IBUS 446/FINC 445: Funding International Business
IBUS 446/FINC 445-150: FUNDING INTERNATIONAL BUSINESS
EM Strasbourg Study Abroad 2013 - Summer I
The goal of this course is to provide you with a strong foundation in international financial management, which will
- provide you with a solid understanding of exchange rate systems and its dynamics,
- enable you to measure and manage foreign exchange risk faced by corporations in a global setting, and
- empower you with some basic analytical tools that would enable you to make sound international asset and liability management decisions.
This is a structured, survey course, which examines the problems, techniques, and policies of financial decision-making in an international enterprise. The course is divided into three segments. First, we will survey the global geopolitical and financial systems, including the American credit crisis, the balance of international payments, the workings of the international credit and foreign exchange markets, exchange rate determination and the role of the euro and international economic policy institutions. Second, we will examine foreign exchange exposure, i.e., foreign exchange risk measurement and management.Third, we will analyze international asset and liability management using capital budgeting as a basis.
The course's pace will be quite rapid because of the subject matter's broad scope. It may not be possible, therefore, to explore all aspects of international financial management with the preferred degree of depth. A background in principles of macro and microeconomics, and business finance (FINC 341) will be required for this course. This important course will be of great interest for persons seeking a career in international business, or with a federal or multilateral institution. Yet, the growing globalization of business and increased interdependence of nations will enable even cattle ranchers to find the lectures and discussions useful in their day-to-day decision-making.
Required Text: Madura, International Financial Management, 10th ed., Thompson South-Western, 2009 (ISBN 1-4390-3833-8).
|Chapter 1-21 Excel / PowerPoints
||Sample Mid-Term Exam||Sample Final Exam|
Please print out the PowerPoint slides, six to a page, so that you can take down notes when I am teaching.
1. It is mandatory that you attend classes regularly and be well prepared for discussions of assigned readings. To save writing time, you may want to print (4 or 6 PowerPoint slides to a page) slides of the 8th edition (indicated above).
2. All end-of-chapter problems are your homework. However, homework will not be collected or graded.
3. Current geopolitical topics, as well as, issues in European/international finance and trade will be discussed in class, along with corporate visits. You will be examined on the content.
4. More than two recorded absences can detrimentally influence your course grade.
- A = 90 -100
- B = 80 - 89.9
- C = 70 - 79.9
- D = 60 - 69.9
- F = 0 - 59.9
- Mid-term exam (combination of multiple choice, and problems) - 35 points
- Final exam (combination of multiple choice, and problems) - 40 points
- Four quizzes based on corporate visits (5 pts. each) - 20 points
- Bonus points for attending French classes in College Station (max. 5 points)
- One 1/2-page blog entry (a reflection of what your learned about Europe) - 5 points
Your course grade for FINC 445 will be determined by adding the scores you earned in the mid-term, final exam, quizzes, blogs, and French class bonus points. If at the end of the course it is determined that a curve is needed, the cut off for various grades will be adjusted accordingly to determine the appropriate letter grade. In order to ensure that all students are treated in an equitable manner, everyone’s grade will be determined solely based on their performance on the tests, quizzes, blogs, and French class attendance. Nothing can be done for extra credit. For those students who are enrolled in FINC 645, the scores obtained in the two tests (mid-term and finals), blogs, and quizzes will be scaled back to 80% of course grade (i.e., multiplying the total by 0.8) and the research paper will weigh in at another 20% of course grade. French class bonus points will be added to this total to determine final course grade.
If you are unable to take an exam for a valid reason, recognized by the university, such as illness or death in the family, a makeup exam will be scheduled. You will be required to produce documentary evidence to substantiate your claim. The makeup exam could consist of multiple choice and/or essay type questions. If you feel that you are entitled to special accommodations because of a disability, please see me within the first two class sessions.
AGGIE HONOR CODE: "Aggies do not lie, cheat, steal nor tolerate those who do."
Scholastic dishonesty (all forms of cheating and plagiarism) will not be tolerated. Moreover, the full consequences of scholastic dishonesty will be pursued consistent with University policy. As commonly defined, plagiarism consists of passing off one's own ideas, words, writings, etc., which belong to another. In accordance with this definition, you are committing plagiarism if you copy the work of another person and turn it in as your own, even if you should have permission of that person. If you have any questions regarding plagiarism, consult the latest issue of the Texas A&M University Student Rules, under the section "Scholastic Dishonesty." Upon accepting admission to Texas A&M University, a student immediately assumes a committment to upload the Aggie Honor Code, to accept responsibility for learning and to follow the philosophy and rules of the Honor System. Ignorance of the rules does not exclude any member of the Texas A&M Universitycommunity from the requirements or the processes of the Honor System. For additional information visit: http://tamu.edu/aggiehonor/ .
Students should understand the extreme seriousness with which the instructor regards violations of the honor code.
The Americans with Disabilities Act (ADA) is a federal anti-discrimination statute that provides comprehensive civil rights protection for persons with disabilities. Among other things, this legislation requires that all students with disabilities be guaranteed a learning environment that provides for reasonable accommodation of their disabilities. If you believe you have a disability requiring an accommodation, please contact the Department of Student Life Services for Students with Disabilities in Room B118 in Cain Hall, or call 845-1637.
The class will generally start with a relatively brief analysis and discussion of current European (or international) business/financial event. You are encouraged to read financial newspapers regularly, (e.g., the Financial Times), in order to follow closely the changes in the global business & financial environment. A detailed discussion of assigned readings or a lecture on the theories, approaches, and application of policy tools will follow. Because of the diverse background of students, we will try to follow the text closely and at the same time integrate current European and international geopolitical developments to the course. Questions on the exams will cover classroom discussions/current events, which may or may not be covered in the text. It is therefore imperative that you attend classes regularly, in body and in mind.
About Your Instructor
Dr. Julian Gaspar is the Executive Director of the Center for International Business Studies and Clinical Professor of Finance at Mays Business School, where he is responsible for internationalizing the business school's curriculum, students and faculty. Dr. Gaspar is the director of Texas A&M University's Center for International Business Education and Research (CIBER) program (one of 31 such centers in the nation), which is funded by the U.S. Department of Education. He teaches international finance, FINC 445 in College Station in the fall, and FINC 445/FINC 645 during the summer in Strasbourg, France where he conducts a 5-week Mays Study Abroad Program with 30 Aggies each year. Dr. Gaspar has a B.S. in Chemical Engineering from the University of Madras in India, an MBA from Indiana University - Bloomington, and a Ph.D. in International and Monetary Economics from Georgetown University in Washington, D.C. Dr. Gaspar has been with Mays Business School since 1991.
Prior to joining TAMU, Dr. Gaspar was an International Economist with the World Bank in Washington, D.C. for four years. His responsibilities included financial and industrial restructuring of developing and transition economies of Central Europe and the Middle East. He has extensive experience in international project economic and financial analysis having worked for the International Finance Corporation (part of the World Bank Group) as well as a consultant with the U.S. Department of State. Dr. Gaspar also has extensive corporate experience having worked as an international economist with the Bank of America in Tokyo and in San Francisco for seven years where he conducted country and industry risk analysis and researched and analyzed debt problems of developing countries. Dr. Gaspar devised financial restructuring strategies for Bank of America associated with the Philippines debt crisis in 1985.
Dr. Gaspar has traveled/worked in over 55 countries covering all continents. His regional expertise covers Africa, Asia, the Middle East, Central Asian Republics, Europe and Latin America. Dr. Gaspar just completed directing a U.S. Department of State‑funded project to help set up the first modern graduate business school in Tashkent, Uzbekistan. Dr. Gaspar also teaches executive programs in Guatemala and in France. He and some of his Mays colleagues developed and published six Russian business cases. Dr. Gaspar is the lead-author of two textbooks, “Introduction to Business” (2006) and “Introduction to Global Business” (2012) published by Cengage.
Tentative Course Outline Week 1 Chapters 2, 3, & 19 "If the world is not easy to forecast, what do you do?" Bloomberg Businessweek, 2/28-3/6/2011 "USA, Inc. Profiting From Freedom Since 1776: Red, White, and Very Blue" Bloomberg Businessweek, 2/28-3/6/2011 Monday, May 27 Week 2 Chapters 6, 4, 7, & 8 Quiz #1 Thursday, June 6 Visit to European Commission, Brussels Friday, June 7 Paris cultural visits PART 2: FOREIGN EXCHANGE EXPOSURE MEASUREMENT AND MANAGEMENT Week 3 Chapters 5, 10, 11, & 12 Quiz #2 Monday, June 10 Visit to Council of Europe, Strasbourg Wednesday, June 12 MID-TERM EXAM (Chapters 2 - 8, & 19) Thursday, June 13 Visit to European Parliament, Strasbourg PART 3 INTERNATIONAL ASSET AND LIABILITY MANAGEMENT Chapters 1, 13, 14, & 15 Quiz #3 Chapter 17 Quiz #4 FINAL EXAM (Chapters 1, 10 - 15, & 17)
INTERNATIONAL FINANCIAL SYSTEM
6: Government Influence on Exchange Rates
4: Exchange Rate Determination
7: International Arbitrage and Interest Rate Parity
8: Relationships among Inflation, Interest Rates, and Exchange Rates
5: Currency Derivatives
10: Measuring Exposure to Exchange Rate Fluctuations
11: Managing Transactions Exposure
12: Managing Economic Exposure and Translation Exposure
1: Multinational Financial Management
13: Direct Foreign Investment
14: Multinational Capital Budgeting
15: Multinational Restructuring
Tuesday, June 18
17: Multinational Cost of Capital and Capital Structure
Wednesday, June 26 (10:00 a.m.)
Thursday, June 27
Visit Heineken Breweries in Strasbourg.
Tentative Course Outline
Chapters 2, 3, & 19
"If the world is not easy to forecast, what do you do?" Bloomberg Businessweek, 2/28-3/6/2011
"USA, Inc. Profiting From Freedom Since 1776: Red, White, and Very Blue" Bloomberg Businessweek, 2/28-3/6/2011
Monday, May 27
Chapters 6, 4, 7, & 8
Thursday, June 6
Visit to European Commission, Brussels
Friday, June 7
Paris cultural visits
FOREIGN EXCHANGE EXPOSURE MEASUREMENT AND MANAGEMENT
Chapters 5, 10, 11, & 12
Monday, June 10
Visit to Council of Europe, Strasbourg
Wednesday, June 12
MID-TERM EXAM (Chapters 2 - 8, & 19)
Thursday, June 13
Visit to European Parliament, Strasbourg
INTERNATIONAL ASSET AND LIABILITY MANAGEMENT
Chapters 1, 13, 14, & 15
FINAL EXAM (Chapters 1, 10 - 15, & 17)
FINC 645/IBUS 646: Research Paper
Please begin research paper work after return from France. PAPER DUE: August 15, 2013
Choose and analyze the sovereign debt crisis of one European country. The primary objective of the 10- page (double-spaced) research paper is to (1) analyze the causes, (2) study the economic reforms that was initiated, and (3) evaluate the management (and progress) of these programs on the country’s external debt, credit worthiness, and economic growth prospects. Since they are somewhat similar to what is going on the United States, you will want to investigate the policies being considered (or being implemented) and challenges being faced by the country to reign in public debt so that the country could become (a) credit worthy (AAA rating), and (b) brought to meet Eurozone’s main “growth and stability pact” criteria: public debt (< 60% of GDP), and fiscal deficit (of < 3% of GDP) over the medium term.
1) One-page basic country outline along with political map of the nation.
2) A table charting the growth of public deficit and debt starting 2005 to present (or latest year available in $ or €):
a. GDP ($ billion)
b. Budget deficit ($ billion)
c. Budget deficit (% of GDP))
d. Public (sovereign) debt ($ billion)
Debt held domestically ($ billion)
Debt held by foreign entities
Major countries holding Greek debt:
Major Banks holding Greek debt:
e. Public (Sovereign) debt (% of GDP)
3) Projected growth of sovereign debt for 2010-2015 period (if available)
4) Major causes for growth of public deficit and debt
5) How does the country’s exchange rate impact economic reform options and why?
6) Policies being considered to reign in the growth of public debt: Are these reform programs being implemented with the help of the IMF/ECB/EC or is this being done by the national government itself? What are the challenges being faced to implement these reform programs. Are domestic citizens taking the reform programs passively?
7) Conclusions: What is the country’s outlook for medium and long-term economic growth? And, also the social and political impact.
1) Jack Ewing, "Debt burden falls heavily on Germany and France," International Herald Tribune, June 14, 2010.
2) Jeff Madura, "International Finacnial Management," Thompsons- Southwestern, 10th edition. Read appendix on Mexican, Asia, and other debt crises.
3) IMF, International Financial Statistics, and their on-line database (West Campus library: speak to librarian).
4) Economist Intelligence Unit, Country Report (your chosen country) to be found on line in the West Campus Library.
(Dr. J Gaspar, 2013)
For more information about this course, please contact:
Dr. Julian Gaspar
Center for International Business Studies
Mays Business School
Texas A&M University
230 Wehner Building, TAMU 4116
College Station, TX 77840-4116