Executive MBA
NBAE 5540: International Finance

Fall 2009

Prof Gordon Bodnar

Outline

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Course notes and materials are available by clicking on the lecture titles and problem set / case names or going directly to the download page using the link above.  Access is restricted to students.  Lecture notes and handouts are in Adobe Acrobat  and require an Acrobat reader to access. If you do not have an Acrobat reader, you may download one from Adobe's homepage

Readings: IFM refers to International Financial Management, by Eun and Resnick and other readings and assignments can be found in the course pack (CP), on the course website download page (W) or on-line (OL).

Date

Lect#

Title 

Topic and Readings                                                                                

Assignment 

Weekend 1

8/15 

 

I. International Macroeconomy 
 

1

  A. Macroeconomics
   
  1. Macroeconomics - from Wikipedia (CP, W)

  2. US Federal Reserve, Monetary Policy and the Economy, US FED Reserve Board (CP,W)

Other helpful info: 

Optional readings: 

 8/15

2

  B. Balance of Payment Issues and Foreign Investment

 

  1. IFM Chpt 3

  2. Is the US Current Account Deficit Sustainable? Cooper, CESIfo Forum, 2005 (CP, W)

 For Fun (OL only) :

Practical Debate: 

8/16 

   

II. International Financial Markets
 

3

  A. Exchange Rate Basics and the Real Exchange Rate

 

  1.   IFM: Chpt 4 and 5 pp. 107-113

  2. All About the Foreign Exchange Market in the United States, FRBNY, Chpts 2 and 5  (CP, W)

  3. Big Mac Index, Economist (CP, W)

Extra Analysis:    
    A Prism into the PPP Puzzles – Parsley and Wei (W)

 

Assignment #1 (W) : Due 8/26 11:59pm EDT  (email to bodnar@jhu.edu)

Weekend 2

8/30

4

  B. International Currency Markets and the Parity Conditions

 

  1. IFM: Chpt 5 (remainder) and Chpt 6

  2. All About the Foreign Exchange Market in the United States, FRBNY, Chpts 3, 4, and 7 (CP, W)

  3. Triennial Survey of Foreign Exchange and Derivatives Market Activity 2007, BIS 2007, (CP, W)

FOR FUN: (proceed at own risk) 
FX retail investments at http://www.everbank.com/main.asp?affid=eb  

 8/30

5

  C. Exchange Rate Behavior, Efficiency and Forecasting

 

 

  1. All About the Foreign Exchange Market in the United States, FRBNY, Chpt. 11 (CP, W)

  2. Technical Trading info - assorted webpages (CP or W)

Advanced optional reading:
         The Economics of Exchange Rates, M Taylor, JEL (1995) (W)

 

8/31

6

  D. International Monetary System

 

 

  1. IFM: Chpt 2
  2.  All About the Foreign Exchange Market in the United States, FRBNY, Chpt. 10 (CP, W)

      Good Review of Global Imbalances

           World Survey, Economist, Sept 22, 2005 (excerpts) (W)

Assignment #2 (W): Due 9/9 11:59pm EDT  (email to bodnar@jhu.edu)

Weekend 3

    III. The Impact of Exchange Rates on the Firm

9/12

7   A. Corporate Exposure to Exchange Rates

 

  1.  IFM Chpt 8 pp. 192 – 193, Chpt 9 pp. 221 - 232

  2.  Corporate Exposures to Exchange Rates, classnote (CP or W)

  3.  On the Measurement of Operating Exposure to Exchange Rates: A Conceptual          Approach," Flood and Lessard, FM 1986. (CP)

  4.  Identifying, Measuring and Hedging Currency Risk at Merck, J. Lewent and A. Kearney,  JACF, 1990. (CP)

Extra Reading on Translation Exposure:   
FAS #52-Measuring the Performance of Foreign Operations, B Carsberg 1983. (CP)
IFM: Chpt 10

9/12 

8

  B. Measuring Exchange Rate Exposures

 

  1.  Techniques for Managing Economic Exposure,” classnote  (CP, W)

  2. IFM: Chpt 8  pp. 194 - 208

9/13

9

  C. Managing Exposures to Exchange Rates

 

 

  1. IFM: Chpt 9
  2. Wharton 1998 Survey of Financial Risk Management by U.S. Non-Financial Firms, (CP, W)
  3. Techniques for Managing Economic Exposure,  classnote  (CP, W)

Assignment #3 (W): Due 9/23 11:59pm EDT  (email to bodnar@jhu.edu)

9/13   Take Home Midterm Quiz (Sessions 1 - 6)  due 9/17  11:59pm EDT 

Weekend 4  

    IV. International Financing and Investing

9/27

10

  A. Investing Internationally

 

  1. IFM: Chpt 15
9/27

11

  B. Cost of Capital for International Projects

 

  1.  IFM: Chapter 17

  2. Globalization of Capital Markets and the Cost of Capital: The Case of Nestle, R. Stutz, JACF, Fall 1995 (CP)

9/28

12

  C. Capital Budgeting for International Projects

 

  1.  IFM: Chpt 18, 21 and 16

Assignment #4: (W) – Due 10/7 11:59 EDT  (email to bodnar@jhu.edu )

Weekend 5

10/10 

13

  D. Global Financing
 

 

  1. IFM: Chpts 11, 12, and 13

  2. Guidelines for Global Financing Choices, Lessard and Shapiro, MCFJ, 1983 (CP)

10/10 Exam Q & A and Review Session 

Sample Exams and Solutions (W)

 10/11

  

 Course Exam  2 hours in class Sunday am

 Updated: 7/29/09