Multinational Finance in a Global Context D, 5 points / 7.5 ECTS Syllabus : Multinational Finance D Course code : FEKD50 Responsibility : Umeå School of Business Subject : Business Administration Level : D (specialized) Course credit : 7.5 ECTS / 5 points Field of education : Social Sciences This course is a course at specialized level in a MSc-degree at the University of Umeå. The course is also an elective course in the Master’s Programs at Umeå School of Business (USBE). Further information: http://www.usbe.umu.se/master/index_eng.html 1. Resolution to arrange the course The course was established by the Faculty of Social Sciences at Umeå University in December 2002 and the syllabus is confirmed by the Board of Umeå School of Business on May 29, 2006. The syllabus i valid from January 16, 2007. 2. Objective and contents International business managers face problems of fluctuating currency exchange rates, exchange controls, inflation, taxes and differing financial practices. The general idea is that the success of a multinational firm depends on its ability to recognize and benefit from market imperfections. The financial manager needs specific tools to deal with the specific financial risks inherent in international business and must be familiar with a variety of different capital markets and tax systems. With a theoretical framework, this course demonstrates that although global integration of financial markets removes some market imperfections, excellent opportunities continue to exist for investors to increase their returns while lowering risks. The course addresses global economy issues at an advanced level, therefore the course learning outcomes have a global view over foreign exchange, foreign investing and financing, for international financial decision making at an advanced level. The learning experience will also include critical, intellectual and independent research, through in-class learning, group work and independent research. The global enterprise is of course dependent of the international financial markets. By this is first and foremost meant foreign-exchange markets and the international capital markets. The basis of the course is therefore a description of these markets, their way of functioning and interrelationship. Then the risk of the enterprise will be analysed in order to evaluate to which extent the risk is of such size that it should be hedged wholly or partly. Special emphasis will be put on an evaluation of both strategic and financial consequences of operating globally. International portfolio diversification allows investors to optimize their returns and multinational companies to lower their cost of capital. A particular importance is given to emerging financial markets and the role played by newly international countries in world finance. International banking and the role of financial management in maintaining global competitiveness are additional issues considered in the course. Expected learning outcomes By the end of the course students should be able to: 1. Make the best use of their knowledge of recent corporate financial concepts; 2. Select tools to deal with the foreign exchange market and to manage the currency exchange risk in different contexts; 3. Implement hedging tactics including the use of modern instruments of hedging and financing; 4. Apply, evaluate and demonstrate a critical analysis of the financial rules governing multinational companies’ financial policies in the context of practical situations and "real-life" business scenarios, and to critically evaluate and justify their selection; 5. Be well prepared for the varied and changing roles of the finance function. 3. Prerequisites Courses in Business Administration (90 ECTS) • A minimum of 40 points/60 ECTS from A-level and B-level courses (Management, Accounting, Financial Investments, Cost Accounting, Marketing) • At the advanced, C level, a minimum of 20 points/30 ECTS, including a Bachelor’s thesis or equivalent • Furthermore, basic courses in Corporate Finance, Statistics and Economics. are recommended 4. Teaching methods/Focus of instruction Philosophies, theories and concepts are presented during lectures. Then, students will become familiar with quantitative issues through numerical examples, exercises and cases. They are expected to take an active part in discussions, literature seminars and reporting about case studies. They will be given a number of assignments, leading to continuous assessment. Course work will be done individually or in small group, and must reach an acceptable level of knowledge and understanding of different situations. Readings Requiring reading for the course includes cases, chapters, and articles contained in the assigned textbooks and supplementary materials. The lectures in the course will consider both conceptual and computational aspects of international financial management topics. Class sessions will be organized around cases and team activities–debates and panel discussions. Written work will take the form of homework assignment and case analyses. Course pack You will receive a course pack with the cases and the articles included. Class Participation This class depends on your participation. At this point of the Master curriculum, a substantial part of your learning comes from other students. It is important and essential for this course that you bring in your own experience and expertise. In addition to attending class (which is required), you should be prepared to comment on the case or article and discuss the analysis presented in class, even if you did not hand in a write-up. Part of the excitement and the benefit of this course are the diversity of experience of the participants of this class. 5. Examination modes 40% coursework, and 60% final exam. Course work: · Group work · Home work and class participation · Assignment on ADRs · Assignment on futures/options · Assignment on case studies 4 cases · Lufthansa (foreign exchange management) · Zapa Chemical (foreign exchange management) · PT Semen Gresik (foreign acquisition) · PepsiCo (foreign acquisition and financing decisions) Final exam: · individual grade · in-class exam · (in English, dictionaries allowed) · closed-book · 4 hour exam The following grading system is used: Pass with distinction (Väl godkänd, Vg, 75% or more), Pass (Godkänd, G, 50% or more) Fail (Underkänd, U, less than 50%). For exchange students the ECTS grading scale will be used upon request. The examination is based upon a written comprehensive examination (tentamen) and the completion and presentation of an essay. Complementary work on term papers and other compulsory tasks should be completed two weeks after the final date of the course, at the latest. Students who do not pass at the time of the normal written examination will be offered an opportunity to sit a further examination within 2-3 weeks. Beyond that, additional examination opportunities normally arise every academic year one week prior to the start of the autumn term. Information on this can be obtained from this web page www.usbe.umu.se/svl/lwuppseng.html When a student has failed an examination on two occasions, he or she has a right to have another grading teacher. A written request should be handed to the director of studies no later than two weeks before the next examination opportunity. Grades on the course are awarded when students have passed all examinations and compulsory course elements. 6. Utilisation et cetera In cases where there are applicants from exchange programs or similar, the course language will be English. Otherwise, parts of the course may be taught in English. Information on language aspects can be obtained from the Student Counsellor. Timetable and other courses, see http://www.usbe.umu.se/svl/lwcourse.shtml Other Regulations Acknowledgment/Plagiarism: Plagiarism is not acceptable and may result in the imposition of severe penalties. The University provides clear guidelines on its attitude towards plagiarism and how to avoid unintentional plagiarism located on the web at http://www.usbe.umu.se/varastudenter/uppsats/Policy-deceive.html Students are advised to read these carefully. If any doubts remain as to what constitutes plagiarism, students should discuss the matter with the lecturer(s). Acceptable Calculators in Examinations: Students may use scientific or financial calculators. They may not use programmable calculators identified by their alphanumeric keyboard. Study Time: Students are expected to prepare a significant amount of material outside of the classroom in order to fulfil course requirements. Previous indications suggest that students should treat this subject as full time work and invest a minimum of forty hours in preparation and attendance. 7. Readings and other materials Compulsory textbook SHAPIRO Alan (2006). Multinational Financial Management. Wiley and Sons, 8th edition. Book website: www.wiley.com/college/Shapiro List of articles and cases provided by lecturer. ------------------------------------------ Umeå University, Umeå School of Business, 901 87 Umeå Phone: 090-786 50 00 vx. Fax: 090-786 66 74.