International Financial Markets and Investments

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Course Information
Discipline(s): 
Finance
Terms offered: 
Fall, Spring
Credits: 
3
Language of instruction: 
English
Contact Hours: 
45
Prerequisites: 

None

Additional student cost: 

None

Description: 

A study of ‘international’ finance is essential given the high degree of integration and globalisation of the world economy.  Further liberalisation of international trade, investment and rapid advances in telecommunication and transportation technologies will ensure the continuation of this process.  The material covered in this course introduces the students to the international monetary system and balance of payments, the foreign exchange market, international capital markets and institutions, management of foreign exchange and political risks, financial management of the multinational firm, and covers recent developments in international capital markets and the world economy.  Students will examine the barriers to international capital flows and study the various financial techniques developed to overcome these barriers.  The focus of the course is ‘global’ in nature and closely follows current developments on the world economic stage.  It places a strong emphasis on ‘connecting the dots’ between theory and practice and requires the students to develop an understanding of current international financial and economic events.

Attendance policy: 

Regular class attendance is mandatory. Students are expected to attend classes each day, including course-related excursions.

IES Abroad Milano allows a maximum of TWO excused absences per semester. Each further absence will automatically result in a penalty of two points off (2/100) on the final grade. SEVEN absences per course (including 2 excused absences) will result in a failing grade for that course. Furthermore, an absence on the date of scheduled tests, presentations or quizzes does not entitle you to recover/reschedule such tests. Failure to attend your midterm and/or final exam will result in an F grade on that paper/exam.

Learning outcomes: 

The students will gain a broad understanding of the key issues in international finance and their relationship with the globalised world economy.  Students will be able to identify the appropriate theoretical discussions and to evaluate their applications in the ‘real world.’  The required coursework involves a deeper study into any one of the theoretical topics covered in the course and researching into relevant current global financial or economic events.  This case study will enable the students to demonstrate their ability to evaluate and analyse current topics in international finance in the context of the relevant theoretical material.

Method of presentation: 

The course is presented in a seminar format and involves a combination of lectures, class discussions and student presentations.  Current global events in international finance are integrated into the weekly discussions.  Students will work on a case study, which integrates any one of the theoretical topics covered in this course with recent events in international finance.  The background research and evaluation of data in the context of the underlying theory will enable the students to develop a better understanding of the selected topic.

Required work and form of assessment: 
  • Mid-term test: 20%
  • Class Participation: 10%
  • Final Paper & Class Presentation (case study): 40%
  • Final Exam: 30% (cumulative – covers entire course material)

Final paper & class presentations (case study): Students will work in groups of two or three (depending on class size) on the final paper and class presentations.  Each group should identify one theoretical topic from the course outline and conduct research to gather data on a recent (or historic) event in international finance or the global economy.  Useful sources for the research will include quality newspapers (e.g., Financial Times, Economist, New York Times, etc.) in addition to relevant books/journal articles.  The objective of this coursework is to evaluate the data and to analyse and discuss the case study in the context of the underlying theoretical discussion.

The mid-term test and the final exam will be closed-book.  The dates for these tests will be announced at the start of the term.

Class participation is another key component of the course.  Students’ contributions should reflect their reading and thinking about the relevant topical issues.  The style of the discussion will be informal and participative.

content: 

Week 1: Introduction to International Finance

  • Introductions, student interests, relevant prior coursework & experience
  • Course map, format, required work and assessment
  • Weekly class format, resources, reading & class discussion assignments
  • Foundations of International Finance (Ch.1).  [Please note that all chapter references in this syllabus refer to the required text-book – International Finance, by Eun, Resnick & Sabherwal].

Week 2: International Monetary System & Balance of Payments (Ch. 2 & 3)

  • Historical Perspectives of International Monetary System
  • Flexible Exchange Rate Regime
  • Euro and European Monetary System
  • Review of past currency crises
  • Overview of Balance of Payments

Week 3: Foreign Exchange Market & Exchange Rate Determination – part 1 (Ch. 4 & 5)

  • Function & structure of the foreign exchange market
  • International finance in practice: market mechanics
  • Spot and forward markets
  • Interest rate parity

Week 4: Foreign Exchange Markets & Exchange Rate Determination – part 2 (Ch. 4 & 5)

  • Interest rate parity (contd.)
  • Forecasting exchange rates
  • Foreign exchange futures & options

Week 5: International Capital Markets & Institutions – part 1 & Project Update I (Ch. 7, 8, 9)

  • Students will provide status update on their final projects.  The purpose of this update is to ensure that the students are making progress on their projects and that they are on the right track.
  • International Banking and Money Markets
  • International Bond Markets

Week 6: International Capital Markets & Institutions – part 2 & Mid-term Test (Ch. 8 & 9)

  • International Bond Markets (contd.)
  • International Equity Markets

Week 7: International Portfolio Investment (Ch. 11)

  • International diversification and portfolio risk reduction
  • Evaluation of risks and opportunities
  • Impact of changing exchange rates

Week 8: Financial Management of Multinational Firm – part 1 & Project Update II (Ch. 12, 13 & 14)

  • Management of economic, transaction & translation exposure
  • Key issues in exposure management
  • Review of exposure management strategies
  • Students will provide second status update on their final essay and project.  By this stage, all research should have been completed and the students should have begun writing up their first drafts.

Week 9: Financial Management of Multinational Firm – part 2 (Ch. 15 & 18)

  • Foreign direct investment (FDI)
  • Theory and practice of FDI
  • Multinational cash management

Week 10: International Trade & Taxation (Ch. 19, 20, 21)

  • Exports & Imports
  • Review of international tax environment: key issues
  • Theory vs. Practice
  • Review of international corporate governance

Week 11: Course Review & Selected Topics

  • This session will be devoted to a course review and selected topics that require further attention
  • Students could bring up any final queries relating to their projects and presentations

Week 12: Class Presentations & Coursework Submission Deadline

  • Final essay submission deadline
  • Class presentations for all groups – timetable will be announced in week 11.
Required readings: 
  • International Finance, Eun, Choel S., Resnick, Bruce G., Sabherwal, Sanjiv (6th Global edition, 2011).
Additional requirements: 

Additional readings will be posted on a weekly basis on Moodle and will consist of relevant topical articles from journals and newspapers.  Students are expected to review this material weekly to prepare for class discussions.

Further, students have access to EBSCO, an online journal archive.  Login credentials can be obtained through the IES London Academic Programmes Manager.