MKF_MEZF International Finance

Faculty of Economics and Administration
Autumn 2023
Extent and Intensity
0/0/0. 5 credit(s). Type of Completion: zk (examination).
Teacher(s)
Oleg Deev, Ph.D. (lecturer)
Ing. Michala Moravcová, Ph.D. (lecturer)
Guaranteed by
Ing. Michala Moravcová, Ph.D.
Department of Finance – Faculty of Economics and Administration
Contact Person: Iva Havlíčková
Supplier department: Department of Finance – Faculty of Economics and Administration
Prerequisites
! MKF_MEFI International Finance
Macroeconomics, Statistics, Financial management, Financial Markets and investments, Security analysis
Course Enrolment Limitations
The course is also offered to the students of the fields other than those the course is directly associated with.
fields of study / plans the course is directly associated with
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 addresses 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).

Learning outcomes
Students will be able to:
- understand international financial relations and all their aspects,
- understand the exchange rates and the foreign exchange market operations,
− comprehend basic concepts of risk management,
− perform an analysis of property and business risks,
− provide insurance coverage suggestions based on the client’s risk analysis,
− evaluate the risk management process and system in insurance,
− compare the results for different methods of risk identification and analysis utilized by insurance companies,
− propose the ways of insurance risk mitigation/transfer via the financial market.
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. Exchange rate systems and associated currency risks. Basic concepts and equations for exchange rate calculations.
  • 4. International parity conditions. Interest rate parity. Purchasing power parity and real exchange rates. Fisher effect. Expectations theory.
  • 5. International parity conditions. Interest rate parity. Purchasing power parity and real exchange rates. Fisher effect. Expectations theory.
  • 6. Exchange rate regimes, central banks, and multinational corporations.
  • 7. Exchange rate determination and forecasting. Forecasting techniques: fundamental, technical, and statistical analyses.
  • 8. Measuring and Managing Real Exchange Risk. How Real Exchange Rates Affect Real Profitability of Exporters and Importers, Pricing Strategies, Managing Real Exchange Risk.
  • 9. Country risk analysis. Political and financial risks. Techniques for assessing country risks. Incorporating risk in capital budgeting.
  • 10. Managing Net Working Capital. International Cash Management. Inventory Management.
  • 11. International Debt and Equity Financing. Sources of Funds for International Firms. Minimizing the cost of debt internationally.
  • 12. International Capital Budgeting. Adjusted Net Present Value. Net Present Value of Free Cash Flow.Financial Side Effects. Tax implications.
Literature
    required literature
  • BEKAERT, Geert and Robert J. HODRICK. International financial management. Third edition. Cambridge: Cambridge University Press, 2018, x, 1036. ISBN 9781107111820. info
    recommended literature
  • MANDEL, Martin and Jaroslava DURČÁKOVÁ. Mezinárodní finance a devizový trh. 2. aktualizované vydání. Praha: Ekopress, 2020, 452 stran. ISBN 9788087865651. info
  • PAUL, Krugman. International Finance: Theory and Policy. Pearson Education Limited, 2022. ISBN 978-1-292-41700-4. info
  • KOCENDA, Evzen and Michala MORAVCOVA. Intraday effect of news on emerging European forex markets: An event study analysis. Economic Systems. 2018, vol. 42, No 4, p. 597-615. ISSN 0939-3625. Available from: https://dx.doi.org/10.1016/j.ecosys.2018.05.003. info
Teaching methods
The course is taught in lectures and seminars, which include class discussions and require active participation. Seminars are designed to get practical knowledge of international finance. Thomson Reuters Refinitiv is employed in the seminars.
Assessment methods
For the course's successful completion, students must take a written exam and submit three homeworks: the first and second homework (deadlines: October, 15 and November, 20) will compile a set of problems, which will be discussed at the seminars and lectures and the third is currency report (December, 15). Currency reports mainly analyze and forecast exchange rates and are routinely prepared and distributed by investment banks to clients worldwide. 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. Students should use qualitative and quantitative methods to support conclusions in report based on the data from the Thomson Reuters Terminal.

Following is the scale that will be used to evaluate your performance in this class:
- Homework up to 10-grade points (2x5 points)
- Currency Report up to 20-grade points
- Final exam (up to 70-grade points, minimum 50% required). The exam will be cumulative on the material from the entire course.

Students cannot take an exam without submitting 2 homeworks and a Currency report with all the requirements fulfilled. In the event of student's departure abroad, the student is obliged to contact the teacher before departure and agree on the dates for fulfilling the stated conditions.
Language of instruction
Czech
Further comments (probably available only in Czech)
Study Materials
The course is taught annually.
The course is taught: in blocks.
Note related to how often the course is taught: 10 hodin.
Information on the extent and intensity of the course: tutorial 10 hodin.
Teacher's information
Final grades would be given according to the following grading scale:

A 92 – 100 %, B 84 – 91 %, C 76 – 83 %, D 68 – 75 %, E 60 – 67 %, F méně než 60 %)

Students in this course are expected to adhere to the Masaryk University’s high standards of integrity as spelled out in the Disciplinary Code for Students and Directive N.3/2008. Anyone who cheats on exams or submits homework that is not their own will be subject to the penalties outlined in the Code. Any copying, recording, or leaking tests, use of unauthorized tools, aids, and communication devices, or other disruptions of objectivity of exams will be considered non-compliance with the conditions for course completion as well as a severe violation of the study rules. Consequently, the teacher will finish the exam by awarding a grade "F" in the Information System, and the Dean will initiate disciplinary proceedings that may result in study termination.

The course is also listed under the following terms Autumn 2021, Autumn 2022.
  • Enrolment Statistics (recent)
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