 3)



e-Activity o Visit the Bureau of Economic Analysis’ Website, located at http://www.BEA.gov, to look at how the balance of trade has changed over the last 12 months. Be prepared to discuss. Activities  Discussions Evaluation  Quiz 1: Chapter 1 20 15



©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 2 of 12

FIN 535 – International Finance
 Homework o Chapter 2: Problems 12, 14, and 15 o Chapter 3: Problems 21, 22, and 23 Reading(s) o Chapter 4: Exchange Rate Determination o Chapter 5: Currency Derivatives Case Studies o Blades, Inc. Case: Assessment of Future Exchange Rate Movements (Chapter 4) o Blades, Inc. Case: Use of Currency Derivative Instruments (Chapter 5) 12 12

3

Preparation 



e-Activity o Visit the Joint Economic Committee Republicans Website, located at http://jec.senate.gov/republicans/public/index.cfm?p=Home, to search for information about economic conditions within the past 10 years. Be prepared to discuss. Activities  Discussions Evaluation   Quiz 2: Chapters 2 and 3 Homework o Chapter 4: Problems 18, 23, and 28 o Chapter 5: Problems 24, 25, and 30 Reading(s) o Chapter 6: Government Influence on Exchange Rates o Chapter 7: International Arbitrage and Interest Rate Parity 20 30 12 12



4

Preparation 

Case Studies o Blades, Inc. Case: Assessment of Government Influence on Exchange Rates (Chapter 6) o Blades, Inc. Case: Assessment of Potential Arbitrage Opportunities (Chapter 7) Activities  Discussions Evaluation   Quiz 3: Chapters 4 and 5 Homework o Chapter 6: Problems 17, 18, and 26 o Chapter 7: Problems 23, 26, 34, and 36 Reading(s) o Chapter 8: Relationships among Inflation, Interest Rates, and 20 30 12 16



5

Preparation 

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 3 of 12

FIN 535 – International Finance o  Exchange Rates Chapter 9: Forecasting Exchange Rates

Case Studies o Blades, Inc. Case: Assessment of Purchasing Power Parity (Chapter 8) o Blades, Inc. Case: Forecasting Exchange Rates (Chapter 9) Activities  Discussions Evaluation   Midterm Exam: Chapters 1 through 7 Homework o Chapter 8: Problems 24, 35, 44, and 49 o Chapter 9: Problems 21, 23, and 32 Reading(s) o Chapter 10: Measuring Exposure to Exchange Rate Fluctuations o Chapter 11: Managing Transaction Exposure o Chapter 12: Managing Economic Exposure and Translation Exposure Case Studies o Blades, Inc. Case: Assessment of Exchange Rate Exposure (Chapter 10) o Blades, Inc. Case: Management of Transaction Exposures (Chapter 11) o Blades, Inc. Case: Assessment of Economic Exposure (Chapter 12) 20 175 16 12

6

Preparation 



e-Activities o Use the Internet to locate a Website for an international company that provides information related to its economic exposure to exchange rate fluctuations. Be prepared to discuss in class. Activities  Discussions Evaluation   Quiz 4: Chapters 8 and 9 Homework o Chapter 10: Problems 19 and 25 (a-j) o Chapter 11: Problems 32, 34, and 40 o Chapter 12: Problems 11, 12, and 13 Reading(s) o Chapter 13: Direct Foreign Investment o Chapter 14: Multinational Capital Budgeting 30 30 8 12 12



7

Preparation 

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 4 of 12

FIN 535 – International Finance
Case Studies o Blades, Inc. Case: Consideration of Direct Foreign Investment (Chapter 13) o Blades, Inc. Case: Decision by Blades, Inc. to Invest in Thailand (Chapter 14) Activities  Discussions Evaluation   Quiz 5: Chapters 10, 11, and 12 Homework o Chapter 13: Problems 15, 16, and 17 o Chapter 14: Problems 24, 28, and 29 Reading(s) o Chapter 15: International Corporate Governance and Control o Chapter 16: Country Risk Analysis 20 45 12 12 

8

Preparation 

Case Studies o Blades, Inc. Case: Assessment of an Acquisition in Thailand (Chapter 15) o Blades, Inc. Case: Country Risk Assessment (Chapter 16) Activities  Discussions Evaluation   Quiz 6: Chapters 13 and 14 Homework o Chapter 15: Problems 12, 17, and 24 o Chapter 16: Problems 16, 18, and 25 Assignment: MNC Enters India Reading(s) o Chapter 17: Multinational Cost of Capital and Capital Structure o Chapter 18: Long-Term Debt Financing 20 30 12 12 250



 9 

Preparation

Case Studies o Blades, Inc. Case: Assessment of Cost of Capital (Chapter 17) o Blades, Inc. Case: Use of Long-Term Financing (Chapter 18) Activities  Discussions Evaluation   Quiz 7: Chapters 15 and 16 Homework o Chapter 17: Problems 17, 18, and 28 20 30 12



©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 5 of 12

FIN 535 – International Finance o 10 Preparation  Reading(s) o Chapter 19: Financing International Trade. o Chapter 20: Short-Term Financing o Chapter 21: International Cash Management Chapter 18: Problems 9, 10, and 11 12

Case Studies o Blades, Inc. Case: Assessment of International Trade Financing in Thailand (Chapter 19) o Blades, Inc. Case: Use of Foreign Short-Term Financing (Chapter 20) o Blades, Inc. Case: International Cash Management (Chapter 21) Activities  Discussions Evaluation   Quiz 8: Chapters 17 and 18 Homework o Chapter 19: Problem 14 and Small Business Dilemma Questions 1 and 2 o Chapter 20: Problems 15, 16, and 17 o Chapter 21: Problem 18, and Small Business Dilemma Questions 1 and 2 30 30 12 12 12



11

Preparation  Reading(s): None Activities  Discussions Evaluation  Final Exam: Chapters 8 through 21 20 350

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 6 of 12

FIN 535 – International Finance
GRADING SCALE – GRADUATE Assignment Quizzes (open book with a 1-hour time limit per chapter) (16 chapters, 15 questions each, worth 1 point apiece) Homework (65 questions worth 4 points apiece) Midterm Exam: Chapters 1 through 7 (open book with a 2-hour time limit) (35 questions worth 5 points apiece) Final Exam: Chapters 8 through 21 (open book with a 2-hour time limit per part) Part 1: Chapter 8 through 14, 35 questions worth 5 points apiece Part 2: Chapters 15 through 21, 35 questions worth 5 points apiece Assignment: MNC Enters India Participation (24 discussions worth 10 points apiece) Totals Total Points 240 260 175 350 % of Grade 16% 17% 12% 23%

250 240 1,515

16% 16% 100%

Points 1,363 – 1,515 1,212 – 1,362 1,060 – 1,211 Below 1,060

Percentage 90% – 100% 80% – 89% 70% – 79% Below 70%

Grade A B C F

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 7 of 12

FIN 535 – Assignments and Rubrics
Assignment: MNC Enters India Due Week 8 and worth 250 points Pick an MNC that currently does not do business in India. Then, consider what steps this company should explore to determine the viability of entering the Indian market and establishing a major sales presence there. To that end: Write an eight to ten (8-10) page assignment in which you: 1. Provide a brief summary of the business you chose (2-3 paragraphs). 2. Track the currency exchange rate for the past 24 months, explain what has occurred, and identify the economic variables that have most influenced these exchange rate movements. 3. Analyze the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market. Then, based on the tracking and your analysis, anticipate what fluctuations seem likely to occur in the next 24 months. 4. Consider how the MNC could minimize any negative impacts of such movements. To this end, formulate at least two (2) currency-derivative strategies that the MNC can use for foreign exchange risk management. Explain how they would minimize the impact on international business operations. 5. Apply a hedging technique to manage the risks of transaction, economic and translation exposures that may occur in the Indian market.

6. Conduct a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence. 7. Use four (4) references of academic caliber for this assignment. Note: Wikipedia and other Websites do not qualify as academic resources. Your assignment must follow these formatting requirements:  Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.



The specific course learning outcomes associated with this assignment are:        Analyze the economic variables that influence exchange rate movements and equilibrium price to anticipate fluctuations and minimize the negative impact on international business operations. Formulate strategies to use currency derivatives for foreign exchange risk management and for speculation by multinational corporations. Analyze the exchange rate risks associated with transaction, economic, and translation exposure in global markets, and develop risk management strategies to minimize the impact on international business operations. Apply a hedging technique to manage the risks of transaction, economic, and translation exposures Conduct country risk analysis to support the formulation of foreign investment strategies. Use technology and information resources to research issues in international finance. Write clearly and concisely about international finance using proper writing mechanics.

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 8 of 12

FIN 535 – Assignments and Rubrics
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric. Points: 250 Criteria
1. Provide a brief summary of the business you chose (2-3 paragraphs) Weight: 5% 2. Track the currency exchange rate for the past 24 months, explain what has occurred, and identify the economic variables that have most influenced these exchange rate movements. Weight: 15%

Assignment: MNC Enters India Unacceptable Below 70% F
Did not submit or incompletely provided a brief summary of the business chosen. Did not submit or incompletely explained what has occurred; did not submit or incompletely identified the economic variables that have most influenced these exchange rate movements. Did not submit or incompletely analyzed the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market; did not submit or incompletely anticipated what fluctuations seem likely to occur in the next 24 months. Did not submit or incompletely formulated at least two (2) currencyderivative strategies that the MNC can use for foreign exchange risk management; did not submit or incompletely explained how they would minimize the impact on international business operations.

Fair 70-79% C
Partially provided a brief summary of the business chosen. Partially explained what has occurred; partially identified the economic variables that have most influenced these exchange rate movements.

Proficient 80-89% B
Satisfactorily provided a brief summary of the business chosen. Satisfactorily explained what has occurred; satisfactorily identified the economic variables that have most influenced these exchange rate movements.

Exemplary 90-100% A
Thoroughly provided a brief summary of the business chosen. Thoroughly explained what has occurred; thoroughly identified the economic variables that have most influenced these exchange rate movements.

3. Analyze the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market. Then, anticipate what fluctuations seem likely to occur in the next 24 months. Weight: 15%

Partially analyzed the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market; partially anticipated what fluctuations seem likely to occur in the next 24 months.

Satisfactorily analyzed the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market; satisfactorily anticipated what fluctuations seem likely to occur in the next 24 months.

Thoroughly analyzed the exchange rate risks associated with transaction, economic, and translation exposure in the Indian market; thoroughly anticipated what fluctuations seem likely to occur in the next 24 months.

4. Formulate at least two (2) currency-derivative strategies that the MNC can use for foreign exchange risk management. Explain how they would minimize the impact on international business operations. Weight: 20%

Partially formulated at least two (2) currency-derivative strategies that the MNC can use for foreign exchange risk management; partially explained how they would minimize the impact on international business operations.

Satisfactorily formulated at least two (2) currencyderivative strategies that the MNC can use for foreign exchange risk management; satisfactorily explained how they would minimize the impact on international business operations.

Thoroughly formulated at least two (2) currencyderivative strategies that the MNC can use for foreign exchange risk management; thoroughly explained how they would minimize the impact on international business operations.

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 9 of 12

FIN 535 – Assignments and Rubrics
5. Apply a hedging technique to manage the risks of transaction, economic, and translation exposures that may occur in the Indian market. Weight: 15% Did not submit or incompletely applied a hedging technique to manage the risks of transaction, economic, and translation exposures that may occur in the Indian market. Did not submit or incompletely conducted a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence. No references provided Partially applied a hedging technique to manage the risks of transaction, economic, and translation exposures that may occur in the Indian market. Satisfactorily applied a hedging technique to manage the risks of transaction, economic, and translation exposures that may occur in the Indian market. Satisfactorily conducted a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence. Meets number of required references; all references high quality choices. 3-4 errors present Thoroughly applied a hedging technique to manage the risks of transaction, economic, and translation exposures that may occur in the Indian market. Thoroughly conducted a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence. Exceeds number of required references; all references high quality choices. 0-2 errors present

6. Conduct a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence. Weight: 15%

Partially conducted a country risk analysis to determine if senior management at MNC should support the proposal for the company to enter the market in India with a major presence.

7. 4 references Weight: 5%

Does not meet the required number of references; some or all references poor quality choices. 5-6 errors present

8. Clarity, writing mechanics, and formatting requirements Weight: 10%

More than 6 errors present

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 10 of 12

FIN535 – Student Notes
Weekly Course Schedule
The purpose of the course schedule is to give you, at a glance, the required preparation, activities, and evaluation components of your course. For more information about your course, whether on-ground or online, access your online course shell. The expectations for a 4.5 credit hour course are for students to spend 13.5 hours in weekly work. This time estimate includes preparation, activities, and evaluation regardless of the delivery mode.

Instructional Materials
In order to be fully prepared, obtain a copy of the required textbooks and other instructional materials prior to the first day of class. When available, Strayer University provides a link to the first three (3) chapters of your textbook(s) in eBook format. Check your online course shell for availability. Review the online course shell or check with your professor to determine whether Internet-based assignments and activities are used in this course. Strayer students are encouraged to purchase their course materials through our designated bookstore MBS Direct. http://bookstore.mbsdirect.net/strayer.htm If a lab is required for the course, MBS Direct is the only vendor that sells the correct registration code so that Strayer students may access labs successfully.

Discussions
Students taking this course online are required to post their discussions to a weekly thread in the online course shell. To earn full credit in an online threaded discussion, students must have a total of 3 posts per discussion thread. Additionally, the posts must be made on two different days during the week. Please note: Material in the online class will be made available on the previous Thursday. As it is always possible that students could lose their work due to unforeseen circumstances, it is a best practice to routinely save a working draft in a separate file before posting in the course discussion area. Professors hold discussions during class time for on-ground students. Check with your professor if any additional discussion participation is required in the online course shell outside of class hours.

Tests
Tests (quizzes, midterm and final exams, essay exams, lab tests, etc.) are available for student access and completion through the online course shell. Check the online course shell to determine how you are expected to take the tests.   Online students are to complete the test by Sunday midnight the week the test is due. On-ground students are to complete the tests after the material is covered and before the next class session.

Assignments
A standardized performance grading rubric is a tool your professor will use to evaluate your written assignments. Review the rubric before submitting assignments that have grading rubrics associated with them to ensure you have met the performance criteria stated on the rubric. Grades are based on individual effort. There is no group grading; however, working in groups in the online or on-ground classroom is acceptable. Assignments for online students are always submitted through the online course shell. On-ground professors will inform students on how to submit assignments, whether in paper format or through the online course shell.
©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 11 of 12

FIN535 – Student Notes

Resources
The Resource Center navigation button in the online course shell contains helpful links. Strayer University Library Resources are available here as well as other important information. You should review this area to find resources and answers to common questions. Technical support is available for the following:



For technical questions, please contact Strayer Online Technical Support by logging in to your iCampus account at https://icampus.strayer.edu/login and submitting a case under “Student Center,” then “Submit Help Ticket.” If you are unable to log in to your iCampus account, please contact Technical Support via phone at (877) 642-2999. For concerns with your class, please access the Solution Center by logging in to your iCampus account at https://icampus.strayer.edu/login and submitting a case under “Student Center,” then “Submit Help Ticket.” If you are unable to log in to your iCampus account, please contact the IT Help Desk at (866) 610-8123 or at mailto:IThelpdesk@Strayer.edu.



TurnItIn.com is an optional online tool to assess the originality of student written work. Check with your professor for access and use instructions. The Strayer Policies link on the navigation bar in the online course shell contains academic policies. It is important that students be aware of these policies.

©2012 Strayer University. All Rights Reserved. This document contains Strayer University Confidential and Proprietary information and may not be copied, further distributed, or otherwise disclosed in whole or in part, without the expressed written permission of Strayer University. FIN 535 Student Version 1124 (1167 2-16-2012) Page 12 of 12