ESF:MPF_AIFI International Finance and Inst - Course Information

MPF_AIFI International Finance and Institutions

Extent and Intensity

2/1/0. 4 credit(s). Type of Completion: zk (examination).

Teacher(s)

Oleg Deev, Ph.D. (lecturer)
Oleg Deev, Ph.D. (seminar tutor)

Guaranteed by

Oleg Deev, Ph.D.
Department of Finance – Faculty of Economics and Administration
Contact Person: Mgr. Jana Nesvadbová
Supplier department: Department of Finance – Faculty of Economics and Administration

Timetable

Tue 16:20–17:55 VT314

Prerequisites

Macroeconomics, Statistics, Financial management, Financial Markets and investments, Security analysis

Course Enrolment Limitations

The course is offered to students of any study field.
The capacity limit for the course is 25 student(s).
Current registration and enrolment status: enrolled: 0/25, only registered: 0/25, only registered with preference (fields directly associated with the programme): 0/25

Course objectives

The main objective of the course is to introduce students to theoretical concepts of international finance with applications in exchange rate forecasting, financial management of multinational corporations and risk analysis of international financial operations. The course is designed to address different practical aspects of international finance, including the organization of foreign exchange markets, investment decisions in the international context, basic tools and concepts of international financial management from the perspective of risks and returns. Understanding the foreign exchange markets and global capital markets (banking, debt and equity) is necessary to carry out a sound and effective management of the multinational firm from a financial point of view. And since multinational corporations face opportunities but also risks, financial management involves the design of risk assessment techniques and appropriate strategies to hedge the company from actual and potential risks through the use of the different types of financial assets (such as derivatives).

In this course, students will relate concepts and knowledge from different areas in finance and economics to tackle and solve problems in complex and changing international environments. More important, students will apply insights from microeconomic and macroeconomic theory, statistics, financial management, banking, financial markets and investments, security analysis, accounting and taxation.

After successful completion of the course, students should be able to:
- understand the organization and functioning of foreign exchange markets;
- comprehend why currency values fluctuate;
- facilitate understanding of the determinants and consequences of international financial transactions;
- use quantitative criteria and qualitative insights when taking international investment decisions;
- provide an in-depth analysis of investment opportunities in specific countries;
- have a perspective on working environment and practices of multinational firms.

Syllabus

• 1. Course introduction and overview. The scope and environment of international finance. Characteristics of main players (multinational corporations and international financial institutions).
• 2. Foreign exchange markets: organization and participants. Transaction exchange risk: definition, basic calculations and hedging opportunities. Organization of the forward foreign exchange market.
• 3. The balance of payments: concept and terminology. Balance of payments accounting.
• 4. Exchange rate systems and associated currency risks. Basic concepts and equations for exchange rate calculations.
• 5. International parity conditions. Interest rate parity. Purchasing power parity and real exchange rates. Fisher effect. Expectations theory.
• 6. Speculation and risk in the foreign exchange market. Real exchange risk management: evaluation and treatment techniques. Transaction, economic and translation exposures to exchange rate fluctuations.
• 7. Exchange rate determination and forecasting. Forecasting techniques: fundamental, technical and statistical analyses.
• 8. Foreign direct investments. International debt and equity financing. Debt instruments and international bank loans. Cross-listing.
• 9. International capital budgeting. Investment decisions and valuations of international projects. Cross-border mergers and acquisitions. International corporate governance and control.
• 10. Country risk analysis. Political and financial risks. Techniques for assessing country risks. Incorporating risk in capital budgeting.
• 11. Risk management and the foreign currency hedging decisions.
• 12. International trade financing. Payment and trade finance methods. Agencies facilitating international trade. Working capital management. International cash management and short-term financing. Multinational tax management.

Literature

required literature
• BEKAERT, Geert and Robert HODRICK. International financial management. Pearson Prentice Hall, 2012. info

not specified
• Outline of the lectures are available in the Study Materials.

Teaching methods

The course is taught in lectures only, which include class discussions and require active participation. Reports improve the ability of students to summarize a certain issue in the field of international finance and discuss it critically. Readings serve to broaden and deepen the spectrum of knowledge students acquire during the lectures.

Assessment methods

For the successful completion of the course students are required to take a written exam and submit two individual projects: a currency report (till the end of Week 8) and a country's investment opportunities report (till the end of week 11). Currency reports mainly analyze and forecast exchange rates and are routinely prepared and distributed by investment banks to clients worldwide. Each student will prepare a 4-pages report on a specific currency. The investment opportunities report usually contains detailed suggestions on portfolio allocation per financial instrument in a specific country alongside possible risk management solutions. The suggestions should be reasonable and justified. Each student will prepare a 4-pages report on a specific country. Students should use qualitative and quantitative methods to support conclusions in both reports based on the data from the Bloomberg Terminal.

Following is the scale that will be uses to evaluate your performance in this class:
- two reports write-up (up to 5 grade points each report),
- active participation in the class (up to 6 grade points),
- final exam (up to 20 grade points).

The exam will be cumulative on the material from the entire course. Students will not be allowed to take an exam without submitting two reports with all the requirements fulfilled. Active participation in class means that student is actively watching, listening and answering questions as the lecture progresses. Student also tries to solve the suggested example problems as the lecture proceeds and proves that he/she has learned the material by answering the related questions and working the related problems incorporated in the summative assessment. Participation quality (thoughtfulness of comments or questions) is valued more than participation quantity (frequency of comments/ questions).

Language of instruction

English

Further comments (probably available only in Czech)

Study Materials

• Enrolment Statistics (Autumn 2015, recent)
  
• Permalink: https://is.muni.cz/course/econ/autumn2015/MPF_AIFI