Preparing for the midterm on Tuesday, October 13 Office hours: Monday after class and by appointment Roughly 1 / 4 multiple choice and T / F 1 / 2 short answer and problems 2 / 4 longer answer Bring a calculator. No phones.
Preparing for the midterm on Tuesday, October 13 Office hours: Monday after class and by appointment Roughly 1 / 4 multiple choice and T / F 1 / 2 short answer and problems 2 / 4 longer answer Bring a calculator. No phones.
Preparing for the midterm on Tuesday, October 13 Office hours: Monday after class and by appointment Roughly 1 / 4 multiple choice and T / F 1 / 2 short answer and problems 2 / 4 longer answer Bring a calculator. No phones.
Office hours: Monday after class and by appointment Roughly multiple choice and T/F short answer and problems longer answer Bring a calculator. No phones. TOPICS TO STUDY
Multinational corporations (MNCs)
Decisions that MNCs face Management structures (e.g., parents, subsidiaries) Agency costs in an MNC Centralized vs. decentralized management Reasons/methods for MNC international expansion MNC valuation Sensitivity of MNC valuation (cash flow and exchange rate) MNC cost of capital International financial markets FICC FX market and exchange rates Forward contracts and rates International money market International flow of funds Definition and components of balance of payments U.S. exports and imports Trade balance, current account, and payment flows Capital account and financial account Government influence on exchange rates Exchange rate systems (e.g., fixed vs. freely floating) Euro and ECB Government invention direct vs. indirect Intervention to stimulate economy and to slow economy History of Bretton Woods, including gold standard Role of the IMF Federal reserve and international finance The dual mandate and expectations of Fed policy
The September 17 FOMC decision, including recent global
developments Trading the dollar around an FOMC decision The market reaction to the FOMC decision Janet Yellens speech a week later Responses of interest rates and the dollar Expectations hypothesis of the yield curve Path of dollar during the days following the Fed statement
Exchange rate determination
Three ways to measure the value of money Currency appreciation and depreciation Supply and demand of currency Equilibrium exchange rate determination Factors that shift supply and demand curves Trade positions in FX The carry trade Forecasting exchange rates Benefits How forecasting affects MNC decisions, which affects MNC valuation Technical, fundamental, and market-based forecasting Bias and standard error in forecasting Measuring exposure to exchange rate fluctuations Exchange rate risk Transaction, economic, and translation exposure Reasons not to hedge MNC as a portfolio of cash flows Currency volatility and correlations VaR in exchange rate risk Effect on sales, cost of materials, and interest expenses Following the markets China and the yuan The Dow (summer, third quarter, recent) The dollar (including the jobs report) The Brazilian real The yield curve (short end and long end) and flight to safety The corporate bond spreads