20253 - INTERNATIONAL FINANCIAL MARKETS
Course taught in English
Go to class group/s: 31
This is a challenging course: A passion for finance or a prior acquaintance with the world of investment will not guarantee a high grade. A good understanding of financial economics and a solid knowledge of financial mathematics and statistics, on the other hand, will go a long way. Concepts related to the mathematics of interest rates (discounting/compounding, equivalence of rates at different maturities), basic statistics (expected values, standard deviation and variance, ordinary least squares), and calculus (limits, differentials, differentiation, Taylor expansions, partial differentiation, optimization) will be useful.
The scope and content of international finance has been fast evolving due to deregulation, product innovations and technological advancements. World capital markets are becoming more integrated and new players are emerging on the international financial landscape. Therefore, a solid understanding of international finance has become important for economic research as well as corporate decision-making. This course aims to provide you with an overview of international financial markets and the financial management of multinational corporations.
- International monetary system;
- Corporate governance, law & economics;
- The foreign exchange market and its segments;
- Currency derivatives: futures, options, and swaps;
- Causal inference in international finance;
- International portfolio investment;
- Hedging transaction and economic exposure;
- International money, bond, and equity markets;
- International capital structure and cost of capital;
- International capital budgeting.
- Explain the Balance of Payments of a country;
- Identify FX market prices and potential arbitrage opportunities;
- Describe and use international FX parities;
- Identify sources of FX risks for a company;
- Describe international capital markets instruments and procedures;
- Understand the factors affecting the performance of an investment portfolio comprising international assets;
- Explain corporate investment decisions within a multinational corporation.
- Evaluate prospects for a currency's apreciation/depreciation;
- Analyze and quantify exposure to FX risks;
- Evaluate and choose FX hedging tools;
- Compare financial alternatives for funding in international markets;
- Design an international investment portfolio;
- Design a strategy for international listing.
- Face-to-face lectures
- Online lectures
- Exercises (exercises, database, software etc.)
- Case studies /Incidents (traditional, online)
- Interactive class activities (role playing, business game, simulation, online forum, instant polls)
The learning experience of this course includes, in addition to face-to-face lectures, the solution of problem sets assigned to you throughout the course. Those exercises will allow you to apply the analytical tools illustrated during the course. Moreover, we will discuss case studies during the course, and to evaluate the effects of a given corporate or investment decision. We will encouraged you to bring your own views and to share their insights. You should read the cases before coming to class, to facilitate the class discussion. The cases are exam material, so you should make sure you understand them just like the textbook material. You must download the case studies from the Library, at the link that I will provide during our classes (the Library needs to know the exact number of students enrolled in the course to make the cases available, so the link cannot be provided prior to the start of classes). Finally, part of the classes will revolve around a trading simulation.
|Continuous assessment||Partial exams||General exam|
Attending and non-attending students are expected to follow the same syllabus and are subject to the same grading scheme. The overall grade in the course is determined as the max between (a) a combination of your intermediate valuation in the individual parts of the course plus the final exam, or (b) 100% weight on the final exam (in other words, whichever scheme is more favorable to you will determine your grade).
The textbook we will follow is: Eun, C. S., B. G. Resnik, and T. Chuluun, International Financial Management, McGraw Hill. The latest edition is the 9th, but older editions (within reason) can be just as good to prepare for our class. This textbook is one of the most widely used in the field.
This course is designed to be hands-on. Hence, we will discuss case studies in our classes. Case studies are an excellent way to develop critical thinking and practice the theoretical concepts encountered in the lectures on challenging real-world problems, and they are an essential component of most courses in the leading business schools of the world. We encourage you to read the cases before coming to class, to facilitate the class discussion. The cases are exam material, so you should make sure you understand them just like the textbook material. You must download the case studies from the Library, at the link that I will provide during our classes (the Library needs to know the exact number of students enrolled in the course to make the cases available, so the link cannot be provided prior to the start of classes).