Obtain a quotation for the spot rate of the foreign currency (that you have in the MNC financial statement) from the bank in the parent country where your selected MNC may conduct foreign exchange transactions.

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International Financial Management 

Project Guidelines – Spring

1- Students will give a presentation and the following criteria must be met to obtain optimum marks:

  • Knowledge, application and evaluation of the content
  • Soft skills

2- AVOID PLAGIARIMS. Please be informed that a plagiarism software "Ithenticate" will be used
3- Project document: Length discussed in content below (excluding: Cover page, Table of Content, List of Figure, Reference List and Appendixes)
4- This project is a combination of practical and academic requirements
5- Presentation Duration in class: 15 minutes
6- Please submit a soft copy (word) of the project.

Please note that the project will make up 15% of your final mark.

Project Outline and Presentation
New Political and economic crisis has changed that way in which business is being done. Write a project report on how the current economic situation has affected different financial aspects of multinational corporations during the last two year since the beginning of the Russia-Ukraine. (at different levels: company, industry, economic, globally. Etc). Apply the international financial management concepts, theories, tools, and methodologies included as part of this course and how they have been affected. It is preferred to show the effect on a selected company in specific industry sector and do the analysis on it, this topic is very broad and open-ended, however ensure to link your project to international financial management use the following details:
1. Select a publicly traded multinational company and justify your selection.
2. Obtain the MNC financial statement in two countries. Two currencies.

Answer the questions posted in the four parts of the project posted. Make sure not to type the questions again, just the answers. Make sure the flow of the project is consistent and linked to each other.
Make each part answer clear with the topic of the chapter (project parts) on top.
Each student group will turn in one report that should be approximately 10 - 15 pages, double space, APA style. Plagiarism policy of the University will be applied.

Grade will be allocated as outlined below:
1: Writing and readability of the report
Each team will be allocated 15 minutes for their presentation. Grades will vary depending on the presentation which will take place towards the end of the semester.

Project Questions

Chapter 1
Selecting the MNC
Select a public traded MNC that conduct international business. The selected MNC should be popular to the degree that you could possibly find all information about it by search. Your project should focus on one parent country and one foreign and one foreign currency.
Justify the selection of the MNC. The following questions will help you:

  1. What is the product that MNC sell?
  2. What foreign country does MNC target? Select one country they do business in.
  3. How do the MNC sell the product in that country? (i.e., through a distributor? by mail?)
  4. Is there some evidence that consumers in that country are buying this type of product?
  5. What expenses does MNC incur from producing the product be in dollars or some other currency?
  6. What kind of supplies and labor does the MNC have?

Chapter 3
Using the Foreign Exchange Market

  1. Explain how you MNC use the spot market for their business?
  2. What bank does MNC use to exchange the foreign currency received for dollars? What is the bid/ask spread on a recent quotation by that bank? Check the bank website to obtain quotations.
  3. Does the MNC possibly need the forward market? Explain

Accessing Recent Exchange Rates
Go to www.ouanda.com. Click on “Currency Tools”, scroll down to “Historical Currency Converters”, and then click on “Currency Trends”. Explain how the main foreign currency for your business has changed over the last month, the last three months and the last year. Go to www.investing.com/equities/ to search for banks spreads.

Chapter 4,6
Monitoring Movements in the Foreign Currency`s Value
What key factors likely affect the value of the foreign currency of concern over time?

Monitoring Central Bank Intervention

  1. How can the MNC be affected if the Fed attempts to strengthen the dollar in the foreign exchange market?
  2. If the Fed decides to weaken the dollar, how will MNC be affected?
  3. How can indirect central bank intervention affect the MNC even if there is no impact on exchange rates?

Accessing Central Bank Information
Go to www.bis.org/cbanks.htm to access the Web site link for the central bank in your target country. Determine whether this central bank intervenes to control its currency in the foreign exchange market.

Chapter 7 and Chapter 8
Assessing Spot and Forward Rates

  1. Obtain a quotation for the spot rate of the foreign currency (that you have in the MNC financial statement) from the bank in the parent country where your selected MNC may conduct foreign exchange transactions. Then, obtain a quotation for the spot rate of the foreign currency from another bank. Does it appear that the spot rates are aligned across locations at a given point in time?
  2. Obtain a quotation for the one-year forward rate of the foreign currency from the bank where MNC may intend to conduct foreign exchange transactions. Then, use a business periodical to determine the prevailing one-year interest rates in the home country and the foreign country of concern. Does it appear that interest rate parity exists?
  3. Review the data on forward rates from The Wall Street Journal or another source to determine whether the foreign currency of concern typically exhibits a discount or a premium. Then review data on interest rates to compare the foreign country of concern and the parent country interest rates. Does it appear that the forward rate of the foreign currency exhibits a premium (discount) when its interest rate is lower (higher) than the home country interest rate, as suggested by interest rate parity?

Determining Whether IFE Holds
Use The Wall Street Journal or another data source to record the interest rate differential between the interest rate of the foreign country in which MNC do business and the parent country rate over the last five or so quarters. Then, review the exchange rate percentage change in the foreign currency of concern over each of those corresponding quarters to determine whether the international Fisher effect (IFE) appears to hold over those quarters for that currency.

Chapter 9
Monitoring Exchange Rate Trends
Use a business periodical or the Internet to determine how the value of the foreign currency of concern has changed in each of the last five weeks. Does it appear that there is a trend over the last five weeks? What is the mean percentage change over these weeks? If you believed that the currency`s value would continue following the recent trend, would it appreciate or depreciate in the near future?

Chapter 13
Establishing a Subsidiary in Foreign Country
Identify the advantages and disadvantages associated with the MNC establishing a subsidiary in the foreign country of concern.

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