Volume 67, Issue 7

Is International Finance Intended for Me?
by Commentator Staff

In the upcoming spring semester, the Finance Department will offer a course entitled “International Finance.”  Last time around, fewer than ten students decided to enroll in the class.  Are students uninterested in the international economy? Does we really feel impervious to the global markets?  If we do, we probably have some rethinking to do. 

In 1999, McDonalds did 61.5% of their sales outside the U.S., a hefty rise when compared to their corresponding 1993 sales figures of 46.9%.  In 1993, Wal-Mart had zilch in international sales.  But, in 1999, they recorded more then 14% of their sales from the foreign markets.  In 1999, General Electric did over 30% of its sales outside their home country.  Cross-border trade has grown 100 fold since 1980. 

With today’s mushrooming technology sphere, international trade appreciation and acumen are vital to success.  Emerging markets, such as China, Hong Kong, Taiwan, South Korea, India, Brazil, South Africa, and Argentina (to name only a few) account for over 40% of the world’s imports. By the year 2050, the people that we now call “minorities” in America will represent more than 50% of our population. Organizations that will thrive in the coming years will recognize and utilize cultural differences as an asset. Differences are a critical catalyst for innovation and originality.

Today, over 400 million people use the Internet, compared with less than 20 million 5 years ago. By 2005, there will be about a billion users. However, more than half the world’s populace has never used a telephone.

If any of these facts and figures convince you that International Finance is fundamental to your post undergraduate success, or if you plan to take your livelihood abroad, then this course list prepared by Visiting Associate Professor of Finance Dr. Malendretos should be a precursor to the exciting class that will be offered just around the corner.  If not, then consider glancing at what follows.  If you don’t, you risk being left behind.

The course is set to examine the following:

A.  Motives of firms in their pursuit of foreign direct investment

Understanding the motives helps us to know the reasons for multinational companies (MNCS) investing abroad.

B.  International Monetary System

What are the financial institutions involved in international trade & investments?  What are the functions of the International Monetary Fund, the World Bank, the Inter-American Development Bank, the European bank for Reconstruction and Development and others?  What’s the meaning of the international debt problem?

C.  Determination of Exchange rates

What factors influence the values of currencies between one another?  Do policies of governments affect the values of their national money relative to other money?

D.  Methods of International Financing

Analysis of Eurocurrency, eurobonds and the integration of multinational markets.

E.  International Capital Budgeting

Do costs of different funding get affected by the global nature of the generation of project financing?

F.  Political Risk

Determinants of expropriation of assets and operations in MNCS.

G.  Foreign Exchange Risk

Alteration of values of foreign exchange and techniques used to hedge against such changes.¨

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