Business 301: Global Financial Institutions and Markets

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1 California Polytechnic State University Orfalea College of Business Business 301: and Markets Spring 2017 Course Outline ( 5 pages ) Instructor: Dr. Bing Anderson Office: Telephone: (805) bianders@calpoly.edu Lecture Hours: M/W 12:10 2:00 PM, Room 302 M/W 4:10 6:00 PM, Room 305 Office Hours: M/W 11 AM 12 noon, or by appointment Prerequisites: ECON 222 Class Web Page: TEXTBOOK: Multinational Business Finance, 14 th Edition, Eiteman, Stonehill, and Moffett, COURSE DESCRIPTION/OBJECTIVE: The last several decades have seen phenomenal growth in the internationalization and integration of financial institutions and capital markets. International capital markets and global financial institutions have fostered links among the world s key financial centers and have created an array of financial innovations. Increasingly, these are being used by multinational corporations in their investment, financing, and risk management decisions. However, these developments have also raised concerns about global financial stability, as well as the need for global regulation of financial markets and institutions.

2 This course attempts to provide a comprehensive and integrated introduction to global financial markets and institutions. We use historical, institutional, economic, and managerial paradigms to analyze and understand the various issues and concepts. The focus will be on the characteristics of international financial markets, institutions, instruments, and innovations, as well as their use in the investment, financing, and risk management decisions of multinational corporations. Learning objectives include applying knowledge to identify opportunities and solve business problems and understanding of business activities in a global environment. Pedagogical style will be a combination of conceptual lectures, practical examples, problems, written project and oral presentation, and current or past event discussions. The lectures will focus on the description and understanding of the theoretical concepts. The practical / managerial implications will be analyzed through examples and discussions. GRADING DISTRIBUTION: Paper and Presentation 18% Midterm Exam 25% Final Exam 30% Participation 9% Currency Trading 18% Paper and Presentation (18%) Choose a major global financial institution, do your own research on it, and write a paper about it. Examples of major global financial institutions are: the Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Reserve Bank of Australia, the Bank of Canada, the Swiss National Bank, the International Monetary Fund, the Word Bank, etc. It could also be a major private financial institution with a global impact, such as Goldman Sachs, UBS, HSBC, etc. It must be done in groups of 3 students. As soon as possible, you need to start working on forming your group. Please let the instructor know early if you have difficulties in forming a group. Each group will produce one paper. The paper should be at least 20 pages long. The paper should be handed in to the instructor, on Monday May 1, at the beginning of the class. Soon after the midterm, each group will be asked to present their paper in front of the whole class.

3 Midterm Exam (25%) The midterm will be a closed-book exam. Only non-programmable calculators can be used during the exam. It will be in class, tentatively on May 10, for 90 minutes. Final Exam (30%) The final exam will also be closed-book. Again, only non-programmable calculators can be used during the exam. The final exam will cover the entire course, although the part not tested in the midterm will be emphasized. Participation (9%) Participation grades will be assigned entirely at the discretion of the instructor, and will be based on a variety of components including attendance, attitudes, contribution to class discussions, quality of the contribution, respect for learning and the learning environment, etc. Class attendance is required. Currency Trading and Presentations (18%) Each group opens a foreign exchange trading practice account and trades currencies there. There will be a 5-10 minute in-class presentation from each group before the midterm, a longer presentation after the midterm that includes a trading performance report, and a 15-minute chat with me during my office hours before the final exam. Make-up Exams No make-up exams will be given without prior consent of instructor and documentation to show why the exam cannot be taken at the scheduled time. In the rare cases of genuine emergencies, documentation must be submitted to and approved by the Finance Area office and the Dean s office. A 10% penalty will be automatically applied to any grades earned from make-up exams. GRADE CONVERSION: The finance area currently uses a standardized grading policy for all finance classes. That is, the proportion of A s, B s, C s, etc must adhere to general guidelines. Specifically, the policy is:

4 A s Maximum of 25% C s Range of 20% to 40% D s and F s combined: Expected minimum of 10%, but could be 0%. The policy is employed to insure that (i) the grade of A is reserved for outstanding performance, and (ii) any student who performs poorly will receive a D or F. If all students perform well, no D s or F s will be given. The phrase Expected minimum of 10% is used in the D s and F s category because history has shown that approximately 10% to 20% of the class typically underperforms. However, the 10% minimum is a soft target. That is, if the entire class performs well, then the number of D s and F s will be 0%. Of course, if there are a large number of poor performing students, then the combined number of D s and F s can exceed 10%. COMMUNICATION PROTOCOL: is probably the best way to ask questions besides office hours. However, because it is not a way to communicate face-to-face, clarifying details via causes delays. So, please try to be specific about the details when asking a question via . During the lecture, if there is anything unclear to you, please raise a question immediately. In most cases, if time permits and the question is representative enough, I will answer it right away. Otherwise, I might defer it to after class or during office hours. However, no question is ever a bad question, and your every bit of effort in learning and inquiry is welcomed.

5 COURSE CONTENTS AND TENTATIVE SCHEDULE: DATE CHAPTER TOPIC Apr. 3 Introduction Apr. 5 Ch. 2 The International Monetary System Apr. 10 Ch. 2 Apr. 12 Ch. 2 Apr. 17 Ch. 2 Apr. 19 Ch. 3 The Balance of Payments Apr. 24 Ch. 5 The Foreign Exchange Market Apr. 26 Ch. 5 May 1 Ch. 5 May 3 Ch. 7 Foreign Currency Derivatives (Part) May 8 Ch. 7 May 10 May 15 May 17 May 22 May 24 May 31 June 5 Ch. 7 June 7 Midterm Review Part of Ch. 6 International Parity Conditions extra time. may be covered if we have