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October 10 AGENDA Introduction to Cases/Projects: Event Analysis: Crises of the world MNC Analysis Investment Simulation International Business & International.

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Presentation on theme: "October 10 AGENDA Introduction to Cases/Projects: Event Analysis: Crises of the world MNC Analysis Investment Simulation International Business & International."— Presentation transcript:

1 October 10 AGENDA Introduction to Cases/Projects: Event Analysis: Crises of the world MNC Analysis Investment Simulation International Business & International Financial Markets Hot issues: What are the causes of the current crisis? Is hot money the culprit of the crisis? (read the Hot Money article) Video: McDonalds in Rusia

2 INTERNATIONAL FINANCE LECTURE NOTES MM IPMI Prof. Roy Sembel, Ph.D October 2009 – February 2010

3 Students Active learners: Read reading materials Discuss within group (articles, hot issues, investment simulation, solution for cases, book review, preparing presentation) Participate actively in class discussion Lecturer Facilitator: Structure syllabus Prepare reading materials, cases, simulation rules & template Invite guest lecturers Facilitate discussion, presentation 3-stage learning: Individual learning Group discussion Class discussion Grading policy: Individual efforts (class participation & quiz) 35% Group efforts (case summary & group presentation) 40% Final examination 25% STUDENT CENTERED APPROACH

4 COURSE OUTLINE Projects / Cases: 1.Event analysis: (Financial) Crises of the world 2.International Portfolio Investment Simulation 3.Book Review 4.Analysis of one Multi National Company (MNC) 5.Exchange rate forecasting Final Examination

5 1.Oct 10 Choose one of the crises: Indonesia 1966, Indonesia 1997, Sub-prime mortgage 2007, Jerome Kerviel (Societe Generale 2007), DotCom Bubble 2000, The Great Depression 1929 2.Nov 14 1-page description of the crises 3.Nov 28 Analysis of the causes of the crises 4.Dec 19 What happened after the crises 5.Jan 23 Lessons learned from the crises 6.Jan 30 Submit complete report 7.February 6 25-minute presentation of the crises Project 1: Crises of the world

6 1.Nov 14 5-minute presentation of criteria, reasons, and fund allocation 2.Nov 28 – Jan 30 weekly performance report 3.February 6 5-minute presentation of final results and lessons learned Project 2: Simulation International Portfolio Investment

7 Project 3: Book Review 1.Nov 14 Choose one book 2.Jan 9 Submit Report (10 pages, A4, times roman 12, line spacing1.5) 3.Jan 16 Book review presentation

8 Project 4: Analysis of one Multi National Company (MNC) 1.Oct 10 Choose one MNC 2.Nov 14 Describe briefly the MNC 3.Nov 28 Analyze historical (weekly: last 52 weeks, yearly: last 5 years) performance of MNCs stock 4.Dec 19 Analyze MNCs funding and investment strategy 5.Jan 30 Analyze MNCs financial risk management strategy 6.Feb 6 Submit complete report on MNC

9 Project 5: Exchange Rate Forecasting 1.Nov 14, 2009 to January 9, 2010 Visit www.oanda.com, play around with Rp/$ data (average daily return, volatility, etc), download monthly data January 2007 – January 2010 2.January 9, 2010 Forecast the Rp/$ (closing) exchange rates for 11/1, 12/1, 13/1, 14/1, 15/1. 3.January 16 Record your forecast error

10 Final Examination 1.Group take-home examination [40% of total final examination score]: Complete report on Investment simulation, EVENT, MNC 2.Individual in-class examination [60% of total final examination score]: Questions on projects, hot issues, guest lecture, articles, etc.

11 Assignment agenda Nov 14: Readings: ICF Ch 3, 4 & 6 Article: The End of Monetary Sovereignty Project/Case: –Mesa Co. p.172, answer question 1-4 (write 2-page summary), –EVENT: 1-page description of the crisis –MNC: Describe the chosen MNC –Simulation:5-minute presentation of criteria, reasons, and allocation of funds Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why?

12 Assignment agenda November 28: Readings:ICF Ch 7,8 Project/Case: –Whaler Publishing Company p. 657 (write 2- p summary) –Simulation:Temporary results and evaluation of International Portfolio Investment –EVENT: Analysis of causes of event –MNC: Historical performance of MNC stock

13 Assignment agenda December 19: Readings: Managing Expectation for Value Project/Case: –RJR Nabisco LBO –EVENT: What happened after the crisis –MNC: Funding and Investment Strategy –Investment Simulation: weekly performance report Guest Lecturer

14 Assignment agenda January 9: Readings: Fundamental vs Emotion in Stock Market Project/Case: Investment Simulation: weekly performance report Book Review: Submit report (10 pages, A4, times roman 12, line spacing 1,5)

15 Assignment agenda January 16: Readings: Book review summaries Project/Case: Book Review: 30 minute presentation per group Investment Simulation: weekly performance report

16 Assignment agenda January 23: Readings: ICF Ch 5, 10, 11, 12 Managing Derivatives Risks: Barings Several articles on Risk Management Project/Case: –Case: Vogl Co –EVENT: Lessons learned –Investment Simulation: weekly performance report

17 Assignment agenda January 30: Readings: ICF Ch 16, 19, Appendix 3 p 87-97 Articles: Emerging Market Risk; Measuring Long Term Performance Project/Case: –EVENT: Submit complete report on the crises –MNC: Financial Risk Management in MNC –Investment Simulation: weekly performance report

18 Assignment agenda February 6: Project/Case: –EVENT: Complete 25-minute presentation of the crises –Simulation: 5 minute presentation of International Portfolio Investment Simulation Results and Lessons learned –MNC: Complete report on MNC

19 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

20 Foreign Exchange Market The foreign exchange market allows currencies to be exchanged in order to facilitate international trade or financial transactions. The system for exchanging foreign currencies has evolved from the gold standard, to agreements on fixed exchange rates, to a floating rate system.

21 Foreign Exchange Transactions The market for immediate exchange is known as the spot market. Trading between banks occurs in the interbank market. Within this market, brokers sometimes act as intermediaries.

22 The forward market enables an MNC to lock in the exchange rate at which it will buy or sell a certain quantity of currency on a specified future date. Customers in need of foreign exchange are concerned with quote competitiveness, special banking relationship, speed of execution, advice about current market conditions, and forecasting advice. Foreign Exchange Transactions

23 Currency Futures and Options Market Currency futures contracts specify a standard volume of a particular currency to be exchanged on a specific settlement date. They are sold on exchanges, unlike forward contracts. Currency call (put) options give the right to buy (sell) a specific currency at a specific price (called the strike or exercise price) within a specific period of time.

24 International Money Market Financial institutions in this market serve MNCs by accepting deposits and offering loans in a variety of currencies.

25 International Money Market Both the European and Asian money markets originated as markets involving mostly dollar-denominated deposits. The Eurocurrency market (market for Eurodollars) developed during the 1960s and 1970s, stimulated by regulatory changes in the U.S. and the growing importance of OPEC.

26 The growing standardization of global banking regulations has contributed towards the globalization of the industry. ¤ The Single European Act opened up the European banking industry and increased its efficiency. ¤ The Basel Accord outlined risk-weighted capital adequacy requirements for banks. ¤ The proposed Basel II Accord attempts to account for operational risk. International Money Market

27 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

28 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

29 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

30 Exchange rate: BIG PICTURE Inflation Differential Income Differential Govt Trade Restriction Interest rate differential Capital flow restriction Domestic DEMAND for foreign goods Foreign DEMAND for domestic goods Domestic DEMAND for foreign currency SUPPLY of foreign Currency for sale Domestic DEMAND for foreign securities Foreign DEMAND for domestic securities EXCHANGE RATE between the foreign & domestic currency Domestic DEMAND for foreign currency SUPPLY of foreign Currency for sale

31 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

32 December 13 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

33 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

34 November 14 AGENDA Forex Markets Hot issues: Which system should we adopt: Fixed, Managed Floating, Free Floating, CBS, or other system? Why? (read The End of Monetary Sovereignty article) Video: The Currency Market Factors that affect exchange rate Case: Mesa Co (p. 172) Simulation: 5 minute presentation on Criteria and fund allocation MNC: Brief Description of MNC EVENT: Description of the crises

35 LEARNING LOG

36 THE WISDOM WAY W ATAK: SWOT ANALYSIS I NGIN: SMART Objectives S IASAT: Grand Strategy D IDIK: Capacity Building O TAK/OTOT: Kerja cerdas/keras implementasi M ETER Ukur pencapaian M ONITOR : Pantau pencapaian M ANAJEMEN Kelola sumberdaya secara optimal SIGNIFICANT & SUSTAINABLE VALUE CREATION


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