The Lee Kong Chian School of Business

Academic Year 2016/17

Term 1

FNCE 210 INTERNATIONAL FINANCE

Instructors:
Title:
Email:
Office:

Dr. Jack Hong & Dr. Jinghao Ke

Adjunct Faculty
jackhong@smu.edu.sg, jhke@smu.edu.sg
Appointment by email

COURSE DESCRIPTION
This course introduces the principles of finance in an international context. In a globalized environment,
investors and corporations embrace an expanded set of investment opportunities, yet they also face additional
risks. The course gives an overview of the international financial environment, and covers issues including
currency exposure, international parity conditions, foreign exchange risk management, international asset
pricing, international investment strategies, and currency hedging for international stock markets.
This course is a blend of theory and practice where the focus is on:
1. Understanding the basics of financial decision making
2. Appreciating the international financial landscape that an investor or firm operates in
3. Evaluating the instruments available to navigate the international financial environment
4. Discussing real world global financial events

LEARNING OBJECTIVES
The course will provide a framework for understanding and making sound financial decisions in a global
context. Classes will be conducted over thirteen sessions and, depending on the topic, will include lectures,
case studies, and/or other activities.
Selected Course Topics and Goals
By the end of this course, students will be able to:

Understand basic financial decision making

Defining the role a multinational firm play in the international arena

Describing the international monetary system, balance of payments

Understanding the foreign exchange market and forecasting foreign exchange rates

Learning the financial instruments available to manage risks in an increasingly volatile global environment

PRE-REQUISITE/ CO-REQUISITE/ MUTUALLY EXCLUSIVE COURSE(S)

Please refer to the Course Catalogue on OASIS for the most updated list of pre-requisites / co-requisites for
this particular course. Do note that if this course has a co-requisite, it means that the course has to be taken
together with another course. Dropping one course during BOSS bidding would result in both courses being
dropped at the same time.

ASSESSMENT METHODS
Group Case Presentation
Class Participation
Mid Term Quiz
Final Examination (closed book)

25%
15%
20%
40%

ACADEMIC INTEGRITY
All acts of academic dishonesty (including, but not limited to, plagiarism, cheating, fabrication, facilitation of acts
of academic dishonesty by others, unauthorized possession of exam questions, or tampering with the academic
work of other students) are serious offences.
All work (whether oral or written) submitted for purposes of assessment must be the students own
work. Penalties for violation of the policy range from zero marks for the component assessment to expulsion,
depending on the nature of the offence.
When in doubt, students should consult the course instructor. Details on the SMU Code of Academic
Integrity may be accessed at http://www.smuscd.org/resources.html.

ACCESSIBILITY
SMU strives to make learning experiences accessible for all. If you anticipate or experience physical or
academic barriers due to disability, please let me know immediately. You are also welcome to contact the
university's disability services team if you have questions or concerns about academic provisions:
included@smu.edu.sg.
Please be aware that the accessible tables in our seminar room should remain available for students who
require them.

INSTRUCTIONAL METHODS AND EXPECTATIONS

GROUP WORK
For group work, students are expected to form teams of 5 themselves; those without teams by the end of
week four may approach the instructor to be assigned to a team. Each team is responsible for one case
presentation. Whenever a case is presented, members of the other teams are expected to engage with the
presenting team in discussions about the presentation. Each case presentation must be concise and is strictly
limited to 25 minutes. Grades will be awarded on the basis of: (1) the quality of preparation and presentation
of the case solution; (2) evidence of the ability of the group to work together; (3) the ability to stimulate
interest during the presentation; (4) citing of good examples and/or relating the concepts to practices and (5)
practical value-added materials related to the case or to a local/regional context.
Groups are to choose and present a single case from this list. Only one group is to present each case.
1.
2.
3.
4.
5.
6.
7.
8.
9.

The Mexican Peso Crisis, 1994

The Asian Currency Crisis, 1997
The Russian Ruble Crisis, 1998
Impact of the Euro, since 1999
UK Pound Crisis, 1992
Chinas revaluation of Yuan, 2005
The Global Financial Crisis, 2008: United States
The Global Financial Crisis, 2008: China
The Euro Debt Crisis, 2009

Each project should include, but is not limited to, the following
1.
2.
3.
4.
5.

Background of crisis
Impact to company
Recommendations
Risks and mitigation plans
Aftermath of crisis

Case slides are due at the beginning of class on the day of case presentation. A complete submission consists
of PowerPoint slides of the presentation (4 slides to a page in landscape format). Within 24 hours of the
presentation, the presenting team must email the slides and any supporting files to the teaching assistant. Noncompliance with these requirements will result in a one-grade penalty.

RESPONSIBILITY OF PARTICIPANTS
All participants are expected to have read the assigned materials before coming to class. In addition, various
application exercises and mini projects may be assigned to enhance your understanding and learning
experience. Whether or not you are able to solve the problem, each participant or group should have, at the
minimum, attempted the exercises and obtained the necessary information. You may be randomly selected to
present your findings or recommendations (even if incomplete) in the session that a topic is discussed. Your
presentation will count toward your class participation marks. You are strongly encouraged to work through
the self-test problems found at the end of each chapter of your text.
Active class participation by each participant is not only encouraged, but is expected and required. In a class of
this nature, much of the learning takes place through interactions, discussions, debates, and arguments put
forth by others. Good participation frequently involves active listening, the ability to summarize the relevant
points made by others, asking and directing pertinent questions to fellow participants, sharing from personal
knowledge and experience, making observations, conclusions, and making inferences from topics discussed.
One can agree or disagree with a particular point made but claims made should always be substantiated with
proper arguments and justifications. Do note that hoarding of discussion time by individuals is usually frowned
upon by fellow classmates and is not encouraged.

CONSULTATIONS AND TEACHING ASSISTANTS

Teaching Assistant (TA)
TBA
You may contact the TA for queries and further explanations of material taught, etc. Please feel free to contact
him/her directly for an appointment.

CLASS TIMINGS
The course is taught in one 3-hour session per week. If the class falls on a public holiday, the university will
schedule a Saturday to conduct make-up lessons.

RECOMMENDED TEXT AND READINGS

CB

Cheol S. Eun & Bruce G. Resnick, International Financial Management, 7th Edition, McGraw-Hill, 2015

Financial Calculator or Notebook Computer: Optional.

WEEKLY LESSON PLANS

CLASS SCHEDULE (Subject to Changes)
SESSION 1
Class Administration
Basics of Finance
Introduction and Overview of International Finance
Readings:

CB Chapters 1

The Economics of Robinson Crusoe

SESSION 2
Recap Quiz I
Basics of Corporate Finance
International Monetary System
Balance of Payments
Readings:

CB Chapters 2, 3
SESSION 3
Recap Quiz II
Foreign Exchange Fundamentals
Bid-Ask Quotes
Cross Rates
Forwards Market
Readings:

CB Chapter 5
SESSION 4
Recap Quiz III
Interest Rate Parity
Purchasing Power Parity
Forecasting Exchange Rates
Readings:

CB Chapter 6
SESSION 5
Recap Quiz IV
Currency Forwards
Currency Futures
Currency Options
Readings:

CB Chapter 7

SESSION 6
Recap Quiz V
Interest Rate Swaps
Currency Swaps
Foreign Currency Speculation
Readings:

CB Chapter 14

SESSION 7
Mid Term Quiz
Corporate Governance around the World
Readings:

CB Chapter 4
SESSION 8
Mid Term Break
SESSION 9
Measurement of Transaction Exposure
Hedging
Readings:

CB Chapter 8

SESSION 10
Economic Exposure
Operating Exposure
Foreign Direct Investments (FDI)
Cross-Border Acquisitions
Readings:

CB Chapter 9, 16
SESSION 1I
International Bond & Equity Markets
Readings:

CB Chapter 12, 13

SESSION 12
Group Presentations

SESSION 13
Group Presentations
Recap and Q&A
SESSION 14
Study Week
SESSION 15
Final Examination