Instructor: Dr. William Pugh                  Office: Bus. Bldg. room 307
Phone: (334) 844-3009
Class Hours: 3:10-5:30 M W  Office Hours: 1:10 p.m.-2:00 p.m.M  T, after class, or by appointment.
E-Mail: Wpugh@Business.Auburn.edu
FAX:  (334)  844 4960

Prerequisites: FINC 361 and a 2.00 g.p.a.

Academic Honesty:  Any violation of the academic honesty code as defined in the student handbook (Tiger Cub) will be
treated in accordance with the student discipline code policy and procedures.

Other Information:  Students who need special accomodation should arrange to meet with the instructor as soon as possible.  If you do not have an Accomodation Memo, but need special accomodation, contact the Program for Students with Disabilities in 1244 Haley Center (844-2096 V/TTY).

Objectives: This course will provide an introduction to the broad areas of international finance: currency markets, including futures and options, balance of payments data, and other international statistics, and international stock and bond markets.  We will focus on some of the additional complications a firm faces if it has subsidiaries, customers or suppliers in another country, where one part must deal in the other's currency. We will spend a large amount of time on currency hedging concepts.  Different tax laws, legal codes, cultural standards, or political uncertainty usually cause further complications. I expect that students will have a basic understanding of financial management as it applies to a purely domestic firm, although we will review some basic finance when we discuss the multinational case.

This course will be as up to date as possible: we will monitor the dollar exchange rate, the trade and current account balances, the direction of international investment, and follow international current events.

Text: Foundations of Multinational Financial Management  by Alan Shapiro. (Prentice Hall, 1998, 3rd. Ed.) I will provide you with an issue of the Wall Street Journal, which you will use throughout the quarter .  You will use it to become familiar with the many financial tables that relate to international finance. You may subscribe through this class for ten weeks at a cost of $20, but this is not required. The subscription also gives you access to the WSJ web site. We will also make use of other relevant web sites throughout the course.

Additional Materials: please bring a basic business calculator, text, and the Wall Street Journal  to class each day.

Exams, grades, etc.: we will have two exams (each counting 25 percent )  and a final counting 35  percent of your grade. Exams will be mostly multiple choice. Ten percent of your grade will be class-based and will include assignments and announced quizes and the remaining 5 percent on a paper on the currency of your choice (4 to 6  pages double-spaced )

Anticipated schedule:

Mar 29.               Introduction to the world's major currencies.

Apr.  3                 Chap 5.   (part) Start at the beginning of the chapter, continue, and stop
                            before the section on The Forward Market.    Focus mostly on the Spot Market section.
         5                Chap. 1. and Apppendix  Chap 2: The Determination of Exchange Rates

         10               Chap. 2.  continued
         12               Chap. 3. The International Monetary System

         17               Chap. 14 topics: globalization, foreign bond and equity markets, Eurocurrency markets, Eurobonds, Swaps.  Chapter 15: Recent Patterns of International Banking. (pages 412-20)
         18                Finish Chapter 5 and also cover Section 9.2: Managing Transactions Exposure (stop after the           section on the Money Market Hedge.)

         24                continue
         26                First Exam,   Chap. 4. The Balance of Payments and International Economic Linkages

May    1                Chap. 4. The Balance of Payments and International Economic Linkages (continued)
           3                Chap. 6  Currency Futures and Options Markets.

           8                Chap. 6  Currency Futures and Options Markets.(continued)
         10                Chap 17 International Portfolio Investment

         15                Chap. 7  Parity Conditions in International Finance: predicting future values of currencies.
         17                Review,  Second Exam,

         22                Chap. 8  Measuring Accounting Exposure (how accountants deal with currency risk).
         24                Chap. 9 Managing Accounting Exposure. The pros and cons of the basic hedging techniques.
                             topics  in Chapter 10: managing economic exposure.

         29                Memorial Day holiday
         31               Chap. 11  Financing Foreign Trade (terms and documents associated with foreign trade), review.

 June   2               Dead Day       .

           8               Final Exam: 8:00 a.m.