International Finance 2400-M1PPFM
1. Foreign exchange market (3 hrs)
1.1 The markets for foreign exchange
1.2 Spot and forward contracts
1.3 Currency derivatives: futures, options and swaps
1.4 Exchange rates quotations and contract settlements
1.5 Cross rates and intermarket arbitrage
2. Parity conditions in international finance (3 hrs)
2.1 Purchasing power parity
2.2 International Fisher relation
2.3 Interest rate parity
2.4 Foreign exchange expectations
3. Foreign exchange rate determination (3 hrs)
3.1 Foreign exchange market equilibrium
3.2 Monetary approach
3.3 Portfolio approach
3.4 Foreign exchnage regimes
3.5 Currency crises
4. Currency options (3 hrs)
4.1 Currency option contracts and quotations
4.2 Intrinsic value and time value of an option
4.3 Currency option pricing
4.4 Put-call option parity
4.5 Options and futures
5. Managing foreign exchange exposure and hedging (3 hrs)
5.1 Currency position and liquidity position
5.2 Foreign exchange exposure: types and measurement
5.3 Managing transaction exposure
5.4 Managing economic exposure
5.5 Managing translation exposure
6. Multinational financial system (3 hrs)
6.1 Repositioning funds and financial arbitrage
6.2 Inter-company and frontier loans
6.3 International cash management
6.4 Transfer pricing
6.5 Taxation effects and global remittance policy
7. Short-term financing (3 hrs)
7.1 Short-term financing strategies and options
7.2 Short-term financing instruments
7.3 Financing international trade
7.4 Effective cost of international borrowing
8. International banking (3 hrs)
8.1 The evolution of multinational banking
8.2 International financial centres and offshore banking
8.3 Eurocurrency markets
8.4 International banking regulation and crises
9. Long-term financing (3 hrs)
9.1 The multinational’s optimal capital structure
9.2 Sourcing equity globally
8.3 International debt instruments: costs and benefits
8.4 Hedging interest rate exposure
8.5 International swap transactions
10. International investment (3 hrs)
10.1 International capital assets pricing model ICAPM
10.2 Portfolio investment and diversification
10.3 Foreign direct investment and multinational corporation
10.4 Multinational capital cost and budgeting
10.5 Foreign project appraisal: real option analysis
10.6 Globalisation of financial markets and capital flows.
Type of course
Prerequisites (description)
Course coordinators
Learning outcomes
Advanced training in international finance and acquired ability to identify and solve numerical problems in the area: understanding the operation of foreign currency and money markets; evaluating foreign currency denominated financial instruments, designing hedging strategies, capital structure and capital budgeting for international corporations, diversifying portfolio of international assets.
A) Knowledge: Student acquires knowledge of international finance and international financial markets as well as that of the theory and practice of international financial management. In particular student is acquainted with the principles of currency markets, modern financial engineering instruments of multinational corporations, exchange risk hedging methods, optimization of capital sourcing methods in MNC, and optimization of foreign assets portfolio.
B) Skills: Student gains skills to identify and solving problems in operation of international currency and money markets; evalualuating financial instyruments denominated in foreign currencies; in designing foreign exchange risk hedging strategies; designing capital structure and capital budgeting of multinational corporations; foreign assets portfolio diversification.
C) Social competences: Student is able to predict the results of processses and events occurring in world financioal markets , to understand the interrelatednes of different markets and their feedbacks. Student is capable of solving problems arising in the course of conducting economic activities on an international scale.
SW01, SW02, SW03, SW04, SW05, SU01, SU02, SU03, SU04, SU05, SU06, SU07, SK01, SK02, SK03
Assessment criteria
Written examination /theoretical questions and definitions, problem solving and exercises/.
Bibliography
Required reading list:
D. Eiteman, A. Stonehill, M. Moffet, Multinational Business Finance, wyd.8, Addison-Wesley, New York 1998
P. Krugman, M. Obstfeld, International Economics. Theory and Policy, wyd. 2, Harper Collins, New York 1991
M.D. Levi, International Finance, fourth edition, Routledge, London and New York 2005
E. Najlepszy, Zarządzanie finansami międzynarodowymi, PWE, Warszawa 2000
E. Najlepszy, Zarządzanie finansami międzynarodowymi. Zadania z rozwiązaniami 1, PWE, Warszawa 2001
Supplementary reading list:
A. Buckley, Multinational Finance, wyd.3, Prentice Hall, New York 1996
D.K. Das, International Finance. Contemporary Issues, Routledge, London 1993
W. Ethier, Modern International Economics, wyd.2, W. W. Norton & Company, New York 1988
C.P. Hallwood, R. MacDonald, International Money and Finance, Blackwell Publishers, Oxford 2000
J. C. Hull, Options, Futures and Other Derivatives, wyd. 3, Prentice_Hall Inc., Upper Saddle River 1997
P. R. Krugman, Currences and Crises, MIT Press, Cambridge Mass., 1995
F. L. Rivera-Batiz, L.A. Rivera-Batiz, International Finance and Open Economy Macroeconomics, Macmillan, New York 1994
A.C. Shapiro, Multinational Financial Management, wyd.5, Prentice-Hall Inc., London 1996
B. Solnik International Investments, wyd.3, Adison-Wesley, New York 1996
Additional information
Information on level of this course, year of study and semester when the course unit is delivered, types and amount of class hours - can be found in course structure diagrams of apropriate study programmes. This course is related to the following study programmes:
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