IFSYLLAB

Office Hours: Mondays and Wednesdays 2:00/4:00 p.m.
Office Location: Room 311B, Business Building
Postal Address: Mail Stop 028, UNR, Reno, NV 89557-0016E-Mail: rleal@
Phone: (702) 784-6811; Fax (702) 784-1769Home Page: /homepage/rleal
Syllabus Contents
SYLLABUS CONTENTS (1)
ABOUT THIS CLASS...........................................................................................................................2C ATALOG D ESCRIPTION .........................................................................................................................2W HO S HOULD B E IN T HIS C LASS ?..........................................................................................................2M Y O BJECTIVES (2)
GETTING STARTED............................................................................................................................3T HE I NTERNET ......................................................................................................................................3C LASS A CCOUNT ...................................................................................................................................3C OMPUTER S OFTWARE ..........................................................................................................................3L IBRARY R ESOURCES .............................................................................................................................4G ROUP P OLICY ......................................................................................................................................4M AKE -U P AND E XTRA C REDIT P OLICY ...................................................................................................4A CADEMIC D ISHONESTY P OLICY (4)
CLASS WORK.......................................................................................................................................4W HAT C AN Y OU B RING TO A I N -C LASS T EST ?........................................................................................4W HAT W ILL B E C OVERED IN E ACH T EST ?..............................................................................................5T HE S TOCK -T RAK A SSIGNMENT . (5)
The role of Performance (5)
Performance Benchmarks (5)
Getting Started with Stock-Trak (5)
How to Obtain the Ticker Symbols? (6)
You Must Trade Every Week (7)
Holdings Requirements (7)
Some Suggestions.............................................................................................................................7C LASS A SSIGNMENTS . (8)
General Requirements for Class Assignments...................................................................................8C LASS A SSIGNMENTS . (8)
Assignment #1: The International Monetary System (8)
Assignment #2: FDI (9)
Assignment #3: Case Study (9)
Assignment #4: Ibbotson Database International Portfolio - Extra Credit........................................
9Look for the list of things
that you must do
immediately on page 10
Third Midterm and Term Paper on Your Country (9)
GRADES (10)
M IDTERM T ESTS (10)
F INAL T EST (10)
C LASS A SSIGNMENTS G RADE (10)
A TTENDANCE G RADE (11)
I NVESTMENT P ORTFOLIO (S TOCK-T RAK) G RADE (11)
THINGS YOU MUST DO IMMEDIATELY (11)
CLASS SCHEDULE (12)
CAVEAT (12)
About This Class
Catalog Description
Financing international business operations and investments, financial decision making in the multinational firm, the international monetary system, balance of payments, foreign exchange rates, international financial institutions. Pre-requisite: MGRS 370.
Who Should Be in This Class?
Finance majors having the appropriate pre-requisites: MGRS 365 (Corporate Finance) and MGRS 370 (Investments). You cannot take this class simultaneously with the pre-requisite classes. If this is your case, you should drop this class. Only COBA graduate students that took BADM 741 are admitted in MGRS 620. If you do not fit into these situations you should see me immediately. No auditing this class is allowed. You cannot take MGRS 365 concurrently with this class.
My Objectives
In this class we will cover some general and some specific, more technical, subjects. My main objectives are to increase your world awareness and to help you get acquainted with the main trends and tools in the international financial markets. No business today is immune to international events. Besides, it is my personal view, that the media is sometimes biased, either favorably or unfavorably, regarding specific countries. I have observed, from former students in this class, this kind of distorted view about other countries. While it is difficult not to be driven by stereotypes because there is a limit to what we can possibly know about other economies, I believe that a first step to success in international business is an open mind that is not driven by these frequently mistaken stereotypes. Furthermore, the future of this country is inexorably linked to that of its world partners. American investments overseas are increasing, particularly where this country has been a traditional business partner: in Europe and in the Americas. Overseas investments create jobs and prosperity at home and foster an increased understanding between partner nations. As a student of finance you must be prepared to understand and to work with international issues. Chances are that your job will involve international issues or that your personal investments will include international assets.
Getting Started
We will use the textbook by Eiteman, Stonehill and Moffett (Addison-Wesley, 8th ed.). A package with class presentations, sample tests, and other materials will be available at the library on the second week of classes. All slide presentations will be included in the package. You do not need to copy what is presented in class since it will be in the package. I will also make sample tests available and will circulate a “Test Alert” a few classes prior to a test. I am in the process of developing a home page at
/homepage/rleal. It already contains some class information and I hope to have all class presentations available for download there soon. The class presentations will also be available at the COBA network on the K drive under the "classdata/mgrs420" directory. You can access the network from any computer in the COBA network.
It is strongly recommended that you read a business periodical such as the Wall Street Journal regularly. I will frequently bring news items to class for discussion. You are encouraged to do the same. Other very good sources of international information in finance are the Financial Times, the Economist, and Euromoney. The last two are available at the library.
The Internet
Every student must have an e-mail account and must provide it to me by sending me an e-mail by the second week of classes. To obtain an e-mail account: go the UNR helpdesk in room #109 at the Getchell library and take your student I.D. You may also use any other e-mail account from an Internet Services Provider or from your business. During the semester I will send you class-related information, such as test information, through e-mail, and many times only through e-mail. It is your responsibility to check your e-mail often. E-mail does not get lost. Not having received an e-mail message is not an excuse. Some of our class assignments involve researching for information on the Internet. Therefore, you must know how to use an Internet browser such as Netscape’s Navigator© or Microsoft’s Explorer©. The university’s computer center offers introductory Netscape classes. You may obtain information about these training seminars at the UNR help desk. There is a low fee for these classes.
Class Account
To obtain a class account, simply log-on to any computer in any COBA lab. Your login should be "Account", the password should be left blank and the server should be "COBA". You will be taken to a web page. You will be requested to enter your social security number and will be presented with all your accounts and passwords for all of your classes. Please make a note or print all of them. The account information is accurate up to January 15. If you added the class later, you must look for the "request for an account" form available in the hanging folders outside room BB308. You must bring to form to me so I can sing it. Then return the form to the appropriate folder outside BB308.
Computer Software
I expect you to know how to use basic computer software such as word processors and spreadsheets. It is important that you have a reasonable command of spreadsheet software such as Excel©, Lotus©, etc. If you have difficulties with this, you need to practice on your own. I will not have time to teach you how to use software in class and cannot tutor you on this. It is your responsibility to be able to know how to use spreadsheet formulas and other basic spreadsheet copying and moving operations. Remember that knowing how to use software is important when you are looking for a job. Act now and learn it. You will need spreadsheets for some of our class assignments.
We will likely use software that accompanies the Ibbotson© database. I will introduce this database to you when the time comes. It may be available during the semester.
UNR offers short training classes for the most commonly used software packages. Please look for information on these classes at the library or at the UNR help desk. The Small Business Development Center on the 4th floor of the Business Building and the Truckee Medows Community College also offer this type of class. Keep in mind that these classes are not free of charge.
Library Resources
You will be required to use some of the databases in the library in your assignments. You can access the on line library resources at /online.html. For most services you will need to use a computer connected to the UNR network. I.e.: your home computer will not do. Other services are available to the community from any computer. Please refer to the URL provided above for more information. I particularly recommend that you check two databases out: ABI/Inform under Silver Platter and Info Trac. Also, by using NEON, you can have access to Wolfpack, which provides an on-line catalogue of the UNR libraries, and access to other on-line catalogues from other libraries in the county and state and from other universities. I advise you to try all of these resources during the first weeks of classes. You are responsible for knowing how to utilize them.
Finally, the library staff at the Business-Government Information Center (BGIC) is very helpful. The BGIC is located on the second floor of the Getchell library. All computer databases are accessible from the computers at the BGIC and they have many resources about international trade and finance.
Group Policy
There are no groups in this class. All activity is individual. All assignments must be done individually. Make-Up and Extra Credit Policy
There are no make-up tests or assignments. There will be one optional extra credit assignment. If you miss a test, for whatever reason, the final test is the only opportunity to replace the missing grade. The final test is also the only opportunity to replace a low grade. See information about the final test below. Taking the final to replace a grade presents no risk. You can take the final and keep the higher grade if your grade in the final is lower than the grade you are trying to replace.
Academic Dishonesty Policy
Academic Dishonesty and Attendance Policies are strictly observed. Refer to the UNR Catalog. Similar assignments will get a failing grade.
Class Work
What Can You Bring to a In-Class Test?
You may bring to any test a formula sheet on a 4” by 6” index card. You shall also bring a calculator. A financial calculator is not necessary but is recommended. You calculator shall have at least an exponentiation key, such as a x y key, for time value of money calculations. You cannot bring laptop or handheld computers to any test. Consulting your textbook or notes during a test is not allowed.
What Will Be Covered in Each Test?
Each midterm will cover the material up to that specific test. Prior to the review section I will provide you with more details on the covered material but this is my general policy. Midterms are not cumulative. However, this does not mean that you will not use the material addressed in a previous midterm to solve a subsequent test. The first and second midterms will be in class. The last midterm will be a term paper.
The final test is comprehensive and will include everything covered in the class. The final test will consist of 30 multiple-choice questions.
For information about test grades see the Grades section of this syllabus.
The Stock-Trak Assignment
My intention with the Stock-Trak assignment is to make you familiar with international investing and with the mechanics of investing in general. Many times, people do not invest simply because they do not know how to start and are afraid to try. Stock-Trak provides you with an opportunity to learn about investing in general and about international investing, in particular. I require that you trade on a number of international types of investments available to everyone here in the US. I hope that this assignment will help you make your own investment decisions better when the time comes.
Because of the reasons stated above I require that you trade weekly. I want you to think about your investments regularly. The weekly trading requirement is there to force you to trade. Particularly, it is there to make you sell things that are not working for you. The decision to buy something is usually easier than the decision to sell. Every week you must think about your holdings and about what you need to buy and what and may want to sell. Nevertheless, you have to watch for transaction costs. Stock-Trak is not the cheapest broker around.
The role of Performance
Performance is secondary for me but not irrelevant. You can see this from the grade criteria. To obtain the maximum number of points possible in this assignment you must trade weekly, trade at least 30 times during the semester, and perform all types of trades I specify later in this syllabus. If your performance is below the class benchmark you will be penalized but your grade points will still be high if you did everything else as requested.
Performance Benchmarks
Stock-Trak provides three possible performance benchmarks: the S&P500 index; the class average; and a money market account. You will be penalized on your performance if you finish below the worst performing of these three benchmarks, provided that you did everything else as requested.
Getting Started with Stock-Trak
Stock-Trak is a trading simulation. It allows you to buy, sell or short sell practically any stock listed in an exchange in the US plus mutual funds, ADRs, options, and futures. You have to trade every week during the simulation period. You are required to perform the following transactions: (1) buy and sell stocks of US companies; (2) buy and sell ADRs; (3) buy and sell close-end funds; (4) buy and sell futures; (5) buy and sell calls on stocks; (6) buy and sell puts on stocks; (7) buy and sell open-end mutual funds; (8) buy and sell a foreign stock traded on a foreign exchange (a new Stock Trak feature).
You need to read and understand the trading rules for Stock-Trak. They are clearly explained in their home page. Their URL is . Registration materials will be provided on the second week of class. You need register and pay $17.95. Pick a password for your account and make a note of it. In the registration form field for your class write UNR-420. Trading begins on February 9 and ends on May 1. You may place up to 100 trades. Your initial wealth is $500,000. You do not need to sell all your holdings at the end of the trading period. The only way to place trades for this class is through Stock Trak's home page. You cannot use the phone or fax anymore. All trades must be placed before 4 p.m. ET to be considered for that day, if placed after that time it will be executed at the closing price of the next day. You can access your account, after you register, by using the Stock Trak home page. Pay special attention to trading with options and futures. There are special trading rules for them. Read the instructions carefully.
There are many resources about investments both on the Internet and at the library. Start with companies that you know. Think of countries that you would like to invest in and try to learn which companies from these countries trade in the US. There is always a mutual fund, closed or open end, which trades on shares from that particular country or region of the world. Do the same about funds targeting specific industries or classes of assets. You can also trade on fixed income funds, both closed and open end.
The Ohio State University finance home page is a great place to start. You can check their resources for investors section. The URL is /dept/fin/cern/cerninv.htm. Explore. You should also use the library resources. Value Line is a publication that analyzes many companies, domestic and international. Info Trac has analysts’ reports on countless companies. Edgar is the SEC’s system has all the filings information. Morningstar has information about mutual funds. Look for the business librarian to get you started.
To learn more about Depositary Receipts look into Bankers Trust’s web site. Their URL is
/ms/dreceipt/depover.htm.
How to Obtain the Ticker Symbols?
For stocks traded on the New York Stock Exchange (NYSE), the American Stock Exchange (ASE), and on NASDAQ the ticker symbols are listed under “sym” daily on the Wall Street Journal. The stocks listed under all of these exchanges include domestic and foreign stocks, closed-end mutual funds, and American Depository Receipts (ADRs). You have to know a priori if a stock is an ADR or not, a closed-end fund or not. A place where you can obtain quotes and ticker symbols is QuoteCom. Their URL is
. But there are others. Check CheckFree as well at /cgi-
bin/qs.
Closed-end fund stocks trade like a regular corporate stock. There are many funds that trade on NYSE, ASE, and NASDAQ. To learn what are the closed-end funds available and their ticker symbol, you should check the Monday edition of the Wall Street Journal. It brings a special session with all the closed-end funds listed according to their investment categories and with their ticker symbols in parenthesis. The Closed-End Funds section is published every Monday in section C of the Wall Street Journal.
I have compiled a list with the US exchange traded ADRs and their ticker symbol. This file is in my home page at /homepage/rleal/adr.html. You must use it to obtain the ticker symbols for ADRs. To download a text file with lots of information about DRs traded in the US and around the world, including their ticker symbol, go to /ms/dreceipt/universe.htm. My ADR list was based on this file.
To trade on futures or options, you must follow Stock-Trak’s rules for the ticker symbols. Please refer to their home page to learn more. Stock-Trak uses their own ticker symbols for futures and options. So, you must learn how to obtain them by carefully reading the instructions in their home page.
To trade on open-end mutual funds, you must know the exact name of the fund. Stock-Trak will provide the ticker symbol.
You Must Trade Every Week
No excuses for not trading on a given week will be accepted. You can trade from anywhere over the web. You are responsible for trading every week. Keep in mind that technical glitches may occur on the part of Stock-Trak. Therefore, do not leave all your trades of the week for the last trading hour on Friday. Something may go wrong and you will end with no trades for that week. Plan your trades for the week and execute them by Wednesday so that there is time to confirm that the trades went through and to fix any trading problems you may have.
Holdings Requirements
You can invest in anything you want provided that you abide to one simple requirement regarding your holdings: at least 20 of your trades have to be on non-US assets, such as an ADR, a country closed end fund, an international open end fund, non-US traded foreign stocks, or futures and options on foreign assets.
Some Suggestions
Never forget to trade every week. Do not use a lot of trades immediately. Remember that you have a total of 100 possible trades for the semester and that you must use at least 30 of them. Leave a few trades as a reserve to fix any problems with your account. If you use all your trades soon, you are finished for the semester and will not be able to trade every week. This will mean a failing grade in this assignment.
You do not need to execute all the required transactions at once. You should take care of them as the semester proceeds and as we cover some of the subjects relating to these transactions. I believe that you are ready to trade on mutual funds and stocks. Maybe you should wait until we cover options and futures to trade on these. It is up to you when you execute a required trade. The only requirement is to have all required trades executed by the end of the semester.
If, at the end of the semester, your performance seems hopeless you may want to take a gamble on futures. Keep in mind that these contracts are highly leveraged and may worsen your position dramatically if you trade on a large number of contracts and take a loss. Therefore, only trade on a substantial amount of futures contracts as a last resort gamble and after you have performed all the requirements for this assignment. Your losses may be so severe that you may be out of the game entirely. On the other hand, it may be your last chance to salvage a hopeless position.
One final word about futures. One futures contract usually involves a fairly large position. Futures are not like stocks. One hundred futures contracts may represent a position worth many million dollars. You do not pay all that to enter the position but your gains and losses are computed relative to the notional value of the position. Be very careful trading with futures. Students in previous classes have not paid attention to this and bought large amounts of futures contracts only to lose everything and sit on the sidelines for the remainder of the semester. Be sure you know what you are doing when you trade on futures.
Class Assignments
General Requirements for Class Assignments
Every class assignment has to be delivered on time at the beginning of the class for which it is assignment. Late assignments will not be accepted, no exceptions. If you know you are not going to be present to a class in which an assignment is due you can turn it in before that class at any time or you can have it faxed to me before the class begins. No assignments will be accepted by e-mail.
I expect every assignment to be typed on a word processor. No handwritten assignments will be accepted. All class assignments must be prepared in a professional manner.
As a general formatting rule, class assignments must be clearly printed on letter sized paper, on font size 12 and single-spaced. Margins should be 1” top and bottom and 1.25” left and right. The number of pages will vary per assignment. Your name must be on the top of the first page together with the title of the assignment and the pages must be numbered.
Class Assignments
Every student in the class will be assigned to a particular country. I am providing you with a list of countries in this syllabus. You should give me three countries you would like to be assigned to. I will make the assignments myself and will try to accommodate your preferences. However, there will be conflicts since some countries will be chosen by more than one person. I will do my best to assign you to one of your countries of choice. If that is not at all possible, I will contact you. Countries will be assigned on a first come first served basis. You must send me your preferences by February 9 by e-mail only, so I have a record of who asked for what first. One additional thing: you cannot choose countries in which you have lived in. The goal is that you learn about a country that you are not too familiar with. The list of countries you can choose from is below. They are the thirty-two largest economies in the world after the US, according to the World Bank, and are shown ranked by their economy size.
1.China
2.Japan
3.Germany
4.India
5.France
6.Italy
8.Brazil 9.Indonesia
10.Russia
11.Canada
12.Mexico
13.Spain
14.South Korea
15.Thailand
16.Iran
17.Turkey
18.Australia
19.Taiwan
herlands
21.Pakistan
22.Argentina
23.Egypt
24.Colombia
25.Belgium
26.South Africa
27.Poland
28.Philippines
29.Switzerland
30.Austria
31.Sweden
32.Denmark
You will be requested to do things related to your country of choice during the semester in different assignments. Basically you will have to follow what has been going on in that country. The library has some country reports on virtually every country in the world. Go see the business librarian and get the most recent report to learn more about your country. Other specific assignments using your country of choice will be explained elsewhere in this syllabus.
Assignment #1: The International Monetary System
Visit the home pages of the World Bank (), IFC (), IMF (), and of the Bank of International Settlements (). Write a 2-page report addressing what the main goals and components of these organizations are; what their current projects seem to be, and how do they fit in the International Monetary System. Try to find out projects related to your country of choice (see above) and what role your country of choice has in the governance of each one of these international organizations. This assignment is due on Feb. 2, 1998 at the beginning of the class.
Assignment #2: FDI
For your country of choice, try to find out about foreign direct investment. This is investment in real productive assets, such as plants, patents, property as opposed to investments in financial assets. Find out what are the main countries investing in your country of choice and how important is US investment in that country. List, if possible, the main foreign corporations, American included, active in that country. Try to find out any major limitations to foreign investment imposed by your country of choice and the reason for them. The country reports and other resources available at the BGIC, such as ABI/Inform and the Wall Street Journal Index, may be very helpful with this assignment. This assignment is due on Feb. 9, 1998 and should be two pages long.
Assignment #3: Case Study
This assignment is based on the Lufthansa case study on page 220 in your textbook. Answer the questions at the end of the case. Present any calculations you make. The write-up should be two pages long. This assignment is due on March 9, 1998.
Assignment #4: Ibbotson Database International Portfolio - Extra Credit
This assignment will be provided to you later in the semester. This assignment is due on April 27, 1998. Third Midterm and Term Paper on Your Country
During the semester you must follow what has been going on in your country of choice. Everything may be important: political and social events, economic changes and information, etc. The term paper must provide a brief overview of recent political and economic events and a report on the latest major events. You must provide an analysis of your country of choice having in mind how attractive the country looks for foreign investment. The whole focus of your paper shall be investment, both direct and in the securities markets of the country. Your assessment of the countries outlook and attractiveness is the most important part. The International Financial Statistics published by the IMF is available at the library. It contains balance of payments information. You must provide a brief assessment of the balance of payments situation in your country to aid your analysis. I expect the report to contain at least the following parts:
1.Recent Political and Economic Events
2.FDI Policies and Profile
3.American FDI in your country
4.The Financial Markets
5.Outlook for FDI and Investors
The report should have at least ten pages. Please cite all your references correctly. Use the Chicago Manual of Style norms for citations (available at the library).
The term-paper is due on May 11, 1998 at 4:30 p.m.。