BA31203 INTERNATIONAL FINANCIAL SYSTEMSA. COURSE SUMMARY

Code BA31203Title International Financial Systems/Sistem Kewangan AntarabangsaSession Semester 2 2014/2015Facilitators Mr. Jaratin Bin Lily

Tel: 088-320000 ext. 1592Room: No.72, Level 4, SPEContact; 0198035574 (Whatsapp only)

Time/Place 4pm-6pm/Thursday/DKP9Synopsis This course examines the principles and theories of the international

aspects of corporate finance, investing and operating multinational organizations in a global economy and environment. It intends to equip students with tools and methods to study and analyze international finance issues and problems. This course will cover foreign exchange and exchange rate determination, multinational financing and investment decisions, currency risk management, currency derivatives, principals of hedging and international capital markets and portfolio investment. Current and historical policy issues and how they relate to the financial markets are discussed throughout the course.

Learning Objectives

At the end of the course, student is able to

1. Be able to discuss and compare the framework of the international monetary system and point out their differences, similarities, and respective advantages and limitations (PLO1, C3).

2. Describe, explain and illustrate the various theories of exchange rate determination. (PLO1, C4)

3. Identify and explain the various types of exchange rate risks faced by firms and the financial instruments (forward/futures contracts, currency options, and swap) and strategies they can use to manage the risks.) (PLO3, C4, A3, LL)

4. Identify some of the sources of international finance and the attitudes of international investors (PLO3, C4, CTPS)

5. Be able to work as part of a group to organize and produce a project involving both descriptive and empirical material. (PLO3, PLO5, CS, CTPS)

Assessment

Component Percentage

Individuala. Assignment 10

b. Quiz 10

c. Final Exam 40

Total 60

Groupa. Case Study 15

b. Report 20

c. Presentation 5

Total 40

Grand Total 100

References Textbooks and references:Main ReferenceMoffett, M.H., Stonehill, A.I. & Eiteman, D.K. (2014). Fundamental of Multinational Finance, 4th Edition, Pearson Addison Wesley

Additional ReferencesEun, C.S & Resnick, B.G. et. al,. (2011). International Financial management, 6th Edition, Malaysian edition: McGraw Hill International

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BA31203 INTERNATIONAL FINANCIAL SYSTEMS

Eiteman, D. K., Stonehill, A. I. & Moffett, M H (2012), Multinational Business Finance, 12th Edition, Pearson Addison Wesley

Solnik, B. & McLeavey, D. (2014). Global Investments, Sixth Edition: Pearson Addison-WesleyMadura, J (2012) International Financial Management, 11th Edition : South-Western,Shapiro, A C (2013) Multinational Financial Management, 10th Edition : John Wiley &

Sons,

At the end of the semester, students may evaluate themselves how much knowl-edge they have gained from the course. Students are welcomed to give any com-ments and suggestion to improve the quality of teaching and course.

B. Course Schedule:

Lec. Subject Date

Prepared for class/Tutorial/Self-Exercises

Chap.Cases

(due date)Question Problem

1

Course introduction Current Multinational

challenges and the global economy

Financial goals and corporate governance

1,2

2 The International

Monetary System3

3 The Foreign Exchange

Market6

4 Balance of Payments International Parity

Conditions4,7

5

International Parity Conditions

Exchange rate determinants

7,9

Case 1The Saga of

the Venezuelan

Bolivar Fuerte

6

Foreign Currency Derivatives: Forward, Futures, Market Hedge, Options, Swaps

8

7

Foreign Currency Derivatives: Forward, Futures, Market Hedge, Options, Swaps

8

Case 2The Japanese

Yen Intervention

of 2010

8 Transaction exposure/ Operating/Economic

exposure10

9 The global cost and

availability of capital11

10 Sourcing equity and debt

globally12

Case 3Toyota’s European Exposure

11 Foreign Direct

Investment and Political risk

14

12

International Trade Finance

Group and individual report

Add.

13 Group Project

presentation

14 Group Project

presentation

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BA31203 INTERNATIONAL FINANCIAL SYSTEMS

15 Study week

NOTE: While every attempt will be made to keep to the schedule listed above, unexpected circumstances may necessitate modifications throughout the semester. REFER YOUR SMARTUMS FOR UPDATED INFORMATION REGARDING THE COURSE SCHEDULE

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BA31203 INTERNATIONAL FINANCIAL SYSTEMSC. GROUP ASSIGNMENT

1. Group Project

List of titles:a. Determinants of Foreign Direct Investment Inflows (e.g exchange rate,)b. Determinants of Foreign Exchange Rate (e.g Interest rate)c. The effect of exchange rate movements on macro (eg. GDP, market value) and microeconomic variables (eg inflation)d. Determinants of Inflation (e.g Exchange rate, World Crude Oil price)e. Determinants of Foreign Direct Investment Outflowsf. Determinants of exchange rate exposure (market level or firm level) (e.g world crude Oil price)

The number of the determinants (factors) depends on the number of member in the group.

The writing guideline is as follows (Remember your Research Methodol-ogy lecture):

1. Introductiona. Background of issuesb. Statement of problemsc. Research Objectives

2. Literature Reviews (more than 60 % of the articles are within 5 years from the current year)

a. Previous research or articles regarding the issuesb. At least 30 articles from journal or recognized sources (At least 15

articles per person)Refer UMS library website : Journals or Google Scholar

c. Citation guide: APA style (Download the manual from your Smartums)d. Strictly use Mendeley for citation managere. Always start with theory and then empirical evidencef. Use Table 1 for article compilation.

3. Research Methodologya. Explain in detail your methods (where do you get your data, type of data,

countries selected, what model/equation you use to testing your hypothesis, etc).

4. Empirical Resultsa. Your group needs to collect and analyze data to support your argument on

the determinants. Comparison at least three countries are required (ASEAN countries). One of the countries must be Malaysia. Students are required to have EVIEWS program for testing procedure. You may ask it from UMTP for installment.

5. Conclusion and Recommendationsa. Give conclusion and recommendations to the issues based on your

literature reviews and empirical results

GuidelinesFont : 11 Tahoma; Spacing : 1.5; Size : A4Pages: Maximum 30 pages (excluding tables and figures)Dateline: Week 12

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BA31203 INTERNATIONAL FINANCIAL SYSTEMS

Requirement1. Please attach the articles and the table compilation. Burn all of your work (report, articles, eviews output) in a CD. All groups are required to present their report.2. You must submit your report to UMS library checking for plagiarism report using turnitin program. Any plagiarism report exceeds 20 percent will not be accepted.

2. Case Study

List of case studies will be informed soon.

Case study report GuidelinesFont : 11 TahomaSpacing : 1.5Margin : Top, Bottom, Left, Right =1 inchDue date (Report) : One week

In preparing the case study report, students must follow the following format:

CASE SUMMARY

ANSWER THE CASE QUESTIONS

CONCLUSION-LESSON LEARNT

3. PresentationThe presentation will be graded based on the following: Business Like Attire; Presentation Skills; Audio/Video/Power Point Quality; Contents of Presentation; and Question and Answer Session Skills.

D. INDIVIDUAL ASSIGNMENTS

Each of your group members will decide on one of the variables to study depending on the title you have been given. As an example, some of the determinants of Foreign Direct Investment are foreign exchange rate, inflation, interest rate and GDP of ASEAN country (Malaysia, Thailand, Singapore, Philippines, Indonesia, Vietnam). Your individual assignment is included in chapter two of your group project assignment.

E. Most of the information you may get them from the following sources:Data sources:IMF databaseWorld bank databaseUNTCD databaseDepartment of statistics publication Yahoo financeCentral bank websiteList of central bank for countries can be accessed at http://www.bis.org/cbank.htm

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