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S.90-4

SIMON FRASER UNIVERSITY

MEMORANDUM

To: ?

Senate

From: Senate Committee on

Academic Planning

Subject: ?

Faculty of Business Administration

Date: ?

December 13, 1989

New courses - BUS 410 and BUS 418

Reference: SCUS 89-34

SOAP 89-71

Action undertaken by the Senate Committee on Academic Planning/Senate Committee on

Undergraduate Studies gives rise to the following motion:

Motion:

"That Senate approve and recommend approval to the Board of Governors

Financial Institutions

BUS 418 - 3

International Financial Management."

alendar Information? 

Abbreviation Code: BUS 

a

SENATE COMMITTEE

ON UNDERGRADUATE STUDIES 

NEW COURSE 

PROPOSAL FORM

Department Business Administration 

Course Number: 

?

410 ?

Credit Hours: 

?

3 Vector:S 

Title of Course: Financial Institutions 

Calendar Description of Course: 

An examination of debt, equity, and derivative securities markets. Institutional 

structure, financial contract forms, and pricing relationships will be stressed. 

Topics to be covered include financial intermediation, financial transacting, val- 

uation, and hedging strategie based on derivative securities. 

Nature of Course 

Seminar 

Prerequisites (or special instructions): 

BUS 312 and BUS 315 and ECON 310 

What course (courses), if any, is being dropped from the calendar if this course is 

approved: 

None ? 

2. Schedu1in 

How frequently will the course be offered? Once per year. 

Semester in which the course will first be offered? Fall 1990. 

Which of your present faculty would be available to make the proposed offering 

possible? All present faculty in finance, are qualified to offer 

this 

course. 

3

?

Objectives of the Course 

. To replace Economics offerings with courses requiring more finance sophistication and 

having a greater managerial orientation. Virtually all Business Schools have such 

courses in their curricula. Sec attached course outline for more detail. 

4.

Budgetary and Space Requirements (for information only) 

What additional resources will be required in the following areas: 

Faculty 

?

None

Staff ? 

None. 

Library 

?

None. 

Audio Visual None. 

Space ? 

Classroom only. 

Equipment 

None. 

5.

Approva1 

Date: 

12, 4

)

, d

S I

?

?

73-34b:-

(When completing this form, for instructions see Memorandum SCUS 73-34a. 

uch course outline). 

Ar-

- SIMON FI1ASI:11 UNIVERSITY

Faculty of Business Administration

BUS 410 - Financial Instilution!;

COURSE OUTLINE

Purpose:

The purpose of .lhls course is . to develop an understanding of the context

in which and the mcLhods by which. financial transactions . lake place. Of

par Ii cular in Lcrcs I. is the emergence, &tevelopincn L and control of financial

instituLions and instruments. Financial inlcrmcdiaLion and advising, rnarkct

organization and market making provide the selling, while the creation and

secondary markel Irading of debt, cquity, and dcrivalivc securities provide

the focus. The contributions of intermediaries, invcsimcni bankers, dealers,

brokers and securities cxcliaiiges to We pricing of and trapsacting in,

various types of debt and equity securities will be stressed. The course

will also explore financial innovation and the use of derivative securities

in various hedging strategies.

çgpircd Texts:

Paul F.

Sin! Lb. ?

Economics of Financial

Insti ItiLi ons and Markets,

(Homewood, Ill.: Richard D. Irwin).

Robert A. Schwartz, Eqijiy Markj;, (New York: Harper and Row).

Marcia Sligum, The Money Markel, (Homewood, 111. : Dow Jones Irwin).

Supplemcnla y

Texts:

Marcia Stigum,

Money

Market. Calculations, (hiomncwood, Ill.: Dow Jones

Irwin).

Ronald Shearer, John Chant., and David, Bond, Time Iconom I e;

Of.' the

Canadian Financial System, (Englewood Cliffs: Prentice-hal 1).

Topical Outline

Part I - An Overview of Financial Markets:

liistrumncnts and Inst i tut ions

A. The nature and purpose of financial instruments (1 week)

1. Financial assets defined

Debt vs. equity

Direc.1 vs. indirect

Derivative vs. primary securities

Terms (form and securi ly of promise, timing and size of paymnemils)

3. Marketability (slandardizaLion, denomination)

4. Issuer type (government, business, individual)

5: Securitizalion and derivative securities - an overview

13.

Financial Institutions (

1 week)

1. Financial in terrne(l 1 aries .( banks and non-banks)

Market makers - primary and secondary market!;

Jnveslme)t bankers

Investment dealers

Brokerage and the exchanges

d. The third and fourth markets

Inves linen 1 managers/advisors

3. Money market vs. capi Ia 1 market 1nt. i Lu t ions

_(Con

Paz-I II - Financial Services and Ike Inlermedialion Process (2 weeks)

A. Ra Iiona.lcs for inlerinedia Lion (cuslomiza Lion, diversificaLion,

in fornza Li on economy •

laizda rd I

z;t

ion, and sccur 1 ty )

U. The intermediaries

Banks - the central bank and char Lered banks

Near-banks - LrusL and mortgage loan companies, cooperative

banks, and savings banks

Investment companies - open- and closed-end (including money

market fuoth; and VCC' s)

Finance compailles, leasitit

companies, and fac Lors

Pension funds and insurance companies

Part. III - I nves tmen L hank 1 ng

weeks

A. Market making and the new Issues market

Inilial public offerings

Seasoned .1 ssue offerings

Undcrwri t log as an option strategy

U. Underwri hog and Lhe market, for corporate control

hostile Lakeovers and leveraged buyouts

Risk arbitrage in mergers and acquisi Lions

h' i nanc i a I i nnova 1. ion and "junk" bond financing

Part IV - The Microstructure of Financial Markets

A. The money market

weeks)

I . Money ma rke I inst. rurnen Ls and I ssuers

The invesLors

3. The maikc L makers - dealers and clearing arrangcmcnLs

Underwriting vs. secondary market dealing

Brokering

Dealer financing, arbi Iraging, and hedging

13. The capi Lal market: Secondary trading

weeks)

I. The raLionaics - services, compeli tion, and pricing

The loves Uncut dealers

Brokerage- and the organized exchanges

a.Accotin Is, orde

process i og, and clearing

b. Auc t ion techu 1 qucs

MarkeL efficiency

Informational efficiency

Commissions and the bid-ask spread

Order flow, volume, and prices

C. The derivative securities znarkcl (1 week)

The ins Lrumen Is - fu lures and us Led opL ions vs. forward

contracts

1u1.tires and op1 Ions market i ust. tnt. 1

Arbi Lrage and hedging sLraLegics

The market makers - floor Lraders/brokers

Iopiai Outs inc (Conlinned) 

Part V - The Regulatory E[wironrncni (2 weeks) 

A. Regulating the intermediaries 

I. Fiduciarlary obi iga tions 

2.

Supervision of Inves Lmciils and financing 

3.

CompetItion policy 

4.

Monetary control a;pec1; 

5.

The cost/benefit tradeoff 

13. New issues and disclosure regulations 

C. Secondary market regulation 

1.

The IDA and se 1 f-regulation 

2.

RegulatIon of organized exchanges 

3.

Listing requirements and ongoing disclosure 

4.

Insider trading and other unfair dealing 

5.

Capital requirements and margin controls 

D. Regulation of the derivative securities markels 

1.. Registration of participants 

2.

Approval of new, contracts 

3.

Mandalory risk disclosure 

4.

Enforcement, arbitration, and reparation provisions 

•i

SIMON FRASER UNIVERSITY? 

Faculty of Business Administration? 

MEMORANDUM 

To: ? 

Robert Rogow, Chairman 

?

From: J.P. Herzog 

Undergraduate Program 

?

I ?

Finance Are9 C odinator 

Subject: New Course Proposal - 

?

J ?

Date: September 19, 1989 

Bus 418

Attached please find a New Course Proposal Form and Course Outline for BUS 

418

(or whatever new number is deemed appropriate). As per your 

instructions, let me offer the rationale for this course. 

As all of us have known from the establishment of the faculty, our finance 

offerings are pitifully few by Canadian Business School standards. Two years 

ago, we proposed one new course 

(BUS 416)

to add to the offerings carried 

over from the old DEC clays - thus bringing our total number of offerings to 

including the core course, BUS 

312.

Other Canadian Business Schools typi- 

cally offer from 8 to 

courses, and they invariably include the two courses 

we propose here. It is doubtful that we would ever want to offer the full 

menu of courses at the upper end of the range, but we should certainly 

approach the lower end if we hope to have a credible set of choices for 

those who wish to concentrate in finance. 

?

This course and the companion 

?

course we propose would bring our total number of offerings to 6. 

To some extent we have been able to get away with our dearth of offerings by 

relying on two courses offered in Economics - ECON 310 and ECON 

445.

While 

. these two courses contain elements that are useful for students of finance, 

they are not entirely satisfactory. For one thing, they are taught from the 

perpective of the economist, rather than the perspective of a manager. This 

influences not only the way the subject matter is covered, but what subject 

matter is deemed worthy of inclusion. ECON 

445,

for example, which BUS 418 

is intended to replace in our curriculum, is much more concerned with trade 

and payment flows between countries and with exchange rate and payment 

mechanisms. Our course would give some attention to trade and international 

payments mechanisms, but would focus much more on how managers use these for 

financial decision-making purposes. 

A second issue relates to the matter of control. Not only does Economics 

(rightly) determine what goes i.nto their courses, but what prior preparation 

students must have and what performance standards must be met. In the case 

of ECON 445, for example, prerequisites include ECON 301 and ECON 

305.

We

permit students to take ECON 301 in lieu of our own requirement of BUS 

307,

but ECON 305 is not required for business majors. Thus our students who wish 

to take ECON 445 could well be barred from entry into this course if they 

mis tnkciil.y Lake BUS 

307

and fail, to take ECON 305. The prerequisites we 

would (and will) set are quite different. Because the offerings we propose 

are advanced 

finance 

courses, students will be required to have completed BUS 

312

and BUS 

315 - -

our business finance and investment courses. 

For all of these reasons, then, a larger choice of finance offerings from our 

own finance faculty; courses taught from a managerial as opposed to economic 

perspective; differences in coverage; and control over both course content 

and prior preparation, we urge your Committee to approve our request. 

SENATE COMMITTEE ON UNDERGRADUATE STUDIES 

NEW COURSE PROPOSAL FORM 

Department iiw'; 

Ac1minirririnn

0-3-0 

BUS Course Number: _4 

?

18

—

?

Credit Hours: 3 Vector: 

Calendar Information 

Abbreviation Code: 

Title of Course: International Financial Management 

Calendar Description of Course: 

An introduction to international financial markets and institutions and to the managment 

of assets and liabilities in an intcrnational/fliult:iiflatioflal setting. Topics to be covered 

include: exchange rate determination and management of foreign exchange risk; interest 

rate swa 

p

s international portfolio management: comparative markets; and country risk. 

Nature or Course 

emi.nar 

rcrcquisites (or special instructions): 

BUS 312 and BUS 315 and ECON 345. 

What course (courses), if any, is being dropped from the calendar if this course is 

approved: 

None 

Schedulinl 

How frequently will the course be offered? Once per year. 

Semester In which the course will first be offered? Spring 1991 

Which of your present faculty would be available to make the proposed offering 

possible? 

All current faculty members are qualified to teach this course. 

Objectives of the Course 

To provide students with a managerial perspec 

liabilities in an international/multinational 

other proposed offering, BUS 417, would bring 

curricula elsewhere in Canada. 

tive on managing exchange risk, assets, and 

setting. This offering, along with the 

our currictiltiin

more into line with business 

Budgetary and Space Requirements (for information only) 

What additional resources will be required in the following areas: 

Faculty ? 

None

Staff 

?

None. 

Library 

None. 

Audio Visual 

None. 

Space 

Classroom only. 

Equipment 

None. 

5. Approval 

Date: ? 

lcTcI

4kt

Department Chaitm n 

73-34b:- (When completing this 

ALcach course outline). 

(_/)(J

•'(

__\t-_, _1_) 

?

-

n

form,

for Instructions see Memorandum SCUS 73-34a. 

in

SIMON FRASER UNIVERSITY? 

Faculty of Business Administration 

c011R5; 

I: OUTLIN 

E.

BUS 418 - International Financial Management 

Purpose: 

The purpose of this 

COULSC

is to examine the financial management of 

firms (both domestic and multi-national) in an incrnationa1 setting. Topics 

to be covered include 

exchange 

rate determination, management of exchange 

rate risks, interest rate swaps, international portfolio strategies, 

comparative financial markets, and country risk. 

Required Text: 

Rita M. Rodriques and E. Eugene Carter, International. Financial. Manage- 

inent, (Englewood Cliffs: Prentice-Hall). 

Supplemental Readings: 

John Williamson, The Open Economy and the World Economy, (New York: 

Jasic 

Books). 

Marcia Stigum, ? 

Money Market Calculations, 

?

(Homewood, ? 

Ill.: 

?

Dow ? 

Jones-Irwin). 

Topical. Outline: 

Part I- Exchange Rate Strategies 

A National Accounting and the Balance of Payments 

B. Exchange Rate Determination 

5 ?

C. Interest Rates and Currency Swaps 

Part II - Financing Strategies 

A.

Financing International Trade 

B.

The Euro-Currency and Euro-Bond Markets 

C.

Financing the Multi-National Firm 

Part III - International Investing 

A.

Direct vs. Portfolio Investment 

B.

Cash Flows for Capital. Budgeting - The International Elements 

C.

The Cost of Capital in An International Setting 

D.

International Capital Asset Pricing 

Part IV - hedging Strategies 

A ?

Matching Assets and Liabilities 

B. Use of Derivative Securities in Hedging: 

1.

Foreign Currency Options 

2.

Forward Contracts 

3.

Foreign Exchange Futures 