Course Details
Course Information Package
Course Unit Title | INTERNATIONAL FINANCE | ||||||
Course Unit Code | AFIN411 | ||||||
Course Unit Details | |||||||
Number of ECTS credits allocated | 5 | ||||||
Learning Outcomes of the course unit | By the end of the course, the students should be able to:
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Mode of Delivery | Face-to-face | ||||||
Prerequisites | AFIN101,AFIN102 | Co-requisites | NONE | ||||
Recommended optional program components | NONE | ||||||
Course Contents | Introduction to International finance: multinational firm, exchange rate risk, political risk, interest rate risk, goals of international financial management and risk management, national income accounting and the balance of payments, effect of national debt and its effect on import/export industries, the link between balance of payments imbalances and exchange rates under fixed and floating exchange rate regimes, main historical developments of the international monetary environment, current monetary environment and the reasons for major international financial crises Valuation of forwards, futures and options: No arbitrage conditions and rational prices for forward and future contracts, currency forwards contract pricing, forward, spot and expected currency prices and home and foreign interest rates, no-arbitrage theory and the valuation of simple currency options and Quantos Exchange rate determination and the link with interest rates, prices and economic policy: The Law of One price and absolute and relative purchasing parity, international version of Fisher Effect connecting inflation, real and nominal interest rates of different countries, empirical evidence for purchasing power parity theory and explanations, interest rate parity, expected inflation differences and expected changes in the exchange rates, covered interest arbitrage, short run equilibrium in the product and asset markets and the effects of temporary and permanent shifts in monetary and fiscal policy Managing foreign exchange rate and interest rate exposure: Risks involved in international operations in different industries, forward, futures and option contracts to hedge currency risk with examples in different industries, swaps and interest rate risk Foreign investment decisions and the cost of capital of international operations: types of entity for foreign operations and possible barriers to entry to foreign direct investment, implications of political risk on the overseas investment decision, international cost of capital using international version of the CAPM, adjusted present value for international investment decisions, taxation in the international enviroment | ||||||
Recommended and/or required reading: | |||||||
Textbooks |
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References |
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Planned learning activities and teaching methods | The taught part course is delivered to the students by means of lecturers, conducted with the help of computer presentations and the use of the board. Lecture notes and other course material like spreadsheet examples are available to students through the web. | ||||||
Assessment methods and criteria |
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Language of instruction | English | ||||||
Work placement(s) | NO |