International Financial Management
825
Winter Quarter 2009
Class Updates
·
(4/3/2009) At long last, I have posted the final exam
and the suggested solutions on the web-page.
I apologize for the delay. I
graded the exam and the papers so that the average scores and the distribution
of the scores were similar across examination methods. The exams and papers will be returned to you
early next week.
·
(3/13/2009) I
have posted the slides from the discussion of the Financial Crisis yesterday
and I also fixed the GIS slides where the hyperlink had problems. Good luck preparing for the exam, and working
on your papers for next week!
·
(3/11/2009) The
slides are up from the discussion of the Financial Crisis yesterday. I added a slide on SIVs etc for those who are
interested in that. We will continue our
discussion of the macro side of the crisis tomorrow. Many of you have asked about the final
exam. It will be closed book, closed
notes, but you may bring a one-page formula sheet. The format of the exam will be similar to the
midterm with mostly problems to work on.
It will not be an entire case (you would not have enough time!), but you
should be prepared to do simplified versions of the type of analyses that we
have gone through in class after the midterm. I will ask no questions about the specific
cases. Instead, the focus will be on the
concepts that we have discussed and the markets that are available for capital
raising, etc. To give you somewhat of an
idea, I have posted an old final exam in the exam section of the web-page.
·
(3/7/2009) That was a really fun discussion in
class. Well done. I have posted the slides from both SUN Group
sessions on the web, and also posted some suggested solutions to the valuations
FYI. Next week is our financial market
crisis week, so remember to bring anything you have learned as you are working
on your papers to class. Enjoy the
week-end, it is finally going to warm upJ
·
(3/2/2009) The
slides are up from our Petrozuata discussion.
I have also posted the spreadsheet with the Quasi-Market Value analysis
where the cost of equity varies along the life of the project as leverage
changes. Solver did not want to
cooperate, but I will work on it and fix it.
For now, at least you have the numbers to refer to FYI. We will discuss the Sun Brewing case in class
tomorrow.
Old Postings:
·
2/25/2009) The
slides are up from our discussion of GIS and outsourcing/off-shoring. I realize that this topic is depressing in
the current market climate, but I think it is useful to understand the
economics of firm’s decisions to move jobs.
It is also useful to think through the political/regulatory angle of
outsourcing/off-shoring. The class
discussion was really interesting in my mind, and I appreciate the wide
participation. I also hope that you
think about the ideas we mentioned towards the end of class about how important
it is to be flexible and think creatively about your future career moves.
·
(2/23/2009) The slides are up from our discussion of
Geeli, the Chinese AC and Refrigeration company. We will discuss outsourcing in class tomorrow
based on Global Information System’s estimated cost savings from off-shoring
jobs to India. It should be a fun
discussion.
·
(2/19/2009) I have posted the slides from our discussion
of Nestle-Alcon. I will also post a
spreadsheet with my calculations in the tools section. We will discuss Geeli today, a Chinese AC and
refrigeration firm needing to raise capital for investment in additional
capacity…
·
(2/13/2009) Slides are up from our discussion of
Hutchison Whampoa, and I have also posted the additional slides on valuation
and segmentation (cost of capital) that I promised. Recall that there are spreadsheets up for the
Nestle-Alcon case in the tools section.
Happy Valentine’s Day!
·
(2/11/2009) I have posted the midterm exam as well as the
suggested answers to the question in the exam section of our web-page. As I said in class, the average in class was
87.6, and the standard deviation 5.7. We
will discuss the exam in class tomorrow.
In addition, we will travel (in spirit) to Hong Kong and talk about
Hutchison Whampoa’s bond financing. Oh,
I also posted the slides from the discussion of AES which we should round off
tomorrow with some more discussion of discount rates…
·
(2/10/2009) I am back from my trip – with a terrible
cold. I will do my best in class this
afternoon though. I have posted some
slides for the class on Cross-Border Valuation that I will go over. I will then talk about AES and their capital
budgeting model. I have also posted the
slides for the global bubbles case and also posted some spreadsheets in the
tools section.
·
(2/3/2009) I have posted slides from Thursday’s
discussion of GM on the web-page. Recall
that we switched the cases as many people were unable to make it on Thursday
and the snow storm kind of put a dent in people’s ability to get together and
finish the write-up of Global Bubbles.
As a result, we are discussing Global Bubbles today in class and the
case write-up is due today. On other
matters, we have a midterm coming up on Thursday in class. We had a vote last class about the midterm,
and the students unanimously voted to have a closed book, closed notes
exam. The only materials you are allowed
to use during the exam aside from a pen/pencil and a calculator is therefore a
one-page (one-side) formula sheet with your name on it. It should include formulas only, and needs to
be turned in with the exam.
·
(1/29/2009) I have posted slides from Tuesday’s
discussion of GM on the web-page. Great
discussion by the way! As mentioned
below, we will discuss the follow-up case on GM Competitive exposure today as
many of you were snowed in and could not meet to finish your analysis of Global
Bubbles. Also, I gather that there is a
company presentation during class that many of you would like to attend so we
should discuss the hand in assignment when most students can make it to class.
·
(1/28/2009) Since
OSU is closed today, and I do not want to cause you guys to travel to get
together with your team mates for the Global Bubbles assignment, I will give
you until Tuesday to turn it in. We will
discuss the follow up of General Motors instead tomorrow, and focus on
competitive/operational/economic exposure to exchange rates. This will also give us an excuse to review
capital budgeting and how it needs to be adapted to international
settings. So, stay warm and safe until
tomorrow! I may need a wheelchair myself
as I have been out shoveling ice, slush, and snow endlessly todayJ
·
(1/26/2009) I
have posted my slides from the discussion of AIFS as well as a spreadsheet with
my solutions. Today we will discuss GM
Transaction/Translation exposure and no slides will be posted in advance. You have a second case due on Thursday,
Global Bubbles. Several of you have
asked how you can use RPPP when there are no specific inflation forecasts in
the case. My answer is that if RPPP
holds, then there should be no effect on competitiveness (as we discussed in
class), so you may as well assume that the inflation is the same in all
countries (in other words, exchange rates are constant). The more interesting part is how to think
about risk relating to future exchange rates.
This can be done by developing exchange-rate related scenarios, and then
evaluating the cost savings associated with each scenario.
·
(1/22/2009) Some
of you have asked about the units in the spreadsheet (AIFS) on the web. It turns out that the case writer is a bit
confusedJ The text of the case and the assignment
questions are correct, the units for the exchange rate should be USD/EUR. When I looked over the case, I also note that
the same mistake is made in Figures 6 and 7.
Sorry about any confusion this may have caused on your behalf.
·
(1/20/2009) I
have received a couple of questions about the case write-up for AIFS which is
due on Thursday, and thought I would share this information with everyone. I view cases as a way to check that we learn
how to use the tools we are talking about in the course. Therefore, you can focus on answering the
specific questions assigned for the case.
You should also be prepared to discuss the case more generally in
class. There is no page limit or rules
about line spacing or font size.
However, it of course helps if I can read what you write! Also, please submit any calculations that you
make and those should be explained so that I can follow your reasoning. See you in class this afternoon!
·
(1/16/2009) The slides for class on Tuesday
are up. We will first finish our
discussion of currency options based on the Market mini-case. Please come prepared to discuss which hedging
strategy you recommend for Markel and why.
Then we will round off our discussion of exchange rate related
derivatives by talking about currency swaps using notes based on another case:
RJR Nabisco. Have a great (long?)
week-end, and stay warm!
·
(1/14/2009) I
have now posted the slides for class tomorrow.
We will discuss how to use forwards, a money market hedge, and currency
options for hedging by way of a small business example: Markel Corporation. Remember that we are going to go over our
check for IRP for JPY/USD and USD/EUR based on the forward rates and money
market interest rates at the back of the slides from yesterday’s class. Moreover, please remember to submit your
forecast for the Euro at the end of the quarter if you have not already done
so!
·
(1/9/2009)
Following up on our Corporate Governance discussion yesterday, the troubles for
the newest Corporate Governance Blow-up, Satyam, a major Indian outsourcing
company, seem to get worse. Both the NYT
and WSJ have articles on the company today.
Apparently, they had claimed to have $1.1 billion in cash reserves when
in reality it was $69 million. As a
result, the company is anticipating problems meeting payroll this month… I have posted slides for class on Tuesday
when we will talk about Parity Conditions.
We will also discuss the Euro (mini-case) and your Euro forecasts for
the end of the quarter (3/5) are due in class.
Please note that you do not have to motivate your forecast. Also, if you have not yet obtained the book,
you can find out about
·
(1/6/2009) Please
note that the class has been moved to Gerlach 265!
·
(11/10/2009)
Welcome to BusFin 825’s web-page! I have
posted the course outline, schedule, and the slides for the first two
classes. You will receive the necessary
information to download additional materials once the class starts in early
January. Meanwhile, Happy Holidays!