Class Description
BUSFIN 4255: International Finance
International Finance is taught by Senior Lecturer, Chad Zipfel, who provided students an understanding of the importance of foreign trade and investment for multinational corporations all the way down to the individual investor. This class taught students how finance plays a key role in managing a firm’s risk through foreign exchange and various government tax structures. The class was divided into four sections:
- Market oriented view of international finance
- Foreign exchange management within multinational corporations
- Advanced finance decision making
- International portfolio and corporate investments
The first section of the semester covered foreign trade between countries, currency markets, exchange rates, and a few concepts taught in a previous course (BUSFIN 4250: Global Finance). The second section covered how to forecast exchange rates using a variety of methods, understanding translation and transaction risk, hedging instruments, and how finance leaders manage currency exposures. The third section covered how multinational corporations determine when to commit to foreign direct investment (FDI), country risk analysis, financing methods for FDI, and transfer pricing. The final section of the semester dove into how an individual investor can manage their portfolio of international investments.
This class includes a combination of exams, group case studies, and a final group project reviewing the international finance strategies of a multinational firm.
Class Reflection
Almost every large corporation is a multinational corporation. US firms have subsidiaries and foreign investments across the globe. Living in a globalized economy, it was important for me to take a class that would teach me how finance plays a role in making key decisions in organizations that do business across the world.
This class was divided into topics that built from one another with group case studies and quizzes sprinkled throughout the semester. See below for a list of topics covered during the course:
- Review of global finance concepts (from a previous course)
- Managing an MNC
- Theory and historical perspectives
- How firms engage in international business (licensing, franchising…)
- Foreign exchange markets
- Spots, forwards, futures, derivatives
- Exchange rates
- Factors that influence exchange rates
- Forward and futures contracts
- International arbitrage
- Locational, triangular, covered interest arbitrage
- Exchange rate risk
- Translation, transaction, economic risk
- Managing operating exposure
- Hedging
- Hedging economic exposure
- FDI motives
- Country and political risks (qualitative)
- Currency swaps
- Transfer pricing
- International bond and equity markets
- Portfolio management
In addition to lecture material, we had 2 guest speakers join our class to better connect material to real world practices. First, we spoke with Dan Molly, currently CFO of Duracell, to discuss his previous work in Proctor and Gamble’s European and Asian markets. Through this discussion, our class got an understanding of how corporations handle business differently in developed vs emerging markets and all this material tied into what we had learned in the lecture well. Our second speaker was Matt Groh, currently Senior Vice President at Merrill Lynch, to discuss international fixed income and equity markets. This discussion was aimed towards understanding how many international markets are tied together through currencies that affect multiple markets (i.e. US dollar and Euro) and how to broaden your portfolio by investing in developed and emerging markets.
Although this class was conducted over Zoom, I thoroughly enjoyed how lively lectures were taught. Since group work and cooperation on projects is a key component of a business students’ undergraduate program, I learned a lot through group case studies, since it helped my team apply coursework into practice. My team’s final project was to conduct an international financial analysis of Toyota Motor Corporation. Since it is a Japanese automotive company, we researched how Toyota conducts FDI (foreign direct investment) in the US, how the firm hedges against translation and economic risk, and how government tax policy can affect the income statements of the firm. This project was another example of putting material that we learned in class into practice.
All in all, this class left me with the tools to understand how individuals and large organizations conduct business around the world. Since this class, I have been able to tie the concepts covered, into real world events. By listening to earnings calls, reading both US and international news, and understanding how the global economy is interconnected, I have gained a broad understanding of how finance plays a role in global business.