FI-4040 - Foundations of International Financial Management

Fall Semester 2002

Instructor: Jayant R. Kale

Professor of Finance

Georgia State University

Robinson College of Business

Atlanta, Georgia 30303

Ph: 404-651-2798

jkale@gsu.edu

Course Materials:

            Alan C. Shapiro, Foundations of Multinational Financial Management, 2002, John Wiley & Sons Inc.

Pre-requisites:

FI - 4000

Objectives of the Course:

Given the global environment faced by today's managers, the objective of the course is to introduce students to the basic concepts and institutional arrangements that underlie financial management in a global economy.

Course Description:

This course will focus on foreign exchange mechanics and the institutional features of the global economy.  Topics to be covered include the international monetary system, the balance of payments, exchange rate determination, currency futures and options, parity conditions in international finance, and management of foreign exchange risk though hedging.

Instruction Methodology:

The primary method of instruction will be lectures and class discussions.  The material in the course is such that it requires a significant amount of quantitative analysis.  The lectures too will emphasize the quantitative aspects of international finance.  The text is meant to be a learning tool that supplements the lectures.  In many cases, the lecture will present material in a manner different from that in the text.  Attendance, therefore, is extremely important.

Outline:

 

Session 1          Introduction and The Determination of Exchange Rates

(8/21/02)          Chapters 1 and 2

 

Session 2          International Monetary System (IMS)

(8/28/02)          Chapter 3

 

Session 3          Complete IMS

(9/4/02)

 

Session 4          Balance of Payments (BOP)

(9/11/02)          Chapter 3 (pages 61-64. Primarily lecture notes.

 

Session 5          Complete BOP and begin The Foreign Exchange Market (FEM)

(9/18/02)          Chapter 6

 

Session 6          Complete FEM and review for test

(9/25/02)

 

Session 7          Test 1

(10/2/02)

 

Session 8          Review test and begin International Parity Conditions (IPC)

(10/9/02)          Chapter 8

 

Session 9          Complete IPC

(10/16/02)

 

Session 10        Foreign Currency Futures and Options (FCFO)

(10/23/02)        Chapter 7. Primarily class notes.

 

Session 11        Continue FCFO

(10/30/02)

 

Session 12        Hedging Transaction Exposure

(11/6/02)          Chapter 10

 

Session 13        Hedging Economic Exposure

(11/13/02)        Chapter 11

 

Session 14        Complete Hedging and Review for Test

(11/20)            

 

Wednesday, Nov. 27 to Sun. Dec. 1, 2002 is Thanksgiving Break

 

Session 15        Test 2

(12/4/02)

 

Grading Policy:

Attendance and punctuality                                                                   5 percent

Assignments                                                                                         15 percent

Test 1 (October 2, 2002)                                                                     40 percent

Test 2 (December 4, 2002)                                                                 40 percent

Total                                                                                                    1000 points

Important Note:

            The last day to withdraw from the course and be eligible for receiving a grade of W is Friday, October 11, 2002. 

Tests: 

There are two tests.  The first test will, obviously be on the material covered until then.  The second test will be on the material covered after the first test. 

Assignments:  In addition to problems etc. that I may ask you solve, I will also ask you to solve some problems etc. as assignments.  I will give N (approximately 5) such assignments and choose the best N - 1 in computing the grade.  The assignment is always due at the beginning of the next class. 

Make-up Policy: 

There is no make up for assignments and I will not accept an assignment once I have begun to discuss it in class (usually after the first five minutes).  If you are going to be absent on the day the assignment is due or will be late for class, make sure that you either turn it in on an earlier day in my office (mailbox) or give your assignment to a friend to turn in.

As a general rule, there is no make-up for tests.  However, if you miss a test and the reason for missing the test is a reasonably serious one, if necessary, I will offer a comprehensive make-up test (tentatively) on December 6, 2002 near my office.  This test will cover material for the entire course and, thus, will serve as the make-up for either missed test. Note that you will be allowed to make-up a test only if the reason for missing a test is a serious one.  Please check with me to determine if the reason satisfies the seriousness criterion.

Office Hours:

By appointment.  I follow an open-door policy and you are welcome to drop by without an appointment.  I would, however, recommend that you call me before you drop by for an unscheduled meeting. 

Attendance Policy and Punctuality:

See current University General catalog for guidelines.  I will take attendance regularly (that is, almost every class).  The attendance call can occur any time during the class.  A student who misses more than three classes during the semester may be withdrawn from the class by the instructor with an automatic grade of WF. 

I expect students to be punctual for class.  In case you come to class after I have taken attendance for that day, I may count it as an absence.  Additionally, if you leave class after I have taken attendance, I may count that also as an absence.

If you attend all classes and are never late, you obtain 5 percent towards your course grade.

NOTE: THIS COURSE SYLLABUS PROVIDES A GENERAL PLAN FOR THE COURSE, AND DEVISTIONS FROM IT MAY BE NECESSARY.