University of Scranton

The Arthur J. Kania School of Management

Economics/Finance Department

Course Number: FIN 584 Semester: Fall 2001

Course Title: International Finance Office: Brennan Hall 310

Instructor: Dr. John N. Kallianiotis Office Hours: Monday: 5:00 - 6:30 P.M.

Tuesday: 11:00 A.M. - 2:30 P.M.

and 3:45 P.M. - 4:30 P.M.

Thursday: 10:00 A.M. - 2:30 P.M.

and by appointment

Telephone: 941-7577 and 941-4048

e-mail: jnk353@uofs.edu

Required Text:

Multinational Business Finance, 9th Edition, by Eiteman, Stonehill, and Moffett, Addison-Wesley Publishing Company, Reading, Massachusetts, 2001.

Suggested Books:

1. Balance of Payments Adjustment: Macro Facets of International Finance Revisited, Edited by Augustine C. Arize et al., Greenwood Press, Westport, CT. 2000.

2. International Financial Markets, by Alan L. Tucker, Jeff Madura, and Thomas C. Chiang, West Publishing Company, New York, 1991.

3. The Wall Street Journal.

Description of Course:

This course is a detailed survey of the financial decision process in multinational corporations. Topics include the International Finance Environment, Exchange Rate Determination, Foreign Exchange Risks, Foreign Investment Decisions, Positioning of Funds, International Banking, Import and Export Financing, and other special topics on International Finance.

Objectives:

1. To give students a global view on Financial Management of Multinational Business and on World Financial Markets, Institutions, and Instruments.

2. To familiarize the students with the openness of the economies and the interdependence of the markets.

3. To learn empirical research techniques useful for their future occupation or advanced studies.

TOPICS COVERED:

Topics Classroom Hours

I. The International Financial Environment 9

1. Introduction to Multinational Business Finance

2. The International Monetary System

3. Balances and Imbalances of Payments

3a. Foreign Exchange Rate Determination

4. The Foreign Exchange Market

4a. International Parity Conditions

5. Foreign Currency Options

II. Managing Foreign Exchange Exposure 3

6. Transaction Exposure: Measurement and Management

7. Operating Exposure

9. Interest Rate Exposure

III. Financing from a Global Perspective 8

10. Internationalizing the Cost of Capital

11. Sourcing Equity Internationally

12 Sourcing Debt Internationally

12a. Designing the Financial Structure

IV. Foreign Investment Decisions 6

13. Corporate Strategy and Foreign Investment

and Political Risk Management

14. Multinational Capital Budgeting

15. International Acquisitions and Valuation

16. Adjusting for Risk in Foreign Investments

V. Managing Multinational Operations 6

18. Repositioning Funds

19. Working Capital Management

20. Import and Export Financing

21. Evaluation of Performance

VI. Advanced Topics in Multinational Finance 6

22. International Portfolio Theory of the MNE

23. Advanced Topics in Currency Risk Management

24. Advanced Topics in Interest Rate Risk Management

VII. Special Topics 5

European Union

North American Free Trade Agreement

Class Meeting:

The class meets for 14 sessions of 2 hours and 40 minutes duration, plus a final examination.

Teaching Methods, Exams, and Assigned Readings:

There will be lectures, classroom discussions, homework assignments, and a group project on some original empirical research by using the literature, data, econometrics, and computers (TSP or Eviews program). A midterm exam will be on October 23; the paper’s outline is due on September 25th; the first draft on November 20th; and the final paper is due on December 74h. Also a class presentation of the paper will be on the last day of the semester and a final exam will be announced later. Each exam and the assignments together with your class participation and performance will count for 33%.

* * * * *

Global Finance by M.V. Eng, F.A. Lees, and L.J. Mauer, Harper Collins College Publishers, 1995.

International Financial Management, Fourth Edition, by Jeff Madura, West Publishing Company, 1995.

“Career in International Finance”

“Sources of Articles and Statistics in International Finance”

International Research in the Business Disciplines, by Carl L. Swanson (Editor), Volume 2, JAI Press Inc., Greenwich, Connecticut, 1996.

Emerging Markets in Asia by Kim, Liaw, Chen (editors), Center of Asian Studies, St. John ‘s University, Jamaica, NY, 1996.

Readings in International Finance, Second Edition, Federal Reserve Bank of Chicago, Chicago 1984.

The International Finance Reader, Second Edition, edited by Robert W. Kolb, Kolb Publishing Company, Miami, 1991.

The Financial Times (London) and The Wall Street Journal (subscriptions are suggested).

Additional Articles will be put on reserve in library.

Balance of Payments Adjustment: Macro Facets of International Finance Revisited, Edited by A.C. Arize et al., Greenwood Press, Westport, CT, 2000.

Choi, Frederick D.S., “International Data Sources for Empirical Research in Financial Management” Financial Management, Summer 1988, pp. 80-89.

The International Monetary System 1945 - 1981, by Robert Solomon, Harper & Row, New York, 1982.

“Balance of Payments” in Readings in International Finance by Federal Reserve Bank of Chicago, 1984, pp. 1-34.

“Foreign Exchange Markets” in Readings in International Finance by Federal Reserve Bank of Chicago, 1984, pp. 217-296.

Marrian, Jane, “Exchange Rate Determination: Sorting our theory and evidence”, in The International Finance Reader, Second Edition [ed] Robert W. Kolb, Kolb Publishing Company, Miami, 1993, pp. 153-165.

Kallianiotis, John, “The Traditional Approach to Exchange Rate Determination: Fixed and Flexible Exchange Rate,” Unpublished manuscript, University of Scranton, August 1993.

Abuaf, Niso, “The Nature and Management of Foreign Exchange Risk” in The International Finance Reader, pp. 419-433.

“International Banking” in Reading in International Finance, pp. 103-173.

“The Eurodollar” in Reading in International Finance, pp. 175-225.

“International Real Investment Decisions” in International Finance Reader, pp. 315-348.

Hickok, Susan and Juann Hung, “Explaining the Persistence of the U.S. Trade Deficit in the Late 1980's Quarterly Review, Federal Reserve Bank of New York, vol. 16, No. 4, Winter 1991-92, pp. 29-46.

Kasman, Bruce, “Recent U.S. Export Performance in the Developing World” Quarterly Review, Federal Reserve Bank of New York, vol. 17, No. 4, Winter 1992-93, pp. 64-74.

Kumar, Vikram and Joseph A. Whitt, Jr. “Exchange Rate Variability and International trade” in Economic Review, Federal Reserve Bank of Atlanta, vol. 77, No. 3, May/June 1992, pp. 17-32.

Quantity and Quality in Economic Research by T.H. Bonitsis and R. C. Brown (editors), Volume IV, Ashgate Publishing Company, 1997.

Interlocking Global Business Systems: The Restructuring of Industries, Economies and Capital Markets by E.B. Flowers, T.P..Chen, and T. Shyu (editors), Quorum Books, 1999.