INBU 4200 -- INTERNATIONAL FINANCIAL MANAGEMENT

FALL SEMESTER 2007 – LEEDS SCHOOL OF BUSINESS

SECTION 001 TR 9:30 – 10:45 KOBL S110
SECTION 002 TR 11:00 – 12:15 KOBL S110

Professor Michael Palmer

Office: KOBL S419
Office Phone: (303) 492-4241
E-Mail: Michael.Palmer@Colorado.EDU

COURSE DESCRIPTION:

INBU 4200 (International Financial Management) will explore many of the financial issues
confronting global firms and global investors. The course will focus on the unique “international”
financial environments and associated risks that confront firms and investors and the strategies
used for dealing with these environments and risks. The course will also monitor current events
in the area of international finance and business during the semester through links to various
web sites and to the financial press. Prereq., BCOR 2100 or BCOR 2200. Restricted to
students with 52 hours completed.

COURSE TOPICS:

Globalization Process and Relationship to the International Finance Function

The globalization of consumption, production and finance (focus on financial markets)
The implications of financial market globalization
The International Monetary System (Gold Standard to post Bretton Woods)
Exchange rates regimes (impact on the determination of exchange rates)
Corporate objectives and corporate governance in a global setting (cultural impacts)

Foreign Exchange Exposure: Risk, Measurement and Management

The types of foreign exchange exposure facing firms and resulting risk for these firms
Foreign exchange (exposure) risk management techniques
Using financial market contracts to manage foreign exchange exposure: Forward contracts,
future contracts, money market hedges, and options contracts
Operational strategies for dealing with foreign exchange exposure

International Money and Capital Markets

The short/intermediate term international money markets
Global commercial banking markets
Eurocurrency markets
Foreign exchange markets (including forecasting exchange rates)
Types of foreign exchange quotes and types of contracts
Long term international debt markets (foreign debt markets and euro-debt markets)
Internationalization of equity markets (cross listings of corporate equity)
Offshore financial centers

Foreign Market Entry Modes for Global Firms

Exporting, Importing, and Licensing
Foreign Direct Investment (FDI)
Wholly owned subsidiaries and Joint Ventures
Cross Border Mergers and Acquisitions
Capital structure issues
Country differences in capital structures (i.e., the use of debt and equity)
Cost of capital implications for the global firm

REQUIRED TEXT BOOK:

International Financial Management, by Eun and Resnick, Irwin, 4TH edition, 2007

SUGGESTED READINGS: FINANCIAL PRESS and ON-LINE SITES

It is strongly suggested that you read either (or both) the Wall Street Journal or the Financial
Times on a regular basis as they will help to keep you current on international financial market
and international business issues. I also recommend that you review Bloomberg.com on line
each day before class for the latest breaking business/financial news.

OFFICE INFORMATION:

Office: S419
Phone: 303-492-4241 (please leave voice message if I’m not there)
E-Mail: michael.palmer@colorado.edu
Office Hours: Tuesday and Thursday 12:30 - 1:45, Monday and Wednesday 10:00 – 11:00 and
by appointment.

COURSE SCHEDULE:

Week 1: Chapter 1: Globalization and the Multinational Firm

Week 2: Chapter 2: The International Monetary System
Week 3: Chapters 2 and 3; Balance of Payments
Week 4: Chapter 4: Corporate Governance around the World
Week 4: Tuesday, September 18, Quiz 1 (lectures, emailed articles and handouts to date).
Week 5: Chapter 5: The Market for Foreign Exchange
Week 6: Chapter 6: International Parity Relationships and Forecasting Foreign Exchange Rates
Week 7: Chapter 6: International Parity Relationships and Forecasting Foreign Exchange Rates
Week 7: Tuesday, October 9, Quiz 2 (lectures, emailed articles and handouts since quiz 1).
Week 8: Chapter 8: Management of Transaction Exposure
Week 9: Chapters 9 and 10: Management of Economic and Translation Exposure
Week 9: Thursday, October 25, Mid-Term Exam (text chapters and lectures since week 1)
Week 10: Chapter 11: International Banking and Money Markets
Week 11: Chapter 12: International Bond Markets
Week 12: Tuesday, November 13, Quiz 3 (lectures, emailed articles and handouts since quiz 2)
Week 12: Chapters 13: International Equity Markets
Week 13: No classes – Fall Break
Week 14: Chapter 15: International Portfolio Management
Week 15: Chapter 16: Foreign Direct Investment and Cross-Border Acquisitions
Week 16: Tuesday, December 11, Quiz 4 (lectures, emailed articles and handouts since quiz 3)
Week 16: Chapter 17: International Capital Structure and Cost of Capital
Final Exam: Section 001 Monday, December 17th, 4:30 to 7:00pm
Final Exam: Section 002 Saturday, December 15th, 10:30 to 1:00pm
Note: Final Exam will cover text chapters since the mid-term and lectures since week 1

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Note: Above chapter and lecture schedule is subject to change based on the pace of this
semester’s work. Quiz and exam dates will not be changed.

OTHER IMPORTANT DATES:

September 12: Deadline for dropping this course without professor’s signature.
October 10: Deadline for dropping this course without Dean’s signature.

For more information on these deadlines and others please see:

http://registrar.colorado.edu/calendar/calendar_fall08.html

QUIZZES AND EXAMINATIONS:

INBU 4000 test schedule will consist of the following:

1) Four quizzes given approximately every third week on dates noted. These quizzes will
cover daily lectures (including power point slides), assigned readings (on my web
site), and any emailed articles. Quizzes will not be cumulative. Quizzes may
include true/false, multiple choice, definitions, calculations, and short essay questions.
These quizzes are designed to keep you current with the course material. Make up
quizzes will not be offered. Please make every effort to meet this quiz schedule (if you
have a conflict with this schedule please see me as soon as possible).

2) Two Major Exams; a mid-term and a final exam: (consisting of true/false, multiple
choice questions, calculation questions, and short essay questions from the lecture
material and the text. These exams will be cumulative with regards to lecture material
but not with regard to text material. Exams will be given only on the days indicate. Make
up exams will not be offered. Please make every effort to meet this exam schedule (if
you have a conflict with this exam schedule please see me as soon as possible).

3) Note: Absences from quizzes or exams due to documented medical reasons will
be handled on an individual basis.

4) Pop quizzes (for extra credit) will also be given during the semester. The number of pop
quizzes will vary depending upon course circumstances. In the past, they have ranged
between 2 and 4. Under no circumstances can a missed pop quiz be made up.

ASSIGNED READINGS ON COURSE WEB SITE:

Throughout the semester, articles will be posted on my University of Colorado home page under
this course. I will normally announce these shortly after posting (generally the day of), but
please be aware that you are responsible for checking my course home page on a regular basis
to see if new material has been posted.

HOME PAGE -- LECTURE NOTES AND ASSIGNED READINGS:

Power point lecture slides and assigned reading will be available on my CU home page:
http://leeds-faculty.colorado.edu/palmerm/

Link to “Current Courses,” and then to Power Point Lecture Slides (Fall 2007).

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GRADING SYSTEM:

INBU 4200 final course grades will be based on the following:

Points Percent of Total
1) Four quizzes (30 points each) 120 points 30.00%
2) Mid term Exam 100 points 25.00%
3) Final Exam 135 points 33.75%
4) On time attendance (20 days @ 2.25 points each) 45 points 11.25%
Total Possible Course Points 400 points

POP QUIZZES AND THE GRADING SCALE:

Pop quiz scores will be added to your individual cumulative points, but they are not added to the
400 total possible course points.

FINAL COURSE LETTER GRADES:

Based upon 400 possible points for the course, final letter grades will be determined as follows:
A = 90% (400 to 360 points)
B = 80% (359 to 320 points)
C = 70% (319 to 280 points)
D = 60% (279 to 240 points)
F = (239 and below)

ATTENDANCE EXPECTATION FOR THIS CLASS:

I require that you do not leave the classroom in the middle of a lecture. Please prepare
yourself for this expectation. I also ask that you refrain from engaging in activities which may
prove disruptive to your fellow students or to me.

ATTENDANCE POLICY AND ATTENDANCE GRADE:

Attendance will be taken on other than the four quiz days and on the day of the midterm (see
schedule). I will start taking attendance on Tuesday, September 4, ending on Thursday,
December 13. During this time there will be 23 attendance days. You are entitled to three
(unexcused) absences during this time, bring the total to 20. Each attendance day is worth 2.25
points (or a total of 45 points for all 20 days).

Sign in sheets will be used to take attendance. Please Note: Coming in late to class counts as
non-attendance. Also Note: Attending all 23 classes, will result in 6.75 extra credit points (22 will
result in 4.5 extra credit points and 21 in 2.25 extra credit points)

All students will be provided with name cards by the end of the first week of class. Please be
responsible for these and bring them to class with you on a daily basis.

EMAILING THE CLASS

Please check your email on a regular basis for class updates from me. Occasionally, I will email
the class information about upcoming quizzes or exams, or information about new postings to
my web site. I will also be emailing you articles pertinent to the class. Thus, it is important that
you check your CU email account on a regular basis.

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COURSE LEARNING OBJECTIVES:

1. To develop an understanding and appreciation of the critical financial issues facing

managers of international firms in today’s increasingly globalized world.
2. To develop a practical framework for the analysis of exchange rates and foreign
exchange exposures including an understanding of forces affecting exchange rates,
possible models and approaches for forecasting exchange rates, and techniques for
managing various types of foreign exchange exposures.
3. To develop students’ understanding of current issues and use of relevant data in the
area of international finance through regular readings and discussions of articles in the
financial press and through the use of appropriate on-line web sites.

THE 2008 LONDON SEMINAR IN INTERNATIONAL FINANCE AND BUSINESS:

Those of you interested in the summer 2008 London Seminar in International Finance and
Business please refer to the London Seminar site on my home page (http://leeds-
faculty.colorado.edu/palmerm/) under “Current Courses.” From this site you can also view the
2007 program itinerary.

The 2008 program will run from Monday, July 7th through Friday August 8th (The “B” summer
session).

The London seminar is designed to cover a wide range of international and Europe based
financial, economic, business, and political issues. The 5 week seminar is taught by a variety of
guest speakers, primarily from industry, and includes various site visits to companies and
financial institutions and markets. Approximately 4 weeks will be spent in London and 1 week in
Paris.

During the five weeks, students will be housed in townhouses (flats) in London and in a hotel
while in Paris.

The seminar is limited to 24 students and results in 6 hours of finance credit (students should
check with their advisors to see how this course will work into their degree program). The
course also counts towards the International Certificate Program. Students are accepted into
the seminar on a rolling basis until 24 have been admitted. Applications for the 2008 program
are now being accepted and on line access is available through the University’s Study Abroad
office (note: you must receive on line access to apply).

The prerequisite for this course is BCOR 2200 (Introduction to Finance). Scholarship funds are
available for accepted students to this seminar from both the Study Abroad Office and the Leeds
School of Business.

For more information about this course, please see me or visit my web site. Information is also
available from the advisors in the Study Abroad Office.

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USEFUL WEB SITES:

1. Real Time Financial/Business News and Financial Data

http://www.bloomberg.com/

2. On Line International Business Commentary

http://www.cnb.com/business/international/fxupdate.asp

3. On Line Business/Finance Commentary

http://w3.cantos.com/cantos/dyn/main.php?t=a

4. Real Time Foreign Exchange Quotes (spot rates)

http://www.fxstreet.com/rates-charts/forex-charts/

5. Real Time Spot and Forward Exchange Rates

http://www.ozforex.com/cgi-bin/spotrates.asp

6. Historical Foreign Exchange Rates

Data and Charts: http://fx.sauder.ubc.ca/
Daily and Weekly Rates: http://www.federalreserve.gov/releases/h10/update/
Monthly and Annual Rates: http://www.federalreserve.gov/releases/g5/current/

7. Bank for International Settlements Triennial Foreign Exchange Market Surveys

http://www.bis.org/triennial.htm

8. United States and Foreign Stock Markets

http://finance.yahoo.com/intlindices?u
http://www.wallstreetsoftware.com/stocks.html

9. American Depository Receipts

http://www.adr.com/

10. Foreign News

Japan: http://www.japantimes.co.jp/
United Kingdom: http://www.timesonline.co.uk/tol/global/
China: http://www.chinadaily.com.cn/

11. Links to Major Central Banks

United States: http://www.federalreserve.gov/
United Kingdom: http://www.bankofengland.co.uk/
European Central Bank: http://www.ecb.int/home/html/index.en.html
Japan: http://www.boj.or.jp/en/index.htm
China: http://www.pbc.gov.cn/english/

12. Links to All Central Banks

http://www.bis.org/cbanks.htm

13. Bank for International Settlements (Including BIS data links)

http://www.bis.org/

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14. Links to Business News
http://news.bbc.co.uk/1/hi/business/
http://www.reuters.com/business

15. Country Background Notes and Country Corruption Measures

http://www.transparency.org/
http://www.state.gov/r/pa/ei/bgn/

16. European Union

http://www.eurunion.org/infores/euindex.htm

17. Interactive Map of the European Union (with country data)

http://www.nationsonline.org/oneworld/europe_map.htm

18. Report on US Intervention in Foreign Exchange Markets

http://www.ny.frb.org/markets/foreignex.html

19. IMF Global Finance Reports

http://www.imf.org/external/pubs/ft/gfsr/index.htm

20. National Currency Notes (Pictures of foreign currency notes)

http://aes.iupui.edu/rwise/notedir/mappage.html

STATEMENTS REQUIRED/RECOMMENDED BY THE OFFICE OF UNDERGRADUATE

EDUCATION:

(1) If you qualify for accommodations because of a disability, please submit to me a letter from
Disability Services in a timely manner so that your needs may be addressed. Disability Services
determines accommodations based on documented disabilities. Contact: 303-492-8671, Willard
322, and www.Colorado.EDU/disabilityservices. Disability Services' letters for students with
disabilities indicate legally mandated reasonable accommodations. The syllabus statements and
answers to Frequently Asked Questions can be found at www.colorado.edu/disabilityservices.

(2) Campus policy regarding religious observances requires that faculty make every effort to
reasonably and fairly deal with all students who, because of religious obligations, have conflicts
with scheduled exams, assignments or required attendance. Please call to my attention any
religious observances which will conflict with assigned work, including, but not limited to,
scheduled exams.

(3) Students and faculty each have responsibility for maintaining an appropriate learning
environment. Students who fail to adhere to such behavioral standards may be subject to
discipline. Faculty has the professional responsibility to treat all students with understanding,
dignity and respect, to guide classroom discussion and to set reasonable limits on the manner in
which they and their students express opinions. Professional courtesy and sensitivity are
especially important with respect to individuals and topics dealing with differences of race,
culture, religion, politics, sexual orientation, gender variance, and nationalities. Class rosters
are provided to the instructor with the student's legal name. I will gladly honor your request to
address you by an alternate name or gender pronoun. Please advise me of this preference early
in the semester so that I may make appropriate changes to my records. See polices
at: http://www.colorado.edu/policies/classbehavior.html and at
http://www.colorado.edu/studentaffairs/judicialaffairs/code.html#student_code

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Campus "Classroom Behavior" policy describes examples of unacceptable classroom behavior.
Please see http://www.colorado.edu/policies/classbehavior.html

(4) The University of Colorado at Boulder policy on Discrimination and Harassment

(http://www.colorado.edu/policies/discrimination.html, the University of Colorado policy on
Sexual Harassment and the University of Colorado policy on Amorous Relationships applies to
all students, staff and faculty. Any student, staff or faculty member who believes s/he has been
the subject of discrimination or harassment based upon race, color, national origin, sex, age,
disability, religion, sexual orientation, or veteran status should contact the Office of
Discrimination and Harassment (ODH) at 303-492-2127 or the Office of Judicial Affairs at 303-
492-5550. Information about the ODH and the campus resources available to assist individuals
regarding discrimination or harassment can be obtained at http://www.colorado.edu/odh

(5) All students of the University of Colorado at Boulder are responsible for knowing and
adhering to the academic integrity policy of this institution. Violations of this policy may include:
cheating, plagiarism, aid of academic dishonesty, fabrication, lying, bribery, and threatening
behavior. All incidents of academic misconduct shall be reported to the Honor Code Council
(honor@colorado.edu; 303-725-2273). Students who are found to be in violation of the
academic integrity policy will be subject to both academic sanctions from the faculty member
and non-academic sanctions (including but not limited to university probation, suspension, or
expulsion). Other information on the Honor Code can be found at
http://www.colorado.edu/policies/honor.html and at
http://www.colorado.edu/academics/honorcode/