06300762 - International finance

The lectures aim to provide students with theory and practice of international finance. Throughout the lectures, real world case studies and excercises are extensivley used for illustration pourposes. Group work and discussion are encouraged.

The module has the aim of giving students the confidence to apply and develop their financial understanding of marco economic factors affecting international business. It further aims to provide students with the skills and abilities required to interpret financial information in an international context.

Students will gain the knowledge and experience of techniques that will enable them to recommend strategic financial solutions for multinational businesses and to implement them effectively. A range of financial and economic theories and techniques combined with practical applications to assist the manager in the practice of financial strategy will be explored.

TARGETED KNOWLEDGE

• draw on international parity condition theories (PPP, Fischer effect, international Fischer effect, interest rate parity, forward rate as unbiased predictor)
• draw on theory of comparative advantage.
• Identify factors of successful internationalization
• Find relevant information in the balance of payments
• Identify and choose a currency regime

TARGETED SKILLS

• Execute currency calculations covered and uncovered interest rate arbitrage
• asses the effects of currecy rate fluctuation on a companies operations
• setting price levels for partial and complete exchange rate pass through

CSR DIMENSION
A thorough discussion on the challenges of globalization takes place during the third lecture

I. The international financial environement
1. Opportunities and challenges in a globalized economy
2. International Monetray System: History and Challenges

II. Foreign Echange Theory and Markets
1. The foreign exchange market
2. International parity conditions
3. Currency derivatives and swaps

III. Foreign exchange exposure
1. Transaction exposure
2. Translation exposure
3. Operating exposure

BOOKS USED AS REFERENCE:

• Moffett, Michael H., Arthur I. Stonehill, and David K. Eiteman. Fundamentals of multinational finance. Pearson, 2014.

ADDITIONAL READINGS:

• David, K., Stonehill I. Arthur, and Moffett H. Michael. Multinational business finance. Boston: Addison–Wesley, cop, 2001.
• Krugman, Paul R. International economics: Theory and policy, 8/E. Pearson Education India, 2008.
• Anthony Saunders. Financial institutions management: a modern perspective. McGraw-Hill College, 2000.

EMBLEMATIC BOOKS OR RESEARCH PAPERS REGARDING THE SUBJECT OF THE COURSE

• Krugman, Paul. "A model of balance-of-payments crises." Journal of money, credit and banking 11.3 (1979): 311-325.

PUBLICATIONS OF THE iaelyon FACULTY REGARDING THE SUBJECT OF THE COURSE

• Mercier-Suissa, Catherine, Abadie, Laurence "Finance internationale : Marché des changes et gestion des risques financiers", Armand Colin, Collection U Economie, 2011

Final Exam
Written 2h
A set of questions, exercises and a short case

Continuing Examination
In class examination
Research report and presentation

TEACHING METHODS
A mixture of lectures and seminars - run on a workshop style - will be used to introduce the topics and techniques. These topics and techniques will be explored further through the use of numerical examples and discussion. Case studies will be used where appropriate and relevant. All relevant module information, required reading, lecture overheads, seminar questions etc are made available to the students.

PRE-REQUISITE
There are no prerequisites for this course. However, a general interest in the world of economics  and finance is very useful

ADDITIONAL READINGS:
Financial pages of daily newspapers; FT.Com; WSJ.com; economist.com; Yahoo Finance.