BUSINESS FINANCE 722

MGT 542

International Finance

Fall 2003

1. Instructor

Professor: John M. Griffin

Office: ICF (46 Hillhouse) Rm 302

Phone: (203) 436-0785 john.griffin@yale.edu

Office Hours 11:20-11:55 am, Monday and Wednesday (or by appointment)

TA: Vivian Wang...email: "Wang, Xiaotong" <xw63@som.yale.edu>

2. Class Meetings

Monday and Wednesday, 10-11:20 p.m., PR 135 A46

3. Course Overview

The main objective of this course is to provide students with a framework for making financial decisions in an international context. To this aim, relevant features of exchange rate instruments and determination, international equity markets, international investments, and instruments will be covered. Subsequently, the issue of exposure to foreign exchange rate risk will be addressed from a corporate perspective (the different types of FX risk, how to measure them, whether and how to hedge them). Topics related to capital budgeting in a multicurrency environment will be presented at the end of the course. Many of the issues in the course have both investment and corporate applications.

4. Course Resources

Required Resources:

1. Cases

2. Textbook: “International Investments” by Bruno Solnik, 4^th edition

3. Will provide chapters from Global Financial Management, by Thomas J. O'Brien, Wiley

4. Additional Readings

5. Lecture Notes (will be available on the Web)

I will supply links to 3-5 on the course webpage

Notes: International Finance Notes and Readings

Handout notes are meant as an outline to reduce the amount of rote copying of definitions and formulas but certainly not as self-contained lecture summary. Reading the lecture notes without attending class will most likely be of little benefit.

Strongly Recommend:

The Economist, Wall Street Journal, Financial Times, or some other Financial News source

5. Prerequisites

Throughout the course, students will be required to solve a number of case studies in the area of international corporate financial policy by using a combination of techniques acquired in basic finance, statistics and the concepts introduced in this course. Students are expected to have completed the first MBA Managerial Finance. In addition, proficiency in mathematics and spreadsheet packages is assumed.

Students who are uncertain as to whether they satisfy these requirements should notify the instructor.

6. Grade determination

Cases and Homework (55%), Final (35%), and Participation (10%)

Cases will be discussed below.

Class Participation

Class contribution consists of positive and constructive comments, questions, remarks, and answers in class. Attendance and arriving on time before the beginning of each class will help contribute to positive class contribution. Effective contribution means participating such that your answer or question moves our analysis and understanding forward. I expect you to come to class on time, fully prepared, and ready to open the discussion. Contribution involves careful analysis of the available quantitative and qualitative evidence presented in the case to develop specific recommendations. Note that not all comments or questions in class contribute positively to your class contribution grade.

Exam

The final exam will be comprehensive (cumulative) and will cover material from lectures, class discussions, assigned readings, guest lectures, and cases. Exams will strive to test the comprehension level, not merely memorization skills.

7. Cases

The cases we will use are real-world situations where a decision-maker needs to address or resolve some type of financial problem. Part of the task will be to analyze the problem outlined in the case, and an equally important part will be to make decisions and to develop action implementations. Making decisions and planning actions based on your analysis is hard work, but it can also be fun. Unfortunately, most decisions in this class (and in the real world) will need to be made with incomplete information. Some problems will be clearly stated, others will be more difficult to discern. It is important to remember that the process in arriving at your answers or decisions may be the most important part of the exercise. Intelligent and reasonable people can end up with far-different conclusions depending on their initial assumptions.

In general, the write-ups are to be brief and focused. You will not be awarded points for explaining aspects in the case but should focus on the solutions to the problems in the case. Each report should contain an executive summary with clearly stated recommendations based on the analysis of the case. All exhibits, such as spreadsheet analysis or figures and tables, should be clearly labeled and referenced. The report will be graded on the basis of the quality of the research, as well as of the professional presentation (neatness, clarity of exposition, etc.).

Students are strongly encouraged to work on solutions to the cases in study groups of 3 or 4 people. The solutions have to be written in the form of a business report to management and consist of no more than 3-4 double spaced typewritten pages (excluding appendices).

8. Course Policies

Fairness to Students: I strive to treat students with dignity and fairness.

Late Assignments: Late assignments will not be accepted for credit, except for the most serious reasons as validated by the appropriately qualified person.

Readings: Readings should be done in advance of the class in which material will be discussed. The outline below will advise of the relevant topic of discussion. Grading: There are no verbal appeals of grade changes. You should submit a written statement explaining the problem and I will be happy to re-grade any exam or assignment. The entire exam or assignment will be re-graded and the score may increase, remain the same, or decrease.

9. Course Schedule http://www.som.yale.edu/faculty/jmg93/intl/I.html