SAIS 380.761
Multinational Corporate Finance

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Syllabus

Prof Gordon Bodnar
Fall 2009

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Readings denoted with a (IFM) are from the textbook, those denoted (W) are on the web, and those with and (R) are on reserve in the library or via ERES (access word is euro09  i.e.,"euro zero nine").

DATE

LEC #

TITLE

READINGS

ASSIGNMENT

9/1

1

Exchange Rates, Real and Forecasted

• IFM Chpts. 5 and 6
• Big Mac Readings - Economist (W)

• Effective Exchange Rate Example – Excel  (W)

 Problem Set #1 - Exchange Rates - Due 9/15 classtime (email)  

9/8

2

Measuring Multinational Activities

• IFM Chpt. 10,
• Accounting for Multinational Operations , Bodnar classnote (W)
• Nike 2008 Annual Report (10K section)   or go to download page (W)

Problem Set #2 - International Measurement - Due 9/22 classtime (email)

9/15

Exchange Rate Exposure

• Chpt 8 pp. 192 – 193, Chpt 9 pp. 227 - 232
• Corporate Exposures to Exchange Rates, - classnote (W)
• On the Measurement of Operating Exposure to Exchange Rates: A Conceptual Approach," Flood and Lessard  (R)

EXTRA: Exchange Rate Exposure: A Simple Model -  by Bodnar and Marston (W)

9/22

Measuring Exposure and Deciding Whether to Manage It

• Chpt 9 pp. 228 - 234, Chpt 8, pp. 205-09
• Identifying, Measuting and Hedging Curerncy Risk at Merck, - Lewent and Kearney (R)
• The Rationale for Risk Management, Smith et al., 1994. (R)
• Rethinking Risk Management – JACF 1996  (W)
• Does Hedging Add Value?  JACF, 2005  (W)

EXTRA:  Perils of the Hedge Highwire, Businessweek, (R)

Discussion Case #1: Jaguar plc, 1984 (R) - Due 9/29 (bring to class and email)

5

Discussion of Jaguar case (first half)
Managing Exposure - Transaction Exposure

• Chpt 8 pp. 194 – 211
• Techniques for Managing Economic Exposure, Bodnar classnote.

    Problem Set #3 - Hedging - Due FRIDAY 10/9  4:00pm (email)

10/6

6

Managing Exposure - Operating Exposure

• IFM Chpt 9 pp. 232 – 238, Chpt 14, and Chpt 7 pp. 175 - 185
• Wharton 1998 Survey of Risk Management by US Non-Financial Firms (W)

EXTRA: The New Standard on Accounting for Derivative Instruments and Hedging  Activity, PwC, (R) 

 Sample Midterrm Exams

10/13

OCTOBER 13 MIDTERM EXAM  in class (Lectures 1- 6) closed book   

10/20

7

International Taxation and Transfer Pricing

• IFM:Chpts. 21
• Taxation of International Operations, Baker, (R)
• Transfer Pricing,  Chpt 5 by Schadewald and Misey (W)

EXTRA:

• KPMG Corporate Tax Rate Survey 1993-2006 KPMG  
• KPMG Global Transfer Pricing Review, 2005  KPMG

Homework Case : Dallas Semiconductor (R) Due - FRIDAY 10/30 4:00pm (email)

8

• IFM Chpt. 18 and 16,
• Valuation in Emerging Markets - McKinsey Quarterly (OL)

 More Info on Political Risk Insurance:

• OPIC - US government political risk provider  - info and rates
• MIGA - World Bank political risk insurer - info center and providers
• AIG - their political risk brochure

11/3

9

International Investment Analysis –  Foreign Cost of Capital

• IFM Chpt. 15 and 17
• Globalization of Capital Markets and the Cost of Capital, Stulz, (R)
• Emerging Markets aren't as Risky as You Think - McKinsey Quarterly

Summary of wild ways to estimate cost of capital in EM when expected losses from EM risks are not accounted for in cash flows  - article

11/10

10

Discussion of Lafarge Case
Evaluation of Performance of Foreign Operations

Measuring the Performance of Operations Subject to Fluctuating  Exchange Rates, Flood and Lessard (R)

Discussion Case: GM case Part II Spreadsheet - Due 11/30 12:00pm (email) 
Discussion Case: GM case Part II write-up - Due 12/4 12:00pm (email) 

11/17

11

Global Financing Choices

• IFM Chpts. 11,12 and 13
• Guidelines for Global Financing Choices, Lessard and Shapiro, (R)

Extra:

• Summary of Global Capital Markets - 2007 - McKinsey Quarterly
• BIS Survey on International Securities and Derivatives

12/1

Discussion of GM Plant X - Brazil Case
Review for second exam

12/15

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