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

October 10 AGENDA Introduction to Cases/Projects:

Event Analysis: Crises of the worldMNC AnalysisInvestment 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: McDonald’s in Rusia

INTERNATIONAL INTERNATIONAL FINANCEFINANCE

LECTURE NOTESLECTURE NOTES

MM IPMI

Prof. Roy Sembel, Ph.DOctober 2009 – February 2010

‘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

COURSE OUTLINE

Projects / Cases:1. Event analysis: (Financial) Crises of the world2. International Portfolio Investment Simulation3. Book Review4. Analysis of one Multi National Company (MNC)5. Exchange rate forecasting

Final Examination

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 crises3. Nov 28 Analysis of the causes of the crises4. Dec 19 What happened after the crises5. Jan 23 Lessons learned from the crises6. Jan 30 Submit complete report 7. February 625-minute presentation of the crises

Project 1: Crises of the world

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: SimulationInternational Portfolio Investment

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

Project 4: Analysis of one Multi National Company (MNC)

1. Oct 10 Choose one MNC2. Nov 14 Describe briefly the MNC3. Nov 28 Analyze historical (weekly: last 52

weeks, yearly: last 5 years) performance of MNC’s stock

4. Dec 19 Analyze MNC’s funding and investment strategy

5. Jan 30 Analyze MNC’s financial risk management strategy

6. Feb 6 Submit complete report on MNC

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

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.

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?

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

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

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)

Assignment agenda January 16:

Readings: Book review summaries

Project/Case:

Book Review: 30 minute presentation per group

Investment Simulation: weekly performance report


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


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

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

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

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.

Foreign ExchangeTransactions

• 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.

• 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 ExchangeTransactions

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.

International Money Market

• Financial institutions in this market serve MNCs by accepting deposits and offering loans in a variety of currencies.


• 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.

• 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.


























Exchange rate: BIG PICTURE

Inflation Differential

Income Differential

Gov’t Trade Restriction

Interest ratedifferential

Capital flowrestriction

Domestic DEMAND for foreign goods

Foreign DEMANDfor domestic goods

Domestic DEMAND for foreign currency

SUPPLY of foreignCurrency for sale

Domestic DEMAND for foreign securities

Foreign DEMANDfor

domestic securities

EXCHANGERATE

betweenthe foreign &

domesticcurrency

Domestic DEMAND for foreign currency

SUPPLY of foreignCurrency for sale









December 13 AGENDA Forex Markets
























LEARNING LOGLEARNING LOG

THE WISDOM WAYTHE WISDOM WAY

WATAK: SWOT ANALYSIS

INGIN: SMART Objectives

SIASAT: Grand Strategy

DIDIK: Capacity Building

OTAK/OTOT: Kerja cerdas/keras implementasi

METER Ukur pencapaian

MONITOR: Pantau pencapaian

MANAJEMEN Kelola sumberdaya secara optimal

SIGNIFICANT & SIGNIFICANT &

SUSTAINABLE SUSTAINABLE

VALUE CREATIONVALUE CREATION

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

Documents

mnc slide

mnc investment simulation

event mnc

crises mnc

group investment simulation

book review presentation

world slide

final examination slide