FINA 5500 International Financial Management Spring 2012 Instructor Professor Niranjan Tripathy Room E105 Wakeland High School Frisco Monday 6 30 pm 9 20 pm Telephone Fax 940 565 3045 4234 tripathy unt edu Office Room 262 Business Leadership Building UNT Room E105 Wakeland HS Frisco Course webpage www coba unt edu firel tripathy f5500 Office Hours 6 00 PM 6 30 PM Mon Wakeland HS 1 30 PM 2 30 PM Wed UNT COB 175 by appointments Course Description and Objectives Welcome to FINA 5500 In this course we will focus on a multinational corporation which makes its investment financing and operating decision in an international setting You will learn about the international financial and currency markets and monetary system in which domestic and multinational firms operate You will also learn about risks and opportunities faced by a corporation as a result of operating in an international environment We will cover a wide range of international finance topics and by the end of this semester you should be able to achieve the following general learning objectives 1 Identify the determinants of currency prices and explain how these prices change in the foreign exchange FX markets 2 Distinguish how various exchange rate systems affect currency prices in the FX market 3 Explain how a country s balance of payments affect currency prices in the FX markets 4 Explain international parity conditions which link the prices of goods interest rates spot rates and forward rates throughout the world 5 Explain the nature and source of exchange rate exposure 6 Given a firm s nature of business and operating environment evaluate the level of exchange rate exposure that firm may have 7 Explain how exchange rate exposure may create risks and opportunities for domestic and multinational firms 8 Explain ways in which national international political and economic events impact exchange rate exposure for domestic and multinational corporations 9 Compare and contrast the basic characteristics of various financial instruments in the currency markets eg spot forward futures options contracts and swaps and explain how these instruments may be used to earn speculative profits or hedge against exchange rate exposure 10 Explain various strategies a firm may use to manage exchange rate exposure Learning Philosophy I want you to first master these objectives at the rote level This level of learning accompanies your initial exposure to knowledge active keywords list define compute solve etc However rote learning is quickly forgotten and is difficult to retrieve with the passage of time Therefore more importantly I also want you to master these objectives at the meaningful and integrative levels of learning Meaningful learning involves the ability to translate across multiple language of perception words prose pictures graphs and symbols mathematics active keywords explain in your own word illustrate interpret etc Integrative learning is the ability to interrelate concepts This way old information is refreshed by being linked to new information increasing the retention rate active keywords compare and contrast evaluate extrapolate etc Most classroom presentations and in class exercises will be geared toward mastering the course and chapter objectives at the meaningful and integrative levels of learning Background Skills Knowledge According to the UNT catalog the prerequisites for this course are FINA 5170 or equivalent ECON 1100 or 5000 or equivalent ACCT 2030 or 5020 or equivalent MATH 1190 or equivalent or consent of department In terms of background you need to have following skills Finance Time value of money Opportunity costs of funds concept Valuation principles for stocks and bonds Economics Supply and demand curve analysis Opportunity cost concept Accounting Debits credits and T account conventions Knowledge of the structure and content of balance sheets and income statements Text Materials 1 Cheol Eun and Bruce Resnick International Financial Management 5th Edition Boston McGraw Hill Irwin 2009 ISBN 13 978 0 07 338234 0 or ISBN 10 0 07 338234 5 Textbook website http www mhhe com er5e 2 Assigned articles 3 A financial calculator TI BAII Plus HP 10B or equivalent Performance Evaluation Your grade in this course will be determined on the basis of your performance in four components 1 seven quizzes 2 two mid terms exam 3 a final comprehensive exam and 4 statistical tests of PPP and IFE Each component and their respective weights are as follows Components Points 6 Quizzes Best 5 out of 6 15 Mid Term Exams 2 x 25 50 Final Comprehensive Exam 30 Statistical Tests of the PPP and IFE 5 Total 100 Quizzes Six short quizzes about 10 minutes each from selected chapters and assigned articles will be given before the mid class break Each quiz will carry 10 points You will receive a zero for every quiz you miss No makeup quizzes will be given Quizzes with the two lowest scores will be dropped and your average on the quiz component will be based on your five best quiz scores The quiz schedule is Quiz Chap Date Quiz Chap Date Quiz Chap Date 1 1 01 30 3 5 02 13 5 6 04 02 2 3 02 06 4 2 03 26 6 14 04 30 Mid Term and Final Exams The exams will test your understanding of the chapter objectives and assigned readings There will be two mid terms and a comprehensive final exam No makeup exams will be given You may miss only one of the two mid term exams If you miss a mid term exam the weight on your final exam will increase to 550 1000 During the exam you may only use the formula sheet s provided to you I will have already distributed copies of these formulas sheets in class and discussed its contents You are required to be familiar with them prior to the exam Neither me nor my TA will discuss or explain how to use these formulas during the exam You are expected to memorize any material not included in the formula sheet Please consult the Studying Assignment section for examination dates The exams will consist of a combination of short problems short conceptual questions and multiple choice questions The mid term exams will be for the full duration of the class period You will be handed the exam back during the class when it will be reviewed but you must remember to turn it back to me before you leave the class Please note that if you leave the class without returning the exam you will automatically receive a zero in that exam Statistical Tests of PPP and IFE You will receive a packet containing annual data on interest rates inflation rates