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AD763 — Multinational Finance
Course Description

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Course Overview

Operating a business or investing on a multinational basis presents many unique challenges and opportunities. The primary objective of this course is to identify and examine these unique aspects and how these challenges can be addressed. These factors range from different sovereign jurisdictions, legal and regulatory environments, foreign exchange regimes, trade barriers and currency fluctuations to issues of language, business customs and distance. We will analyze these factors and the tools and mechanisms designed to manage or mitigate their effects. Similarities and differences between managing an operating business, foreign direct investment, and international outsourcing will be distinguished from more passive portfolio investments.


We will commence the course by considering trade between nations – why it is so attractive and why it is also so prone to social conflict.  That is, under most circumstances unobstructed free trade is mutually-improving between countries, making both richer, but not improving for every group within each country.  We will then study barriers to trade – tariffs and other restrictions – why governments impose them and what effects they have.  We will discuss an increasingly important subject, the links between international trade, energy use, and greenhouse gas emissions – and whether these justify some restrictions on trade.

Throughout this trade section we will consider these issues from the individual company or investor point of view, addressing sovereign and country risk for trade and investment, the consequences they pose for companies or investors operating in different jurisdictions and how these risks can be analyzed.

In the finance section, we turn first to international financial flows and their impact on foreign exchange rates, another area distinguishing operations and investments in different countries. Given these risks, financial managers and investors focus significant attention on mitigation, through forward and futures markets, swaps, and the general use of derivatives. The class will also focus on the basic mechanics of these instruments and how they can be utilized to hedge attendant risks.

We will then move to specific topics in multinational finance — distinctions in the financial instruments used in international finance, measurement and management of risk, especially through portfolio management, foreign direct investment, financing international trade, and outsourcing. 

A schedule of reading assignments and assigned problems is given in the Course Schedule. Students are expected to prepare for the lectures as well as to do research on their own. The objective of the lectures will be to guide and clarify student learning. Students are expected to read the chapters and attempt to do the assigned problems in the text prior to the lectures, and come to class prepared to participate in a group learning experience.


1. Courses: MET AD 731 and MET AD 630 or equivalent

2. Student Competencies: Statistics Concept Understanding, Mathematics Comprehension, Facility with MS Word and MS Excel

Technical Notes

The table of contents expands and contracts (+/- sign) and may conceal some pages. To avoid missing content pages, you are advised to use the next/previous page icons in the top right corner of the learning modules.

This course requires you to access files such as word documents, PDFs, and/or media files. These files may open in your browser or be downloaded as files, depending on the settings of your browser.


There are six modules plus a final exam over seven weeks.

Delivery Mode — Online

The online course delivery mode is designed to give flexibility to students to study the subjects covered in the course at their own pace, offered in the form of recorded lecture notes, tutorials, and additional online material to enhance students’ learning experience. In addition to the asynchronous online material and testing, students will also have opportunities to participate in live classrooms delivered by a professor and/or a facilitator. We will have at least one 1-hour live classroom each week, and may add more as necessary.

Getting Started, or What Should I Do First?

The job of a graduate student is to move forward human knowledge.

I know this is intimidating, but my job is to challenge you. You want to know more about international finance and improve your understanding of multinational corporations, cross-border investments, and currency risk — there wouldn’t be much point in taking this course if you didn’t. This course is about becoming a critical thinker in a multinational environment, learning to evaluate what you read, investing abroad, evaluating your investment and risk management decisions, and developing your own conclusions.

If that sounds ambitious, it is. I am here to help you through that process. This is challenging — and challenges are prerequisites for progress! Don’t expect to master multinational finance and trade in the first week. However, you should expect to have a much better understanding of international finance when you successfully complete the class. I only know of one way to succeed at mastering this study material: be persistent, don’t give up, review the material until you master it, and attempt to explain it to someone who is new to the field!

General Guidance

There are no dumb questions.

I really believe and practice this. If you have a question, ask! The internet has made data accessible to everyone. In fact, there is really way too much of it. The problem is that you don’t know how to evaluate this data. Where does it come from? Who wrote it and why? What is their agenda? Use the Internet resources carefully!

I encourage you to challenge anything and everything. Don’t just read the textbook or the online material, read with a view to challenging what is being explained. However, if you challenge something, be sure to be able to back up your claim with research and correct references. This is a multinational finance course (not math!), where art and science merge in various aspects, and there is often more than one right answer in a given situation.

Course Learning Goals and Objectives

To successfully complete this course, students should have a general understanding of financial analysis, mathematical and statistical concepts, understand the Normal distribution and its characteristics, be familiar with measures of risk and expected returns and know basic concepts of international finance.

The multinational finance and trade course will build on these fundamentals to provide a framework for (i) analyzing multinational corporation risks and (ii) exploring international investment opportunities in the form of foreign direct investments, as well as investments in global financial markets. We will learn how to analytically approach multinational finance risks, study corporate currency exposures and examine how currency fluctuations affect the overall risk and return of global companies. We will also study the concepts of foreign investments and learn how to determine the cost of capital for international ventures. The course will also provide the student with a framework for analyzing the foreign exchange markets, determining foreign exchange rates and parity conditions in international finance. Additionally, we will examine international portfolio investment strategies and ways to finance foreign trade.

After successfully completing the course requirements, students will be able to:

1. Understand the classical model of comparative advantage in trade, based on constant returns to scale

2. Explain how this changes to competitive advantage with increasing returns to scale

3. Show how comparative advantage drives vertical FDI, while competitive advantage builds horizontal FDI

4. Show why vertical FDI tends toward developing countries, and horizontal FDI to developed ones

5. Understand current debates about Carbon Taxes and International Burden Sharing.

6. Describe important components of multinational financial management

7. Calculate a nation’s balance-of-payments

8. Distinguish between current, financial, and official reserve accounts

9. Explain the concepts of interest rate parity and equilibrium exchange rates

10. Differentiate between nominal and real exchange rates

11. Understand how central banks change money supply to effect both interest and exchange rates

12. Show how central banks can sterilize their intervention to effect either of these rates, but not both

13. Define social, political, cultural, and economic country risks

14. Define translation and transaction exposures

15. Identify basic factors that determine foreign exchange risk for a company

16. Describe how the risks of currency exposure can be hedged with forwards and options

17. Determine the cost of capital for foreign investments

18. Describe international cash management



Stodder received his BA cum laude from Harvard University, MS with distinction from University of Essex (UK), and PhD with fellowship from Yale University, all in the field of Economics.  He considers himself ‘servicable’ in Spanish, Russian, and French – in that order.

He was Professor of Practice at Rensselaer Polytechnic Institute (RPI) for 26 years. He has provided testimony before the State Legislature of CT, State Courts of CT and NY, and in US Federal Court on issues of injury, death, employment loss, and pension disputes, and published in  related fields of Public Finance and Law & Economics.  He has also published on behavioral economics, post-communist transitions, energy and the environment, and digital social currencies.

He has presented at conferences and seminars in Argentina, Austria, Belgium, Brazil, Canada, China, France, Italy, Korea, Portugal, Russia, Spain, the UK, and the US.  His Research affiliation with the Pardee Center has supported his study of the macroeconomic impact of Carbon Taxes.  

Course Resources

Recommended Text

Alan C. Shapiro, Multinational Financial Management, 11th Edition

ISBN: 978-1-119-55990-0

The textbook for this course can be purchased from 
Barnes & Noble at Boston University

Required Text

International Economics: Theory and Policy, Paperback – 12th Edition, 2021

by Paul R. Krugman, Maurice Obstfeld, and Marc J. Melitz,

· Publisher: PEARSON; 12th edition (2021)

· Language: English

The textbook for this course can be purchased from 
Barnes & Noble at Boston University

Note: You may also purchase the Global Edition of the same textbook, both are fine for this course.

Optional Readings

Wall Street Journal

Business Week

Financial Times

The Economist




This course will use a Blackboard site. Students are required to have a BU ID and password to log in. If you do not have a BU ID yet, note that this takes some time so be sure to start this process well before class starts. The site is:

Boston University Library Information

Boston University has created a set of videos to help orient you to the online resources at your disposal. An introduction to the series is below:

The Welcome to Boston Universities Libraries video cannot be displayed here

All of the videos in the series are available on the 
Online Library Resources
 page, which is also accessible from the Campus Bookmarks section of your Online Campus Dashboard. Please feel free to make use of them.

As Boston University students, you have full access to the BU Library. From any computer, you can gain access to anything at the library that is electronically formatted. To connect to the library, use the link
. You may use the library’s content whether you are connected through your online course or not, by confirming your status as a BU community member using your Kerberos password.

Once in the library system, you can use the links under “Resources” and “Collections” to find databases, eJournals, and eBooks, as well as search the library by subject. Some other useful links follow:

Go to 
 to access eBooks and eJournals directly.

If you have questions about library resources, go to 
Ask a Librarian
 to email the library or use the live chat feature.

To locate course eReserves, go to 

Please note that you are not to post attachments of the required or other readings in the water cooler or other areas of the course, as it is an infringement on copyright laws and department policy. All students have access to the library system and will need to develop research skills that include how to find articles through library systems and databases.

Free Tutoring Service

Free online tutoring with Smarthinking is available to BU online students for the duration of their courses. The tutors do not rewrite assignments, but instead teach students how to improve their skills in the following areas: writing, math, sciences, business, ESL, and Word/Excel/PowerPoint.

You can log in directly to Smarthinking from Online Campus by using the link in the left-hand navigation menu of your course. Here is a video that provides an overview of the service:


Please Note

Smarthinking may be used only for current Boston University online courses and career services. Use of this service for purposes other than current coursework or career services may result in deactivation of your Smarthinking account.

Study Guide

Module 1 Study Guide and Deliverables


· Introduction to Multinational Finance & Trade


· Module 1 content

· Krugman Chapters 1, 2, 3, 4, 5


None this week


HW 1, Comparative Advantage: Access from Sunday, May 15th at 5:00 PM until Saturday, May 21st at 11:59pm ET.  HW1 Coaching on Thursday, May 19th at 6:00 PM ET

Live classrooms:

Live session with the instructor on Sunday, May 15th at 5:00 PM ET

Module 2 Study Guide and Deliverables


· Increasing Returns


· Module 2 content

· Krugman Chapters 6, 7, 8, 9


EU Disputes, Wanting In, Wanting Out

· Original posting due by Wednesday, May 18th, 11:59 PM ET

· Responses to at least 2 of your classmates’ postings by Saturday, May 21st, 11:59 PM ET



HW 2, Tariffs for Large & Small Countries: Access from Sunday, May 22nd at 5:00 PM until Saturday, May 28th at 11:59 PM ET. HW2 Coaching on Thursday, May 26th, at 6:00 PM ET.

Live classrooms:

· Week 1 Homework meeting on Thursday, May 19th at 6:00 PM ET

· Live session with the instructor on Sunday, May 22nd at 5:00 PM ET

Module 3 Study Guide and Deliverables


· Trade and Development

· Global carbon taxes


· Module 3 content

· Krugman Chapters 10, 11

Presentation Topic:

US-China Trade Tensions

Team should be ready to present at end of Sunday (May 29) Live Classroom


HW 3, International Labor & Capital, Income Distribution: Access from Sunday, May 29th, at 5:00 PM until Saturday, June 4th , at 11:59 PM ET.  HW3 Coaching on Thursday, June 2nd, at 6:00 PM ET.

Live classrooms:

· Week 2 Homework meeting on Thursday, 26th at 6:00 PM ET

· Live session with the instructor on Sunday, May 29th, 5:00 PM ET

Module 4 Study Guide and Deliverables


· Exchange Rates and Interest Rates, Fisher’s Interest Rate Parity

· The Problem of Macroeconomic Coordination


· Module 4 content

· Krugman Chapters 13, 14, 15, 16


Currency Crises

· Original posting due by Wednesday, June 1st, 11:59 PM ET

· Responses to at least 2 of your classmates’ postings by Saturday, June 4th, 11:59 PM ET


Submit Term Paper Thesis by Sunday June 5th at 11:59 pm

HW 4, Interest Rate Parity: Access from Sunday, June 5th at 9:00PM until Saturday, June 11th at 11:59 PM ET.  HW4 Coaching on Thursday, June 9th, at 6:00 PM ET.

Live classrooms:

· Week 3 Homework meeting on Thursday, June 2nd at 6:00 PM ET

· Live session with the instructor on Sunday, June 5th at 9:00 PM ET

Module 5 Study Guide and Deliverables


· National Macroeconomic Policy & International Linkage


· Module 5 content

· Krugman Chapters 17, 18, 19

Presentation Topic:

The Panama/Pandora Papers, Laundering, Tax Avoidance

(To be Presented in Sunday Live Classroom)


HW5, Fiscal-Monetary: Access from Sunday, June 12th at 9:00 AM until Saturday, June 19th at 11:59 PM ET, HW5 coaching on Thursday, June 17th at 6:00 PM ET

Live classrooms:

· HW4 meeting on Thursday, June 9th at 6:00 PM ET

· Live session with the instructor on Sunday, June 12th at 9:00 AM ET

Module 6 Study Guide and Deliverables


· Currency Futures and Options

· Strains in the International Financial System


· Module 6 content

· Shapiro Chapters 14-(16)-18


International Money Laundering

· Original posting due by Wednesday, June 15th, 11:59 PM ET

· Responses to at least 2 of your classmates’ postings by Saturday, June 18th, 11:59 PM ET


“Original Sin” in International Finance (To be presented in Sunday Live Classroom)


Term Paper due Monday, June 20th at 11:59 PM ET

HW6, Transfer Pricing: Access from Sunday, June 19th at 5:00 PM until Saturday, June 25th at 11:59 PM ET (No HW coaching on this one.)

Course Evaluation:

Course Evaluation opens on Tuesday, June 14, at 10:00 AM ET and closes on Tuesday, June 21 at 11:59 PM ET.

Please complete the course evaluation. Your feedback is important to MET, as it helps us make improvements to the program and the course for future students

Live classrooms:

· HW5  meeting on Thursday, June 16th at 6:00 PM ET

· Live session with the instructor on Sunday, June 19th 5:00 PM ET

Final Exam Details

The Final Exam is a proctored exam available from 6:00 AM ET Wednesday, June 22nd through Saturday, June 25th at 11:59 PM ET. The Administrative Sciences department requires that all final exams be administered using an online proctoring service called Examity that you will access via your course in Blackboard. In order to take the exam, you are required to have a working webcam and computer that meets Examity’s system requirements. A detailed list of those requirements can be found on Home Page > Proctored Final Exam and Information > Scheduling Your Exam with Examity. Detailed instructions regarding your proctored exam will be forthcoming from the Assessment Administrator. You will be responsible for scheduling your own appointment within the defined exam window dates.

Final Exam Duration: 2 hrs

To complete the Final Exam, you must download the Excel sheet, complete the work on your computer, then submit the completed Excel sheet.



Course Grading

There are six modules plus a final exam over seven weeks.

You can expect to be challenged in this course, and excellent scholar-quality work will be rewarded with an “A.” Grades for this course will be curved.

This is a Boston University course; that means something. One thing it means is that we recognize and reward excellence. Excellence is uncommon, even rare. Your grade, then, will reflect the standards of excellence set by Boston University, in which only truly distinguished work will receive the highest grade.

Course Grading Structure

Course grades will be a combination of 3 discussions , 6 Homeworks (in each of the  modules), a group Presentation, the term paper, and the final exam — weighted as follows:

3 Discussions


1 Presentation


4 Homeworks


1 Term Paper


1 Final exam


Discussions and Expectations

Student participation is essential for a successful class. Contributing to the discussion for each module will give you an opportunity to be heard and to experience a rewarding learning environment. Each student is required to add value within the discussion forum. Use this opportunity, it’s yours.

· You should research the assigned discussion topics and make an initial post for each discussion topic, by Thursday, 11:59 PM ET.

· You should also respond to at least two posts initiated by your classmates, by the following Monday, 11:59 PM ET.

Where to participate to discussion questions – The “My Groups” section in the left-hand course menu.

Student Preparation for Discussion

Minimal preparation is reading the material, summarizing what it is about and what the major issues are, and making some recommendations.

Superior preparation involves being able to (i) summarize the situation or problem presented; (ii) recommend a solution to the discussed problem; (iii) support your recommendation with relevant details, and analyses; and (iv) discuss innovative solutions.

The discussion participation grade will reflect the quality and quantity of contributions to class discussions as well as other voluntary activities that enhance the course experience for everyone. The best way to judge your performance in this area is to ask yourself after every discussion: “what value did I provide in this module’s discussion?”


Homework will serve as resources for final exam preparation. Each one is open-book and open-notes . It is extremely important to COMPLETE THE HWs BEFORE THE DEADLINE. You can not redo the HW once the deadline has passed, since solutions will be mailed out

Oral Presentation

Each student will be assigned to a small group (3 to 6) to make a brief oral in-class Zoom presentation, with visual aids, on one of the 3 assigned topics.  It’s possible that we may have 2 groups presenting on the same topic.

Under normal circumstances, everyone in the group gets the same grade, but not everyone has to take a turn as a presenter.  I’ll let the group pick one or two people for that role.

 ‘Everyone gets the same grade’ raises the ‘free rider’ incentives for a public good (we will discuss this), so I have long used the following ‘escape clause.’  If the group agrees that some member(s) is(are) not contributing a fair share, those students may then all sign an email for me to separate themselves from that person or persons.  

Without explicit penalty, each party to this conflict will then be responsible for making its own presentation.  But this is unusual, I’ve only experienced it once in 30 years of teaching.  The incentives to not be split off from the group are pretty strong.

Term Paper – Multinational Finance and Trade Paper

Using the knowledge that you have acquired during the course, you will need to prepare a research paper analyzing a specific corporation, country, investment fund, or foreign government involved in a multinational investment scenario or in a situation involving specific international investment or operational risks. These can include, but are not limited to: sustainability issues, sovereign risk, climate change concerns, energy crises, multinational mergers or acquisitions, etc.

You will need to describe the background of involved parties, provide detailed analysis of the situation, and explain the specifics of the multinational topic/case.

Note that the most important aspect of this project is to demonstrate thorough understanding of the challenges that multinational corporations face, as well as the additional risks of international investments and trade. You need to choose the topic of your paper carefully, analyze the case thoroughly, and offer critical case investigation.

· You should surely NOT just present the numbers, formulae, and existing facts.

· Your paper MUST include your conclusion regarding the situation and offer an alternative strategy, stating how the described situation could have been prevented, if applicable/possible.

· The paper also MUST include a bibliography of information and works cited.

· The paper should not exceed 15 double spaced pages.

· The paper should be prepared using the APA writing style and guidelines for references’ format. You must provide a bibliography, and all direct quotations and data sources must be properly cited.

The Department uses the APA style as to facilitate both reading the paper and understanding references, without being cumbersome as some of the other styles (such as Chicago or MLA). Students can download the student style guide from the 
American Psychological Association
 web site or you can purchase the APA style guide from the book store. The American Psychological Association provides 
many online resources
 to help you as you write your paper.

Papers are to be RESEARCH PAPERS. Remember that work that you use from other authors MUST be referenced. Since it is assumed that you are not an authority on the topic that you are writing, it is expected that this paper is an overview of many different sources of information. These must be attributed to the original author using the 
 format. This is your paper and not the cut and paste of someone else’s work. The internet has led to a false sense of what research is all about. Those new to research tend to think that it means spending an afternoon surfing the internet and then an afternoon cutting from material available. Keep in mind that the Internet is: (1) not quality oriented as it has good materials and not so good materials, and the Internet does not know the difference; (2) the Internet is NOT a sole source location. In particular, sources such as Wikipedia are the works of individual submitters which are not reviewed. Thus while many entries provide excellent information, some are fundamentally flawed or just plain wrong. Keep in mind that the Boston University Library as well as your local, state and the national US Library of Congress have extensive online services. USE THEM.

Where to turn in – The “Assignments” section in the left-hand course menu.

Final Exam

There will be a proctored Final Exam in this course using a proctor service called Examity. Detailed instructions regarding your proctored exam will be forthcoming from the Assessment Administrator. You will be responsible for scheduling your own appointment.

Ungraded Items

· Live classroom sessions: We will have at least one synchronous live classroom in each module and will schedule additional live classrooms as needed.

· Your participation, while not mandatory, will be valuable to you and the class. I strongly encourage student participation and contribution during the live classrooms. Use this opportunity to distinguish yourself from others and benefit from personalized studying, learning, and teaching experience. You can be the best and I can help you along the way.

· To participate in the live classroom discussion, you will need to go to the “Live Classrooms” section in the left-hand course menu.

· Live classroom sessions will be recorded and archived for further viewing. You can go to the “Live Classroom Recordings” area to view the recordings.

Requirements, Policies and Standards

Timely Presentation of Materials Due

All assignments and assessments have due dates. These are the LAST DATES that stated material is due. I maintain the right to refuse or downgrade any materials presented after due dates. This is not a subject for discussion.

Students should organize their time and work so as to turn in the assignment before the due date. To be absolutely clear, this means that the work will be accepted anytime up to that date but not after. Students should develop a schedule so that the work is built around their personal needs and obligations. Students should allow for contingencies and plan to hand in their work well before the last minute. That way, should some unforeseen problem arise, the timely presentation of work is not in jeopardy.

You are to complete any assignment on your own.

Grading Policy

Grade inflation is not in the best interests of BU students or the reputation of the institution. I have a responsibility to differentiate the performance of my students, and to reward with high grades only those who do exceptionally well. A Grade of ‘A’ or ‘A–’ will be limited only to those students truly distinguishing themselves in the course.

The Academic Policy Committee of Metropolitan College recommends the following guidelines for distinguishing grades.

A, A–
B+, B, B–

As merited

Requests for Extensions

The general position is that make-up extensions are not given. There is no guarantee that a make-up will be permitted, and any request needs to be in writing, and a written verification of the incident will be expected. Sometimes, unfortunate situations occur that make fulfilling requirements impossible and, as such, requests for extensions will be evaluated on a case-by-case basis. This is not to penalize any individual student but to attempt to assure that there is a level playing field and the total class feels confident that no one has a unique advantage. If, for any reason, you are unable to meet any assignment deadline, you should contact the instructor immediately and preferably in advance. All assignments must be completed.

Off-Syllabus Work

Students will not be allowed to submit work for consideration that is beyond that defined in the syllabus. Students will not be allowed to submit extra work to improve their grade as this will be unfair to other students.

Satisfaction of Department Learning Goals

Course Number

MET AD 763

Course Name

Multinational Finance and Trade

Department Goal

(Substantial, Some, None)


Critical and Innovative Thinking


Each student is required to individually solve specific derivative problems during each class. This requires detailed quantitative analysis and innovative thinking.

International Perspective


Through the course, students are required to read through extensive literature on derivatives’ transactions to understand the complex structure of derivative products globally. Students learn about major international financial institutions, global pension funds, and different country’s federal, state or local governments’ involvement in derivative transactions.

Communication Skills


Students are encouraged to solve problems and explain the solutions to their classmates. In addition, each student needs to write a paper as a term project, describing a derivative product, and discussing, in detail, extensive losses stemming from improper use of derivatives. Students also offer their perspective of how companies could avoid such disastrous transactions by better management practices or superior risk management.

Decision Making


During class, students create derivative strategies along with the instructor and have to make choices for the formation of a portfolio consisting of stocks and options; this requires both quantitative and qualitative decision making.

Technical Tools & Techniques


During this course, students are required to use Excel and various Excel functions to calculate necessary inputs for the Black-Scholes option pricing model. They need to be familiar with logarithm and exponential functions as well as with the Normal distribution to be able to obtain put and call option prices.

Research Skills and Scholarship


To complete the final paper project, students are required to research global derivative scandals of large magnitude, including transactions/trades that have contributed to the downfalls of major financial entities. Students need to understand every detail of the derivative misapplication and write a research paper describing and explaining specifics of derivatives’ transactions.

Professional Ethics and Standards


During the derivatives class, professional ethics and standards are discussed in almost all of the lectures, with examples emphasizing the grave consequences of illegal derivatives trading or misreporting practices, not only for the trader(s) involved, but also for the entire enterprise.

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