FIN 456/Fin 556 International Financial Management

School of Business Administration - Portland State University CRN 65646 / 65647

Spring 2009
Instructor:

Ulrich Uli Kammholz, MBA

Adjunct Faculty, School of Business Administration
Portland State University,
Portland, Oregon 97207

Class Periods:
Time:
Dates:
Place:

Mondays and Wednesdays

15:15 17:05 hours
March 30 June 10, 2009
TBD

Office:

I do not have an office on Campus, but I will be happy to schedule

time with students 1 hour prior to class or within 1 hour after class.
Please schedule via e-mail
Email: ulrichk@pdx.edu

Final Exam.

Wednesday, June 10, 2009, 15:15 17:05 hours

PURPOSE: The primary purpose of the course is to examine and understand the
conceptual framework that provides the foundation to analyze key financial decisions of
an international business or one exposed to global competition. The international aspects
of financial management, or similarly, the foreign financial operations from the
perspective of a multinational corporations (MNC) build upon the principles of financial
management. Thus, the course builds upon and extends the valuation framework of
domestic corporate finance and integrates the dimensions unique to international finance.
OBJECTIVES: The financial management function of global firms can be divided into
five distinct segments for ease of understanding the many aspects of the subject. The
underlying premise is that the MNC serves as a catalyst and facilitator of international
trade and as an important producer and distributor in host countries.
1. Understanding the international economic and financial environment. Part I.
2. Understanding the foreign exchange rate determination, including the foreign
exchange and derivatives markets. Part II.
3. Understanding foreign exchange exposure measurement and management. Part III.
4. Understanding the financial management aspects of the MNC. Part IV.
5. Understanding the world financial markets and institutions. Part V.
METHOD: The course is conducted through a series of lectures, selected case studies
(text short cases and two longer case handouts), and end of chapter questions and
problems. Students are required to write case briefs on the longer cases. On occasion a
group of 2 or 3 students will be asked to lead one case discussion session. On such
occasions, these 2-3 students can submit a collective case brief.

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FIN 456/Fin 556 International Financial Management

School of Business Administration - Portland State University CRN 65646 / 65647
Spring 2009
SHORT PAPER: Students are encouraged to read the daily press to select an
international economic or financial topic of interest, and are required to write a short
paper (3, not more than 10 pages) on that topic and its relevance to international finance.
The topic can also be about a world financial institution. International economic or
financial topics will be discussed in class and students may volunteer presenting their
topic to class. There will be a sign up sheet to avoid duplication of the topics.
LONGER CASE STUDIES: There will be two longer case studies Mercedes Benz and
Merck & Co., Inc. MSDIAlcala de Henares, Spain. Each student must read the case
before coming to the class and submit a one to two page case brief answering the specific
assignment questions. The brief should include a very short case background, the case
problem, brief analysis and possible alternative solutions.
If a group--in this class, it will be graduate students--is asked to lead the case analysis and
discussion, they will be allowed 15 minutes to cover the important aspects of their
analysis. The group presenting their views can submit one joint case brief. All other
students--graduate and undergraduate--must submit individual case briefs.
END OF CHAPTER ASSIGMENTS: There are frequent end-of chapter questions and
problems assignments, which serve as very useful and important reviews of the subject
matter. These assignments will be collected at the beginning of each week. Note: You
are strongly urged to turn in assignments each week. If you miss some of the
assignments, the ultimate deadline is the day of the classroom examination. For
example, the latest day to turn in all assigned materials from Chapters 1-7 of the
textbook is the day of the first classroom exam.
EXAMINATIONS: There is a mid-term examination and also a final examination based
upon topics and materials covered.
GRADING:
Mid-term
Final
Case Brief (s)
Assignments: Questions & Problems
Short Paper

30% in class exam.

30% in class exam
20%
15%
5%

COURSE POLICIES: Each student is expected to read the assigned materials before
coming to class, attend all lectures, keep up with the topics covered, complete assigned
work and presentations, be responsible for all in-class and e-mail announcements, and
take the scheduled examinations. If a student has an approved compelling reason for not
taking the mid-term, a special make-up examination must be arranged with the instructor
and taken in the PSU Testing Center (at UCB). Students failing to take an examination
without prior approval will receive zero points. As to class attendance, experience
indicates that your grades are usually lowered if you miss more than 5 class sessions, and

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FIN 456/Fin 556 International Financial Management

School of Business Administration - Portland State University CRN 65646 / 65647
Spring 2009
normally students should not expect to have a passing grade if 7 or more class sessions
are missed.
PARTICIPATION: While I will not explicitly grade your participation, for students on a
grading margin (i.e., B vs. B+, etc.), I will consider participation as an extra grading
factor.
CLASS ROOM ENVIRONMENT: I want to foster a classroom environment that is
conducive to learning. Generally, I feel it is best to run class in an informal/relaxed
fashion. However, I expect students to behave as professionals by treating other class
participants with courtesy and respect. I will do likewise. Please show up on time and
ready to start at the scheduled time. Treat class time as a regular business meeting that is
vital to your career progression.
MATTERS OF ACADEMIC INTEGRITY: As indicated throughout the syllabus, the
penalties for academic dishonesty are quite severe, and could result in a non-passing
grade for the course. Please consult with me if you need to discuss specific situations
regarding academic integrity.
TEXTBOOK:
Cheol S. Eun and Bruce Resnick, International Financial Management, Fifth
Edition (Boston, McGraw-Hill Irwin, 2009).
CASE STUDIES:
Mercedes Benz - Harvard Business School #9-394-084, November 30, 1993
MSDIAlcala de Henares, Spain (Merck & Co., Inc.) Harvard Business School
# 9-289-029, September 7, 1995
REFERENCES:
For a more detailed background on international economics see, Paul Krugman and
Maurice Obstfeld, International Economics: Theory and Practice, 8th edition (Reading,
Mass., Addison-Wesley Publishing Company, 2008).
For a more advanced reference on international financial markets see, Richard M. Levich,
International Financial Markets: Prices and Policies, 2nd edition (NY, McGraw-Hill, 2001)
Other suggested references for current events useful for your paper.
Euromoney
Wall Street Journal and Asian Wall Street Journal
Asia Money
Treasury and Risk Management
The Economist
Financial Times
Business Week

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FIN 456/Fin 556 International Financial Management

School of Business Administration - Portland State University CRN 65646 / 65647
Spring 2009

Course Outline (to be updated)

I.

INTERNATIONAL FINANCIAL ENVIRONMENT.

Chapter 1. Introduction to MNE & multinational financial mgt.
Assignment: Questions 1,2 & 3 on Mini Case on Nike, as well as What is the
comparative advantage of the countries Nike product is produced in? Also check
internet exercise on Nestle.
Chapter 3. Balance of Payments.
Assignment: Questions # 3,4 & 5.
Chapter 2. International Monetary System.
Assignment: Summarize in a page, the commonalities from Mexican Peso Crises,
the Asian Crises, and the Argentine Peso Crises and relate them to the current
Global Financial Crisis. There are many new terms in this chapter, see Key
words on p. 57,
Chapter 4. Corporate Governance.
Discuss in class, Mini Case on Parmalat and its relevance to the current crisis, i.e.
Bernard L. Madoff Investment Securities LLC, Stanford Financial Group, etc.

II.

Foreign Exchange Market and Derivatives.

Chapter 5. Foreign Exchange Market Mechanics.
Assignment: TBD
Chapter 6. International Parity Relationships.
Assignment: TBD
Chapter 7. Currency Futures and Options.
Assignment: TBD

Mid-term Exam Wednesday, April 29, 2009 15:15 17:05 hours.

(Exams normally take 1 week to grade.)

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FIN 456/Fin 556 International Financial Management

School of Business Administration - Portland State University CRN 65646 / 65647
Spring 2009
III.

Measuring and Managing FX Exposure

Chapter 8. Transaction Exposure.
Assignment: TBD
Chapter 9. Economic Exposure.
Assignment: TBD
Chapter 10. Translation or Accounting Exposure.
Assignment: TBD
Case Study: Mercedes Benz

IV.

Financial Management Aspects of MNC.

Chapter 20. Financing International Trade.
Assignment: TBD
Chapter 18. Multinational Capital Budgeting.
Assignment: TBD
Case Study: MSDIAlcala de Henares, Spain (Merck & Co., Inc.)
Chapter 16. Corporate Strategy and Foreign Direct Investment.
Assignment: TBD

V.

Financing Globally: the issues (March 9, 11)

Chapters 12 & 13. International Bonds and Equities.
Assignment: TBD
Chapter 14. Interest Rate and Currency Swaps.
Assignment: TBD

Final Exam Wednesday, June 10, 2009, 15:15 17:05 hours.

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