Southern Connecticut State University
Department of Economics and Finance
Spring 2006

COURSE NUMBER:
MBA 574
COURSE TITLE:
Multinational Financial Management
COURSE DESCRIPTION:
A study of the financial issues facing a multinational firm operating in an international; environment. Topics include balance of payments concepts, exchange rate theories, corporate treasury management, international cost of capital and risk management.
PREREQUISITES:
MBA 503
PROFESSOR:

Dr. Robert M. Eldridge. Seabury Hall 304
Tel: (203) 876-5046 (H);
(203) 392-5628 (O)
Fax: (203) 392-5254/5863
Email: eldridger1@southernct.edu

OFFICE HOURS:
Tues:1400 - 1630
Wed: 1700 - 1900
Thurs: 1700 - 1900
or by appointment.
CLASS HOURS:
Thurs 1935 - 2205, ENA113
MATERIALS:
1. Multinational Business Finance, 10th ed, Eiteman, Stonehill and Moffitt, Boston: Pearson Addison Wesley, 2004
2. Subscription to The Financial Times of London.
COURSE OBJECTIVES:
This course establishes a foundation of the financial activities of a for-profit, publicly traded firm within the structureof an international free- market setting. At the end of the course the student should have an appreciation of the basic issues facing the financial manager within the international framework.
INSTRUCTION:
The course will consist of lectures, readings from The Financial Times of London, usage of the World-Wide-Web and a term paper.
METHOD OF ASSESSMENT:

1. 3 exams @ 20% =
2. Term Paper =
3. "Two minute drills" =
4. Participation and attendance =
5. Ethics questions =

60%
25%
10%
03%
02%
SPECIAL NOTES:
1. "Two minute drills". At the end of each class there will be a one question quiz lasting two minutes. I will count only the top 10 grades. This will constitute 10% of the course grade.

2. At the end of the course the student will be requested to complete a "Course Survey" form, separate and distinct from any University Evaluation form. This survey helps me in preparing the course for the next time it is offered. For each form returned, 1/n points will be added to the final grade, where "n" represents the number of students enrolled in the course based on the registrar's final class list.

3. The student is permitted and encouraged to tape record lectures for personal study use only.

4. If any student has a particular disability-related need in order to participate in this course, such as special seating, note-taking assistance, use of tape recorders or modified exam conditions you will need to visit the Disability Resource Office, EN C105A, to arrange for approved accommodations. If you have other information you wish to share with me such as emergency medical information, or arrangements in case the building has to be evacuated, please tell me as soon as possible.

5. It is recommended that you form yourselves into study groups for the purpose of doing the homework problems.

6. Cell phones and audible pagers MUST BE TURNED OFF during class unless the permission of the instructor has been obtained in advance. Failure to comply will result in a failing grade for the class.
TERM PAPER:

 

The grade on the paper will be a function of both the finance and the writing. While I don't expect Pulitzer-prize English, I do expect the following:

1. No spelling errors. I accept either British or American spelling as long as you are consistent.

2. Standard grammar:

a. Every sentence must have a subject and a verb.

b. Subject and verb will agree in number.

c. No split infinitives.

d. No dangling participles

e. No dangling prepositions.

3. Use proper punctuation, especially in the use of commas in the possessive case.

4. Pronouns will clearly reflect the preceding proper noun.

5. Remember, a name like General Motors is a compound singular noun and thus is never referred to as "they", but always "it".

6. Unless requested to do so, do not write from the perspective of the first person singular.

7. Use of the verb "to go" as a surrogate for the verb "to say" will cause me to instantly dematerialize and most likely haunt your speech/writing patterns for the rest of your life. In a similar fashion, the word "like" is not sugar or salt to be casually sprinkled into your speech/writing habits. It,too, will cause me untold grief and torment; both errors will most likely guide my marking pen when making out grades.

8. If you use a direct quotation, be sure to put it in quotation marks and properly reference it. If not so done, you will have committed plagiarism - the worst academic sin - and suffer accordingly. See also http://cwp.missouri.edu --> resources --> plagiarism

 

EXPECTATIONS:

A. What you may expect from me:

1. A strong grounding in International Finance.

2. A willingness to work with you on specific problems you have with the course or scheduling.

3. A sense of excitement about the field of finance.

B. What I expect of you:

1. Come to class prepared by having read the assigned materials and done any outside work assigned.

2. If you know that you will miss a class, a call to me would be appreciated.

3. If something does not make sense in the course, you will ask me either in class, in office hours or call me at home.

4. A sense of what is going on in the world of business and finance through a daily reading of The Financial Times.

C. Profile for success or failure. If you go into an exam behind in the reading and not up with the class discussions or any assigned homework, you probably will not be successful. If, on the other hand, you have done the reading and homework and been faithful in attendance, you should have no problem with any exam you get from me.

 
ASSIGNMENT SCHEDULE
(subject to change)
DATE
TOPIC
CHAPTERS
PROBLEMS
REMARKS
Feb 18 Datastream tutorial - Library     1000-1200
Jan 26 * Intl Monetary System; Balance of payments 1,2,3    
Feb 02 Foreign Exchange markets; Intl Parity conditions 4,6    
Feb 09 Forex Rate Determination; Catch-up 7    
Feb 16 Accounting, Economic Exposures 8,9    
Feb 23 Forex Exposure 10    
Mar 02 Exam I; cost of Capital Exam I; 11    
Mar 09 Sourcing equity capital; capital structure 12,13    
Mar 16 Foreign Direct Investment; Political risk 15,16    
Mar 30 Capital Budgeting; M&A 18,19    
Apr 06 Catch-up      
Apr 13 Exam II; Intl Portfolio theory Exam II; 20    
Apr 20 Repositioning funds 21,22    
Apr 27 Intl Trade Finance 23    
May 04 Derivatives; Swaps 5,17   Paper due
May 11 Catch-up      
May 18 Final Exam   1800-2000  
 

Paper

In this paper you will select a country and examine a number of issues over a five year period ending 31 Dec 2001 (if you select a country that is a member of the euro zone, your five year period must end on 31 Dec 2000.):

1. The nature of the exchange rate regime.

2. The relationship of the country's currency to the US dollar and the UK pound sterling.

3. The relationship of interest rates in the country to those of the US and the UK. This will include calculating the interest rate differentials between the country and the US and UK.

4. An analysis of the factors driving both the exchange rates and interest rates, to include issues such as purchasing power and interest rate parity. This should also include an analysis of the economy of the country including its balance of payments.

5. An analysis of the sovereign risks associated with the country.

6. An evaluation of the desireability of investing in the country either on a portfolio basis or a foreign direct investment basis

The paper will be written to conform to the Chicago/Turabian style. During the course of the term you will be introduced to a number of databases and web sites that will assist you in both the financial analysis and writting.

 

Some neat web sites

A. Time series of exchange rates: pacific.commerce.ubc.ca

B. The Bank of England: www.bankofengland.co.uk

C. The Financial Times of London: www.ft.com

D. New York Federal Reserve Bank: 12 noon exchange rates:
www.ny.frb.org/pihome/statistics/forex12.shtml

E. St Louis Federal Reserve Bank exchange rates:
www.research.stlouisfed.org/fred/data/exchange.html

F. International Monetary Fund: www.imf.org

G. Bank for International Settlements, Basle: www.bis.org

H. European Central Bank: www.ecb.int

J. For good writing tips and a potpourri of good sites: www.southernct.edu/~hochman/willz.html --> All Writers
1. Writing aids
2. Global newspaper file
3. Dictionaries
4. Thesauri