The University of Texas at Dallas

Global Leadership Executive MBA Program

IMS 6220: International Corporate Finance

Summer 2008: Feb 18 – March 30, 2008

Professor Contact Information

Jonathan Hochberg Phone: (972) 883.6462 office Fax: (972) 883.6164
E-Mail: Use Blackboard e-mail

Course Pre-requisites, Co-requisites, and/or Other Restrictions

Financial Management FIN6301

Course Description
This course focuses on corporate financial management issues faced by managers
operating in the global financial markets. Foreign operations and international financing
possibilities entail additional opportunities, risks, and complexities that must be
understood by both financial and strategic managers. The purpose of this course is to
analyze the critical factors, risks, and decisions that relate to both the short-term and
long-term financial position of the firm in an internationalized setting and discuss
strategies for dealing with these added complexities.

Student Learning Objectives/Outcomes

• Learn the evolution of the financial context of international business, including the
development of foreign exchange markets.
• Gain knowledge of the exposures and risks faced by a firm doing business in
multiple currency environments, as well as how to hedge or mitigate those risks.
• Learn about funding options for international operations and how foreign
investment decisions are made.
• Learn the ways in which international operations create additional financial
management demands on the firm.

Text: (ESM) Eiteman, David K., Arthur I. Stonehill & Michael H. Moffett. 2001.
9th Edition. Multinational Business Finance. Reading, MA: Addison-
Wesley. (You can buy the 9th edition used and save some $$)

Articles: Listed by Week Due

Cases: Listed by Week Due

Course Syllabus Page 1

Grading Policy and Evaluation

• Emphasis in this course is on content mastery, critical thinking, and

demonstrated ability to apply marketing concepts to business situations

• Individual Assignments: 50%

Lufthansa Case 25%

Final Exam- Far East Trading Case 25%

• Team Assignments: 50%

Team Presentations 50%

Written Assignments

1. Individually written cases (Lufthansa, p. 187 text and The Far East Trading Co., p
583 text)

Students prepare a written response to each question as a Word document (12 pt. Font
in Times New Roman or Arial). All assignments need to be sent to the digital drop box
via Blackboard. The name of the Word document should include the student's last name
as a part of the title: e.g. smithlufthansa.doc. Individual assignments should be a
maximum of four pages, double-spaced and must reflect your own thoughts on the case.
The write-up should begin with a brief summary of your recommendations, followed by
the justification for those arguments. Spend as little time and space as possible on the
facts of the case--- assume the basics are understood.

Final Exam (The Far East Trading Company)

The final case is the final exam and is an individual written assignment and will test
individual understanding of concepts. The exam will cover the material in the case
(pp. 583-589) of the text. For the Far East Trading Company case use the 2 issues
presented at the end of the case as well as the following questions to frame your
thinking?

1. What are both the short-term and long-term impacts of the Asian currency
crisis on corporate earnings and cash flows of multinational firm?

2. What actions should Jan Karl take to prepare and position the Far East
Trading Company for weathering the Asian flu?

2. Team Presentations. Please prepare a team presentation using 3 power point

slides to answer the research questions dealing with issues of international corporate
finance for presentation on the scheduled web conferences. (See team questions
assigned at end of syllabus).

Course Syllabus Page 2

Evaluation of written assignments and project papers will be based on thoughtful,
analytical, well-constructed responses demonstrating knowledge of the topic by citing
examples of the key concepts present in the readings or cases.

• A ---Excellent: Understanding of all key issues; no important analytical errors

or omissions; concise, very well written and organized, makes appropriate
use of charts and tables.
• B---Good: Understanding of most issues; only a few important issues not
discussed; few analytical errors; well-written and well-organized, makes
appropriate use of charts and tables.
• C---Adequate: Understanding of many issues, but not all important aspects
covered; various analytical errors; excessive case recitation unsupported by
analysis; poorly written or organized, makes inappropriate use of charts and
tables.

Web Conference Discussions

The purpose of the teleconferences is to discuss class material. Participation in the
teleconferences will assist you in understanding the assignments. Participation will be
evaluated using the following criteria:

• A --- Excellent comments: answers questions appropriately; understands all

key issues; often develops discussion by building on or integrating others’
comments
• B --- Good comments: answers most questions appropriately; understands
most key issues; introduces some new issues or adds to others’ comments
• C --- Adequate comments: answers few questions appropriately; understands
some issues, but not all important aspects; introduces issues without
reference to prior discussion or repeats previous points.

Course & Instructor Policies

Format for Written Assignments

Written assignments should be Word documents (no html formats) that are:
• Double-spaced, 12 pt. Arial or Times New Roman font
• Citations properly formatted in MLA style
• Clearly identified by author or team
o For an individual assignment, the student name needs to be on the first
page of the document AND as part of the document name, i.e.
Jonessocres.doc when it is submitted.
o For a team assignment, the team number and names of team participants
on the first page AND the team number as part of the document name i.e.
Team2MNCs.doc when it is posted
o There is no need for a separate cover pages

Submission
Assignments should be posted on Blackboard (Bb) within the course area by the due
date. Assignments are submitted to the Digital Drop Box under Tools tab. Be sure to
use the SEND command to submit to the Drop Box. Do not use ADD command to post.

Course Syllabus Page 3

Late Assignments
If you need to miss an assignment deadline, you must pre-notify the instructor and
course manager before the deadline. You should provide the reason for missing the
deadline and an alternative date for submitting the assignment. The instructor and
course manager must approve the extension and the new deadline. If you do not pre-
notify the instructor, the instructor may determine the appropriate grade deduction for the
assignment.

Evaluations:

Peer Evaluation
Students need to complete a peer evaluation for each team assignment. The peer
evaluation is an electronic document whose link is located on Blackboard (Bb) in the
course area under the Information button. Students allocate 100 points among the team
members to reflect the level of contribution made by each team member on a specific
assignment.

Course Evaluation
The completion of a course evaluation is a course requirement. Students need to
complete a course evaluation form which is an electronic document whose link is located
on Blackboard (Bb) in the course area under the Information button. Students who do
not submit a course evaluation by the due date will receive an incomplete grade for the
course.

Schedule of Assignments
______________________________________________________________

Week 1 : THE INTERNATIONAL MONETARY SYSTEM

Dates : Feb 18- Feb 24

Lecture : Power Point Slides and Audio Lecture 1 on Blackboard
Readings : Chapters 1&2
_____________________________________________________________________

Week 2 : FOREIGN EXCHANGE MARKETS

Dates : Feb 25- March 2

Lecture : Power Point Slides and Audio Lecture 2 on Blackboard
Readings : Pages 59-83; 103-118; 122-131; Skim rest of Chapters 3-5

Weekly : Post to colleague’s discussion topic (posted on Feb 25)

Discussion
Topic:
_______________________________________________________________

Course Syllabus Page 4

Week 3 : FOREIGN EXCHANGE EXPOSURE AND MANAGEMENT

Dates : March 3- March 9

Lecture : Power Point Slides and Audio Lecture 3 on Blackboard
Readings : Pages 152-170; 202-225; Skim Chapter 8; rest of Chapters 6 & 7

Assignment : Individual written case due– Lufthansa (post to Digital Drop box
Bb)
Due date : Sunday, March 9

Week 4 : FINANCING THE GLOBAL FIRM

Dates : March 10- March 16

Lecture : Power Point Slides and Audio Lecture 4 on Blackboard
Readings : Pages 303-310; 336-340; 361-366; Skim Rest of Chapters 10-12

Plan ahead
Team assignment: Teams #1 -4 post team ppt presentations to Discussion board by
March 17.

Web conference: Saturday, March 15 at 3pm- 4pm CST. (We will discuss the
Lufthansa case)

Peer Evaluation March 21

Due:
______________________________________________________________________
Week 5 : INTERNATIONAL INVESTMENT DECISIONS

Dates : March 17 – March 23

Lecture : Power Point Slides and Lecture 5 on Blackboard
Readings : Pages 406-420; 469-475; Skim Chapter 13; Rest of Chapters14

Web conference: Wednesday, March 19 at 7pm- 9pm CST. (Teams #1-4 will
present)
Plan ahead
Team assignment: Teams #5-8 post team ppt presentations to Discussion board by
March 21.
______________________________________________________________________
Week 6 : INTERNATIONAL FINANCIAL OPERATIONS TOPICS
Dates : March 24 – March 30
Readings : Pages 519-525; 530-544; 554-564; Skim rest of Chpts 18 and 19

Assignment : Individually written Case Final: The Far East Trading Company
(text pp. 583-589) post to Digital Drop box Bb.

Due date : March 30

Web conference: Tuesday, March 25 at 7pm- 9pm CST. (Teams# 5-8 to present)

Course Eval : April 1

Course Syllabus Page 5

Academic Integrity

The faculty expects from its students a high level of responsibility and academic
honesty. Because the value of an academic degree depends upon the absolute
integrity of the work done by the student for that degree, it is imperative that a
student demonstrate a high standard of individual honor in his or her scholastic
work.

Scholastic dishonesty includes, but is not limited to, statements, acts or

omissions related to applications for enrollment or the award of a degree, and/or
the submission as one’s own work or material that is not one’s own. As a
general rule, scholastic dishonesty involves one of the following acts: cheating,
plagiarism, collusion and/or falsifying academic records. Students suspected of
academic dishonesty are subject to disciplinary proceedings.

Plagiarism, especially from the web, from portions of papers for other classes,
and from any other source is unacceptable and will be dealt with under the
university’s policy on plagiarism (see general catalog for details). This course will
use the resources of turnitin.com, which searches the web for possible plagiarism
and is over 90% effective.

Team Assignments
Due for presentations on Web conferences of 3/19 and 3/25

Please prepare a team presentation using 3 power point slides to answer the research
questions dealing with issues of international corporate finance for the web conference
presentations. Please post to the discussion board on the specified due date. I
have provided some URLs to give you a starting point with your research.

Team #1- Operating Exposure: Using the following major periodicals as starting
points; find a current example of a firm with a substantial operating exposure problem.
To aid your search, focus on businesses having major operations in countries with
recent currency crises through either depreciation or major home-currency appreciation.
What are the circumstances that led to the firm’s predicament? How could this have
been avoided or the risks reduced?
Financial Times http://www.ft.com/
The Economist http://www.economist.com/
The Wall Street Journal http://www.wsj.com/

Team #2- SEC Edgar Files: In order to analyze an individual firm’s operating exposure
more carefully, it is necessary to have more detailed information available than in the
normal annual report. Choose a specific firm with substantial international operations
i.e., Coca- Cola or PepsiCo, and research the Security and Exchange Commission’s

Course Syllabus Page 6

Edgar files for more detailed financial reports of their international operations. How
would this information prove valuable and to whom?
http://www.sec.gov/edgar/searchedgar/webusers.htm

Team #3 -Overseas Private Investment Corporation (OPIC): The OPIC provides

long-term political risk insurance and limited- recourse project-financing aid to U.S. -
based firms investing abroad. Using the organization’s web page, answer the following
questions:
Exactly what types of risks will OPIC insure against?
What financial limits and restrictions are there on this insurance protection?
How does the inconvertibility insurance work?
How should a project be structured to aid in its approval for OPIC project financing?
http://www.opic.gov/

Team #4- Changing Accounting Practices: FASB- FASB promulgates standard

practices for the reporting for financial results by companies in the U.S. It also, however,
often leads the way in the development of new practices and emerging issues around
the world. One major such issue today is the valuation and reporting of financial
derivatives and derivative agreements by firms. Use the FASB’s home page and the
web pages for several of the major accounting firms and other interest groups to see the
current proposed accounting standards and the current sate of reaction to the proposed
standards. Report on your findings? What are the implications for international
corporate finance? Investing overseas?
FASB home page http://www.fasb.org/

Team #5- The International Swaps and Derivatives Association (ISDA)- The ISDA is
the primary global organization that attempts to both standardize the use of interest rate
and cross-currency swaps and track the market’s size. Use ISDA’s web site as a
starting point to research which type of interest rate derivatives is growing the fastest—
the plain vanilla interest rate swap, the cross currency swap, and the various interest
rate options. Define each of these and describe how and why international businesses
use these financial vehicles? ISDA http://www.isda.org/

Team #6-The Euro Prior to Launch: Use the web page below to determine the value
of the euro before its introduction on January 1, 1999. The calculation of the euro’s
value before its introduction—assuming the fixed parities established by the EU on
December 31, 1998—gives some insight as to how its value has theoretically fluctuated
even prior to its official launch. Discuss this and how the euro it currently trading against
the Dollar, the Yen and other major world currencies? http://pacific.commerce.ubc.ca/xr

Team #7 –Transfer Pricing: A number of international banks and consultancies

provide ongoing advisory services on transfer pricing. What is transfer pricing and how
and why is it used as a strategy in international corporate finance? Use google.com

Course Syllabus Page 7

and visit the websites of the large consulting firms to determine what pricing practices
are defensible.

Team #8– How are debt/equity swaps used by MNFs? and What are Brady
Bonds?:
MNFs may use debt/equity swaps under certain circumstances. What are those
circumstances and how can this technique be of value to an MNF. One starting point is
is to go to www.investopedia.com Give a few examples of firms’ using Debt/equity
swaps. Research Brady bonds- explain what they are and the context of when they
were originated and for what purpose.

Course Syllabus Page 8