Course Outline
Course Instructor: Nadia Murtaza
Subject: International Finance
Course Code: MC-639
Course Description:
This course focuses on international financial management and international trade. Topics in
financial management, viewed primarily from the perspective of managers doing business
overseas, include the management of foreign exchange exposure, foreign direct investment
decisions, and multinational capital budgeting. Other topics covered include trends in international
banking, the balance of payments, the determination of exchange rates, International Financial
Crisis, and the Asian meltdown. We will also examine the challenges and problems faced by firms
planning on doing business in Pakistan.
Objective of this course is Active Learning:
Learning should be an active experience. Students who passively listen to lectures, copy
someone else’s notes, and limit their readings to the bare minimum are unlikely to develop their
critical thinking potential and expand their personal knowledge system.
For this course, it is strongly recommended to keep yourself up to date through newspapers such
as the Financial Times, and weekly magazines, such as the Economist.
Class 1 - Overview
Reading assignment:
Chapter 1 Multinational Financial Management: An Overview
Reading Text:
Doing Business in Pakistan by Haroon Sharif
International venturing by emerging economy firms: the effects of firm capabilities, home
country networks, and corporate entrepreneurship
Class 2 - International Trade Flows
Chapter 2 International Flow of Funds
Reading Text:
Why Pakistan is back in trouble with balance of payment?
Class 3 - How Foreign Exchange is Traded; International Money,
Credit, Bond and Stock Markets
Reading assignment:
Chapter 3 International Financial Markets
1. Why would a foreign corporation want to invest in Pakistan?
2. Why might two investors in different countries come to different conclusions
about the value of an MNC for which they have information of equal quality (cash
flows, etc.)?
Class 4 - Exchange Rate Determination
Chapter 4 Exchange Rate Determination
Class 5 – Exchange Rate Policy and the Asian Currency Crisis
Reading assignment:
Chapter 6 and the Currency Crises reading set.
Class 6 – Currency Derivatives
Chapter 5 Currency Derivatives
Class 7 - Interest Rate Parity
Chapter 7 International Arbitrage and Interest Rate Parity
Class 8 - More Parity Conditions
Chapter 8 Relationships Among Inflation, Interest Rates, and Exchange Rates
Chapter 9 Forecasting Exchange Rates
Class 9 - Managing Transaction Exposure
Chapter 10 Measuring Exposure to Exchange Rate Fluctuations
Class 10 - Managing Economic Exposure
Chapter 11 Managing Transaction Exposure
Class 11
Chapter 12 Managing Economic Exposure and Translation Exposure
Class 12
Chapter 13 Direct Foreign Investment
Class 13
Chapter 16 Country Risk Analysis
Class 14
Project/ Debate on measures of removing Balance of Payment Deficit in Pakistan
Class 15
Terminal Paper
Recommended Books:
• International Financial Management (ninth edition)
By Jeff Madura
• International Financial Management
By Thummuluri Siddaiah