Fin ZG518

BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI
WORK INTEGRATED LEARNING PROGRAMMES

Digital
Part A: Content Design
Course Title Multinational Finance
Course No(s) FIN ZG518
Credit Units 4
Credit Model
Content Authors Krishnamurthy Bindumadhavan
Course Objectives
No
CO1 Gain insights into the principles of multinational finance
CO2 Gain basic understanding of the underlying concepts and building blocks related to
multinational finance
CO3 Understand the application of these concepts in financial decision making using suitable
examples, case studies, simulation, etc.
Text Book(s)
T1 David K. Eiteman, Arthur I. Stonehill & Michael H. Moffett, "Multinational Business
Finance", Pearson, 13th edition, 2013.
T2 Mihir A. Desai, “International Finance: A Case Book”, Wiley
Reference Book(s) & other resources

R1 Kirt C. Butler, “Multinational Finance: Evaluating the Opportunities, Costs, and Risks of
Multinational Operations”, Wiley, 6th edition, 2016.
R2 Jeff Madura, “International Corporate Finance”, Cengage Learning, 10th edition, 2012.
Content Structure
1. Module 1: Introduction to Global Financial Environment

1.1. Session 1: Current Multinational Financial Challenges
1.1.1. Financial Globalization and Risk
1.1.2. The Global Financial Marketplace
1.1.3. The Theory of Comparative Advantage
1.1.4. International Financial Management
1.1.5. Market Imperfections
1.1.6. The Globalization Processs
1.2 Session 2: Ownership and Governance of the Corporation
1.2.1 Who Owns the Business?
1.2.2 The Goal of Management
1.3 Session 3: The International Monetary System
1.3.1 History of the International Monetary System
1.3.2 IMF Classification of Currency Regimes
1.3.3 Fixed vs. Flexible Exchange Rates
1.3.4 Emerging Markets and Regime Choices
1.4 Session 4: The Balance of Payments
1.4.1 Typical Balance of Payments Transactions
1.4.2. Fundamentals of Balance of Payments Accounting
1.4.3 The Accounts of the Balance of Payments
1.4.4 The Capital and Financial Accounts
1.4.5 Trade Balances and Exchange Rates
1.4.6 Capital Mobility
2. Module 2: Foreign Exchange Theory

2.1. Session 5: The Foreign Exchange Market
2.1.1. Functions of the Foreign Exchange Market
2.1.2. Market Participants
2.1.3. Foreign Exchange Rates and Quotations
2.2 Session 6: International Parity Conditions
2.2.1. Prices and Exchange Rates
2.2.2. The Forward Rate
2.2.3. Prices, Interest Rates and Exchange Rates in Equilibrium
2.3 Session 7: Currency Derivatives
2.3.1. Foreign Currency Futures
2.3.2. Option Pricing and Valuation
2.3.3. Interest Rate Derivatives
3. Module 3: Multinational Exchange Rate Exposure

3.1. Session 8: The Determinants of Exchange Rates
3.1.1. Exchange Rate Determination
3.1.2. Currency Market Intervention
3.1.3. Disequilibrium: Exchange Rates in Emerging Markets
3.2 Session 9: Transaction Exposure Management
3.2.1 Types of Foreign Exchange Exposure
3.2.2 Trident’s Transaction Exposure
3.3 Session 10: Translation Exposure Management
3.3.1 Overview of Translation and its Methods
3.3.2 Trident’s Translation Exposure
3.4 Session 11: Operating Exposure Management
3.4.1 Trident Corporation: A Multinational’s Operating Exposure
3.4.2 Measuring Operating Exposure: Trident Germany
4. Module 4: Financing the Multinational Firm

4.1. Session 12: The Global Cost of Capital
4.1.1. Financial Globalization and Strategy
4.1.2. The Demand for Foreign Securities
4.2 Session 13: International Debt and Equity Financing
4.2.1 Designing a Strategy to Source Capital Globally
4.2.2 Optimal Financial Structure
4.2.3 Raising Equity & Debt Globally
5. Module 5: Foreign Investment Decisions

5.1. Session 14: International Portfolio Theory
5.1.1 International Diversification and Risk
5.1.2 Internationalizing the Domestic Portfolio
5.1.3 National Markets and Asset Performance
5.2 Session 15: FDI: Returns and Risks
5.2.1 Sustaining and Transferring Competitive Advantage
5.2.2 Deciding Where to Invest
5.3 Session 16: Multinational Investment and Acquisition
5.3.1 Complexities of Budgeting for a Foreign Project
5.3.2 Project vs. Parent Valuation
Learning Outcomes:
No Learning Outcomes
LO 1 Describe the international financial environment in the context of international
fund flows, international financial markets, and international financial agencies,
and how they affect multinational corporations
LO 2 Discuss the relationships among inflation, interest rates, and exchange rates
using the interest rate parity, the purchasing power parity and the international
Fisher effect theories
LO 3 Explain exchange rate determination, and how firms can manage their exchange
rate risk and capitalize on anticipated exchange rate movements
LO 4 Analyze multinational capital budgeting to enable firms to make informed
investment decisions
Experiential Learning Components:
1. This course will feature experiential learning components in the form of projects and assignments
(Financial modeling, analysis, case studies, simulations etc.) that are designed to enable the
participants to learn by doing. This will also form part of the Evaluation Components for the
course.
2. Please note that experiential learning components are integrated into the following modules:
Module Topic Experiential Learning
Component
2 Foreign Exchange
3 Multinational Exchange Rate
Exposure
4 Financing the Multinational Firm
5 Foreign Investments
Part B: Learning Plan
Academic Term FIRST SEMESTER 2017-18

Course Title Multinational Finance
Course No FIN ZG518
Lead Instructor C H Yaganti
Contact Hour 1
Type Content Ref. Topic Title Study/HW Resource Reference
Pre CH 1.1.1 Review Course Handout/ List your Chapter 1 of text book (T1)
expectations from this course
During 1.1.1 to 1.1.3 Financial Globalization and Risk, Chapter 1 of text book (T1)
CH The Global Financial Market
Place, The Theory of Competitive
Advantage
Post CH 1.1.1 to 1.1.3 Review reference chapters from Chapter 1 of text book (T1)
textbook; replay videos as needed
to clarify understanding
Contact Hour 2
Pre CH 1.1.1 to 1.1.3 Review Course Handout/ List your Chapter 1 of text book (T1)
expectations from this course
During 1.1.4 to 1.1.6 International Financial Chapter 1 of text book (T1)

CH Management, Market
Imperfections, The Globalization
Process
Contact Hour 3
Pre CH 1.1.1 to 1.1.6 Review previous week's topics. Chapter 2 of text book (T1)
During 1.2.1 Who owns the business? Chapter 2 of text book (T1)
CH
Post CH 1.2.1 Review reference chapters from Chapter 2 of text book (T1)
Contact Hour 4
Pre CH 1.2.1 Review previous week's topics. Chapter 2 of text book (T1)
During 1.2.2 The Goal of Management Chapter 2 of text book (T1)

CH
Contact Hour 5
During 1.3.1, 1.3.2 History of IMF and its Chapter 3 of text book (T1)
CH classification
Post CH 1.3.1, 1.3.2 Review reference chapters from Chapter 3of text book (T1)
Contact Hour 6
Pre CH 1.3.1, 1.3.2 Review previous week's topics. Chapter 3of text book (T1)
During 1.3.3, 1.3.4 Fixed vs. Flexible Exchange Rates, Chapter 3 of text book (T1)
CH Emerging Markets
Post CH 1.3.3, 1.3.4 Review reference chapters from Chapter 3of text book (T1)
Contact Hour 7
During 1.4.1 to 1.4.3 Balance of Payments Chapter 4 of text book (T1)

CH
Contact Hour 8
During 1.4.4 to 1.4.6 Capital Mobility Chapter 4 of text book (T1)

CH
Contact Hour 9
During 2.1.1 Functions of Foreign Exchange Chapter 6 of text book (T1)

CH Market
Contact Hour 10
During 2.1.2, 2.1.3 Market Participants, Foreign Chapter 6 of text book (T1)
CH Exchange Rates
Post CH 2.1.2, 2.1.3 Review reference chapters from Chapter 6 of text book (T1)
Contact Hour 11
During 2.2.1, 2.2.2 Prices and Exchange Rates, The Chapter 7 of text book (T1)
CH Forward Rate
Contact Hour 12
Pre CH 2.2.1, 2.2.2 Review previous week's topics. Chapter 7 of text book (T1)
During 2.2.3 Prices, Interest rates and exchange Chapter 7 of text book (T1)
CH rates
Contact Hour 13
During 2.3.1, 2.3.2 Foreign Currency Futures, Option Chapter 8 of text book (T1)
CH pricing and valuation
Contact Hour 14
During 2.3.3 Interest Rate Derivatives Chapter 8 of text book (T1)

CH
Contact Hour 15
During 3.1.1, 3.1.2 Exchange Rate, Currency Market Chapter 9 of text book (T1)
CH
Contact Hour 16
During 3.1.3 Disequilibrium Chapter 9 of text book (T1)

CH
Contact Hour 17
During 3.2.1 Types of Foreign Exchange Chapter 10 of text book (T1)

CH Exposure
Contact Hour 18
During 3.2.2 Trident’s Case Chapter 10 of text book (T1)

CH
Contact Hour 19
During 3.3.1 Overview of Translation and its Chapter 11 of text book (T1)
CH Methods
Contact Hour 20
During 3.3.2 Trident’s case Chapter 11 of text book (T1)

CH
Contact Hour 21
During 3.4.1 Trident’s case Chapter 12 of text book (T1)

CH
Contact Hour 22
During 3.4.2 Trident Germany Chapter 12 of text book (T1)

CH
Contact Hour 23
During 4.1.1 Financial Globalization and Chapter 13 of text book (T1)

CH Strategy
Contact Hour 24
During 4.1.2 The Demand for Foreign Securities Chapter 13 of text book (T1)
CH
Contact Hour 25
During 4.2.1, 4.2.2 Designing a strategy, Optimal Chapter 14 of text book (T1)
CH Financial Structure
Contact Hour 26
During 4.2.3 Raising debt and equity globally Chapter 14 of text book (T1)
CH
Contact Hour 27
During 5.1.1, 5.1.2 Internationalization Chapter 16 of text book (T1)

CH
Contact Hour 28
During 5.1.3 National Markets and Asset Chapter 16 of text book (T1)
CH Performance
Contact Hour 29
During 5.2.1 Sustaining and transferring Chapter 17 of text book (T1)

CH competitive advantage
Contact Hour 30
During 5.2.2 Where to Invest? Chapter 17 of text book (T1)

CH
Contact Hour 31
During 5.3.1 Complexities of Budgeting Chapter 18 of text book (T1)

CH
Contact Hour 32
During 5.3.2 Project vs. Parent Valuation Chapter 18 of text book (T1)
CH
Evaluation Scheme:
Legend: EC = Evaluation Component; AN = After Noon Session; FN = Fore Noon Session
No Name Type Duration Weight Day, Date, Session, Time
EC-1 Quiz-I/ Assignment-I Online - 5% August 26 to September 4, 2017
Quiz-II Online 5% September 26 to October 4, 2017
Experiential Online 15% October 20 to 30, 2017

Learning
EC-2 Mid-Semester Test Closed 2 hours 30% 24/09/2017 (AN) 2 PM – 4 PM
Book
EC-3 Comprehensive Open 3 hours 45% 05/11/2017 (AN) 2 PM – 5 PM
Exam Book
Syllabus for Mid-Semester Test (Closed Book): Topics in Contact Nos. 1 TO 16

Syllabus for Comprehensive Exam (Open Book): All topics
Important links and information:
Elearn portal: https://elearn.bits-pilani.ac.in
Students are expected to visit the Elearn portal on a regular basis and stay up to date with the latest announcements and
deadlines.
Contact sessions: Students should attend the online lectures as per the schedule provided on the Elearn portal.
Evaluation Guidelines:
1. EC-1 consists of either two Assignments or three Quizzes. Students will attempt them through the course pages
on the Elearn portal. Announcements will be made on the portal, in a timely manner.
2. For Closed Book tests: No books or reference material of any kind will be permitted.
3. For Open Book exams: Use of books and any printed / written reference material (filed or bound) is permitted.
However, loose sheets of paper will not be allowed. Use of calculators is permitted in all exams.
Laptops/Mobiles of any kind are not allowed. Exchange of any material is not allowed.
4. If a student is unable to appear for the Regular Test/Exam due to genuine exigencies, the student should follow
the procedure to apply for the Make-Up Test/Exam which will be made available on the Elearn portal. The
Make-Up Test/Exam will be conducted only at selected exam centres on the dates to be announced later.
It shall be the responsibility of the individual student to be regular in maintaining the self study schedule as given in the
course handout, attend the online lectures, and take all the prescribed evaluation components such as Assignment/Quiz,
Mid-Semester Test and Comprehensive Exam according to the evaluation scheme provided in the handout.

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BIRLA INSTITUTE OF TECHNOLOGY & SCIENCE, PILANI

WORK INTEGRATED LEARNING PROGRAMMES

CO1 Gain insights into the principles of multinational finance

Reference Book(s) & other resources

1. Module 1: Introduction to Global Financial Environment

2. Module 2: Foreign Exchange Theory

3. Module 3: Multinational Exchange Rate Exposure

4. Module 4: Financing the Multinational Firm

5. Module 5: Foreign Investment Decisions

Experiential Learning Components:

Part B: Learning Plan

Academic Term FIRST SEMESTER 2017-18

Lead Instructor C H Yaganti

During 1.1.4 to 1.1.6 International Financial Chapter 1 of text book (T1)

During 1.2.2 The Goal of Management Chapter 2 of text book (T1)

During 1.4.1 to 1.4.3 Balance of Payments Chapter 4 of text book (T1)

During 1.4.4 to 1.4.6 Capital Mobility Chapter 4 of text book (T1)

During 2.1.1 Functions of Foreign Exchange Chapter 6 of text book (T1)

During 2.3.3 Interest Rate Derivatives Chapter 8 of text book (T1)

During 3.1.3 Disequilibrium Chapter 9 of text book (T1)

During 3.2.1 Types of Foreign Exchange Chapter 10 of text book (T1)

During 3.2.2 Trident’s Case Chapter 10 of text book (T1)

During 3.3.2 Trident’s case Chapter 11 of text book (T1)

During 3.4.1 Trident’s case Chapter 12 of text book (T1)

During 3.4.2 Trident Germany Chapter 12 of text book (T1)

During 4.1.1 Financial Globalization and Chapter 13 of text book (T1)

During 5.1.1, 5.1.2 Internationalization Chapter 16 of text book (T1)

During 5.2.1 Sustaining and transferring Chapter 17 of text book (T1)

During 5.2.2 Where to Invest? Chapter 17 of text book (T1)

During 5.3.1 Complexities of Budgeting Chapter 18 of text book (T1)

Experiential Online 15% October 20 to 30, 2017

Syllabus for Mid-Semester Test (Closed Book): Topics in Contact Nos. 1 TO 16

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