W1International Business Finance

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Lecture Program
Date 24-Sep Week 1 Topic Multinational Busines Finance and Corporate Governance. Mini-case Enron. 1-Oct 2 Corporate Governance (evidence).
8-Oct
15-Oct 22-Oct
3
4 5
Foreign exchange rate. Balance of Payments.
International Parity Conditions. Set coursework. International Parity Conditions. DataStream tutorial (computers room Management School) Reading week Foreign Exchange Rate Determination. International Financial Markets and derivatives. International Financial Markets and derivatives. Foreign Exchange Risk Management (internal and external techniques of exposure management)
With one unit of production (a mix of land, labor, capital, and technology), efficient Thailand can produce either 12 shipping containers of shoes or 6 shipping containers of stereo equipment Brazil, being less efficient in both, can produce only 10 containers of shoes or 2 containers of stereo equipment with one unit of input
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A “simplistic” definition
International finance is the branch of economics that studies the dynamics of exchange rates, foreign investment, and how these affect international trade
Free trade Perfect competition No uncertainty Costless information No government interference
The Theory of Comparative Advantage – An Example
Assume Thailand is more efficient than Brazil at producing both sports shoes and stereo equipment
Globalization and Creating Value in the MNE
Transnational firms are those with ownership thoroughly dispersed internationally and as a result are often managed from a global perspective
Creating Firm Value in Global Markets
The Theory of Comparative Advantage
The theory of competitive advantage provides a basis for explaining and justifying international trade in a model assumed to enjoy
29-Oct 5-Nov 12-Nov 19-Nov 26-Nov
6 7 8 9Βιβλιοθήκη 103-Dec11
Foreign Exchange Risk Management (internal and external techniques of exposure management)
10-Dec
12
Political Risk Assessment and Management. Review
ECON914 International Finance
Professor Ólan Henry olan.henry@ Office F1A
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Teaching
Mondays 14:00-17:00
Workshops included in this time
Office Hours:
7
Module Handbook
Please read the module handbook carefully
Timetables Assessment Deadlines References
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Aims Lecture 1
The aims of today’s lecture are: Introduce the concept of International Finance Understand the goal of management when there is separation between ownership and control Outline the role of corporate governance
Building firm value in a global business requires An open marketplace Strategic management Access to capital The firm value pyramid illustrates the concept of building firm value
•Only Brazil Benefits
Situation before
Trade at Brazil’s domestic “Price”
•Only Thailand Benefits
Situation before
Trade at a Price Reached by Free Bargaining
Wednesdays 10:00-12:00
2
Core Reading
The main reading for this module is:
Fundamentals of Multinational Finance, by Michael H. Moffett, Arthur I. Stonehill and David K. Eiteman, Addison Wesley, Second edition. Buckley, Adrian, “Multinational finance”, Financial Times/Prentice Hall, 2004, 5th edition.
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Additional Reading
Shapiro, Alan C., “Multinational financial management”, New York : J. Wiley & Sons, 2006, 8th edition. Ross / Westerfield / Jaffe, “Corporate Finance”, Seventh edition, McGraw-Hill. Butler; Multinational Finance, 3rd edition Madura and Fox, International Financial Management, Thomson.
Trade can resolve that distribution problem
This exchange ratio will determine how the larger output is distributed
Trade at Thailand’s domestic “Price”
The Theory of Comparative Advantage – An Example (2)
The Theory of Comparative Advantage – An Example (3)
Clearly the world in total is better off because there are now 10,000 containers of shoes (instead of just 6,000), as well as 6,000 containers of stereo equipment (instead of just 5,600) However, the goods are not distributed across international boundaries!
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Assessment
2-hour written examination at the end of the term – 80% Assessed Coursework – 20%
This assessment is on the following topic: “Testing the interest rate parity condition for a chosen pair of bi-lateral exchange rates”. Candidates will be in groups of 4. Each group assignment must be submitted no later than Friday 30th of November 2012 to the Postgraduate office. Reference: Lothian, J and Wu, L (2005) “Uncovered Interest Rate Parity over the Past Two Centuries”, /lothian/pages/papers/uip07.pdf