Course Title: Financing International Business

Part A: Course Overview

Course Title: Financing International Business

Credit Points: 12


Course Code

Campus

Career

School

Learning Mode

Teaching Period(s)

BUSM2347

City Campus

Postgraduate

660H Grad School of Bus and Law

Face-to-Face

 Sem 1 2008,
Sem 2 2006

Course Coordinator: Professor Steven Li

Course Coordinator Phone: 61 3 9925 0100

Course Coordinator Email:steven.li@rmit.edu.au


Pre-requisite Courses and Assumed Knowledge and Capabilities

There are no Pre-requisites for this course.


Course Description

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This course introduces the student to the concepts of financing international business.  The international economy is playing an ever-increasing role in business and students need to be aware of the threats and opportunities of this development.  International financing differs from ‘domestic’ financing in two important regards.  First, the absence of a common currency for transactions and second, the pricing of capital assets may be substantially different in the global economy.  This course, accordingly, focuses on exchange rates and their different determinants and also the implications of capital market imperfections.<o:p></o:p>

Topics will include

  • Introduction to International Financial Decision Management<o:p></o:p>
  • Balance of Payments
  • International Banking and Financial Markets
  • Exchange Rates<o:p></o:p>
  • Parity Conditions in International Finance<o:p></o:p>
  • Hedging Foreign Currency Risk<o:p></o:p>
  • Exchange Rate Risk Management<o:p></o:p>
  • Direct Foreign Investment and International Capital Budgeting
  • Country Risk
  • Multinational Cost of Capital and Capital Structure<o:p></o:p>
  • MNC Financing Decisions<o:p></o:p>
  • International Trade Financing<o:p></o:p>


Objectives/Learning Outcomes/Capability Development

This course will enable students to develop the following capabilities:

  • Understand the main determinates of exchange rates and supporting theories;
  • Identify the types of foreign exchange exposure; derive measurements and know the different strategies for managing each exposure;
  • Know the terminology and products used in financing an international business;
  • Assess the various sources of funding available in the international arena;


At the conclusion of this course, you should be able to:
 

  • Understand the various influences on optimum financial structure and cost of capital unique to a multinational corporation.
  • Discuss the key methods and strategic motives for expanding production or having a physical presence in the overseas markets;
  • Understand and appreciate the complexity of various issues involved with international capital budgeting;
  • Know and understand the importance of managing cash flows available to international businesses.
  • Identify sources of financing and terms of payment for international trade


     


Overview of Learning Activities

To achieve these objectives you are required to:

  • Attend lectures that will provide content information;
  • Lead class and group discussions in class assignments and case analyses;
  • Read widely from the literature and master some fundamental concepts and techniques in international financial management;
  • Analyze the extent to which these problems and financing options apply, or could apply, to your own organization;
  • Study in depth one aspect of international finance in your organization and recommend some solutions for improvement;


Overview of Learning Resources

The prescribed text is considered the essential resource for this course.  Information regarding the prescribed text and other references is provided in the detailed course notes.

 


Overview of Assessment

Assessment for this course will comprise the following two components:

Examination 40%

All topics covered during the semester are examinable Details of the exact format of the final exam will be provided during the semester.
The exam will be ‘closed book’ and of three hours duration.    No notes, books, ‘mindmaps’ or any other material will be allowed in the examination room.

Project 60%

This is an individual assignment.  Details will be distributed in class although the aims of the project are to:<o:p></o:p>

<!--[if !supportLists]-->&middot;         <!--[endif]-->Enable you to analyse an MNC of your choice and that is of interest to you.<o:p></o:p>

&middot;         <!--[endif]-->Develop critical, analytical and problem skills relating to financing issues in international business. <o:p></o:p>

<!--[if !supportLists]-->&middot;         <!--[endif]-->Apply the concepts, framework and techniques learnt in this course to an organisational setting. <o:p></o:p>

<!--[if !supportLists]-->&middot;         <!--[endif]-->Develop various data gathering and synthesising skills. <o:p></o:p>

<!--[if !supportLists]-->&middot;         <!--[endif]-->Select and apply relevant literature, which will provide practical solutions to issues. <o:p></o:p>