The course examines important issues in international corporate finance using a mixture of classes involving lecture/discussion and the analysis of cases. After a review of international finance fundamentals, considerable time is devoted to international capital budgeting decisions, which require an understanding of exchange rates and the determination of an appropriate cost of capital. These issues are examined as they arise in the valuation of direct foreign investments, in leveraged buyouts, in initial public offerings, in equity carve outs and in international mergers and acquisitions. Many of the cases involve corporations in emerging markets where issues of political risk arise. The course also analyzes the determination and management of foreign exchange risks of various types. The cases include discussions of the use of foreign currency forwards, options, and swaps and their appropriate use in risk management. The course concludes with an analysis of the financing large projects in developing markets.
Nomura Professor of International Finance
Professor Hodrick teaches both fundamental and advanced courses in international finance. His expertise is in the valuation of financial assets. His current research explores the empirical implications of theoretical pricing models that generate time-varying risk premiums in the markets for bonds, equities and foreign currencies. He is also a research associate of the National Bureau of Economic Research.