Postgraduate course 2020/2021

International Finance

Type: Elective course

Area of studies: Economics

Delivered by: School of Finance

When: 2 year, 1 semester

Mode of studies: offline

Instructors: Madina Karamysheva

Language: English

ECTS credits: 4

Contact hours: 40

Course Syllabus

Abstract

Integration and globalization of the modern world require a deep understanding of international nance. This course focuses on explanation of up-to-date theories of international nance and on its practical real world applications. Effective corporate decision making requires a deep understanding of the international nancial markets, in particular this course will cover foreign exchange markets and world capital markets. Moreover, hedging strategies and risk management are necessary for effective nancial management.

Learning Objectives

• explanation of up-to-date theories of international nance and on its practical real world applications.

Expected Learning Outcomes

• deep understanding of the international financial markets

Course Contents

• Multinational Financial Management and Globalized World
  growth of international trade; globalization of financial markets; goal and organizational structure of the MNC; important international players; globalization and MNC: benefactor or menace?
• International Financial Markets
  i. Balance of Payments (Concepts and terminology; surpluses and deficits in the BOP Accounts; dynamics of the BOP) ii. Foreign Exchange Market (Market players; Organization of FOREX market; Spot rates, Forward rates; Interest rate parity, PPP and real exchange rates; Foreign exchange intervention, exchange rate systems)
• International Capital Markets
  (a) International debt nancing (Global sources of funds, characteristics of debt in- struments, world's bond market, international bank loans, cost of debt) (b) International equity nancing (International stock markets, cross-listing and de- positary receipts, strategic alliances) (c) International capital market equilibrium (Risk and return of international in- vestments, international diversication, optimal portfolio allocation, international CAPM, integrated versus segmented markets)
• Multinational Capital Structure and Capital Budgeting
  NPV, nancial side eects, real options, parent versus subsidiary cash ows
• Risk Management and Hedging
  (a) Forecasting exchange rates (Parity conditions and exchange rate forecasts, com- mon forecasting techniques, fundamental forecasting, technical analysis, evaluat- ing forecasts), Measuring and managing real exchange risk (b) Foreign currency futures and options, foreign currency swaps (c) Forward markets and transaction exchange risk (hedging transaction exposure, forward foreign exchange market) (d) Managing economic and translation exposure (assessing economic exposure and restructuring to reduce economic exposure; hedging with forward contracts) (e) Country risk analysis (country and political risk analysis, measuring country risk, assessment of political risk in nancial decisions) (f) Risk Management and the Foreign Currency Hedging Decision (arguments against and for hedging, hedging in real world, hedging trends) (g) Financing International Trade (fundamental problem with international trade, documents, methods of payments, nancing exports, countertrade)
• Systemic Risk

Assessment Elements

• Assignments
• Group Project/Presentations
• Term paper and defense of your project

Interim Assessment

• Interim assessment (1 semester)
  0.45 * Assignments + 0.2 * Group Project/Presentations + 0.35 * Term paper and defense of your project

Bibliography

Recommended Core Bibliography

• Krugman, P. R., Obstfeld, M., & Melitz, M. J. (2015). International Economics: Theory and Policy, Global Edition (Vol. Tenth edition, global edition). Boston: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1419045
• Maurice Obstfeld, & Kenneth S. Rogoff. (1996). Foundations of International Macroeconomics. The MIT Press. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.b.mtp.titles.0262150476

Recommended Additional Bibliography

• Geert Bekaert, Campbell R. Harvey, & Christian Lundblad. (2005). Does financial liberalization spur growth. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.3EA485E8
• Nicholas Bloom, John Van, & Reenen Costas Meghir. (2009). The Impact of Uncertainty Shocks. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.96AE1765