TEACHING PLAN FOR
INTERNATIONAL FINANCE
1. Basic description
Name of the course: International Finance
Academic year: 2012-2013
Term: 1st
Code: 80120
Degree / Course: International Business Program
Contact hours: 49.5
Number of ECTS credits: 5
Total number of hours committed: 125
Teaching language: English
Lecturer: Ferran Macipe
Classroom: Chupa Chups
Timetable:
Mondays,
15.30 - 17.45
Wednesdays, 15.30 - 17.45
Office Hours: Mondays, 17:45 – 18:45
Wednesdays, 17:45 – 18:45
2. Presentation of the course
“The increasing openness and interdependence between countries” could be a simple definition
of Globalization. This process has many causes and implications (cultural, technological,
political, environmental, etc.), but it is widely accepted that Finance is the dimension in which it is
most advanced.
The course focuses on understanding the theory of international finance and on its real world
applications from a business point of view. Understanding the foreign exchange markets and
world capital markets (banking, debt and equity) is necessary to carry out a sound and effective
management of the firm from a financial point of view. And since multinational corporations face
opportunities but also risks, financial management involves the design of appropriate strategies
to hedge the company from actual and potential risks through the use of the different types of
financial assets (such as derivatives) available for this purpose.
3. Competences to be achieved in the course
General competences
Instrumental competences
G.I.2. Ability to relate concepts and
knowledge from different areas.
G.I.4. Ability to tackle and solve problems.
G.I.5. Ability to take decisions in complex
and changing environments.
G.I.8. Oral and written competence in
communicating in English.
General personal competences
Specific competences
Disciplinary competences
E.D.1. Facilitate understanding of the
determinants and consequences of of
international financial transactions.
E.D.10. Introduce basic financial concepts
and analytical techniques and introduce
their
application
to
international
transactions.
Professional competences
G.P.3. Moral commitment and ethical E.P.1. Ability to understand the decisions
sense.
taken by economic agents and their
interaction in the markets.
E.P.2. Ability to analyse economic and
Generic systemic competences
market indicators when taking decisions
within the organisation.
G.S.3. Ability to think globally.
E.P.9. Assess and discuss the economic
and financial position of an organisation.
Competences for applicability
E.P.17. Ability to express and understand
G.A.1.
Ability
to
apply acquired spoken and written communication in
English at an advanced level in the
knowledge and skills.
G.A.2. Ability to use quantitative criteria international business environment.
and qualitative insights when taking
decisions.
G.A.3. Ability to search and exploit new
information sources.
Own competences of the subject
Understanding and application of the systems and models that enable the financial flows and
operations to be carried out.
4. Contents
INTRODUCTION
1. Globalization and the Multinational Firm
PART I: FOREIGN EXCHANGE MARKETS
2. Balance of Payments
3. The Foreign Exchange Market
3.1 Market players
3.2 Spot rates, forward rates and foreign exchange swaps
3.3 A model of foreign exchange markets: interest parity
3.4 Real monetary assets, interest rates and exchange rates
3.5 Foreign Exchange Intervention
PART II: INTERNATIONAL CAPITAL MARKETS
4. International Capital Markets:
4.1 International Credit and Money Markets
4.3 International Bond Market
4.2 International Equity Markets
5. Globalization and Market Integration
PART III: HEDGING AND RISK MANAGEMENT
6. Risk Management and Hedging Strategies
6.1 Forecasting Exchange Rates
6.2 Measuring Exposure to Exchange Rate Fluctuations
6.3 Foreign currency futures and options
6.4 Managing Transaction Exposure
6.5 Managing Economic and Translation Exposure
PART IV: STRATEGIC DECISION-MAKING IN INTERNATIONAL FINANCE
7. Foreign Direct Investment
8. Financing in the Short-Term and in the Long-Term
9. Managing Net Working Capital
10. International Trade Finance
5. Assessment
The final grade will be determined by the weighted average of the following activities carried out
throughout the semester:
Assessment
elements
In-class
quizzes and
assigned
exercises
Midterm
exam
Time period
Type of
assessment
Comp
Opt
Assessment agent
Lecturer
Selfassess
Type of
activity
Coassess
Grouping
Indiv
Weight
(%)
Group
(#)
Throughout
the
semester
X
X
Conceptual
and
application
X
20%
Week 6
X
X
Conceptual,
application,
and overall
understanding
X
20%
Group project
Week 11
X
Final exam
(a minimum
grade of 4 is
required to
pass the
course)
Extra credit:
class
participation
Exam Week
X
Ongoing
X
X
Application
X
Conceptual,
application,
and overall
understanding
X
Analysis,
application
and synthesis
X
X
20%
40%
X
10%
Taking the final exam is a necessary condition to receive a quantitative evaluation of the course.
In case of non-attendance to the final exam, the student will receive an “N.A.” grade.
Class participation will be evaluated as extra credit, contributing up to 1 point (out of 10) to the
final grade. Only those students who fulfill the following criteria can
obtain partial or
full credit in this category of the assessment:
. demonstrate preparation: relate things to book chapters, readings and previous discussions
. contribute in an active and significant way to ongoing discussions: keep analysis focused,
help solving exercises and questions, respond thoughtfully to other students' comments,
contribute to the cooperative argument-building, suggest alternative ways of approaching
the material.
Supplementary Evaluation
For those students who during the regular term evaluation have obtained a weighted final grade
below 5.0, but have obtained a continuous evaluation above 4.0 (In-class Quizzes and assigned
exercises and Group Project), there will be a supplementary evaluation according to ESCI-UPF
calendar and academic regulations. This supplementary evaluation will imply a re-take of the
final exam that will account for 60% of the total grade. The total final grade will keep the
obtained grades in the rest of continuous evaluation elements. The participation extra credit is
set to zero in the supplementary evaluation.
6. Bibliography and teaching resources
•
Basic bibliography
- MADURA, International Corporate Finance, South Western College, 11/e, 2011
•
Supplementary bibliography
- BEKAERT and HODRICK, International Financial Management, Prentice Hall, 2/e, 2011
- EUN and RESNICK, International Financial Management, McGraw-Hill/Irwin, 6/e, 2011
- KRUGMAN, OBSTFELD and MELITZ, International Economics: Theory and Policy,
Prentice Hall, 9/e, 2011
•
Teaching resources
- journal, magazine and newspaper articles on current events
- power point slides prepared by the authors of the textbooks and by the professor
7. Methodology
The teaching and learning processes will be based on lectures preceded and followed by
independent study by students.
8. Scheduling activities
Week
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Exams week
Session
Lecture 1
Lecture 2
Lecture 3
Lecture 4
Lecture 5
Lecture 6
Lecture 7
Lecture 8
Lecture 9
Lecture 10
Lecture 11
Lecture 12
Lecture 13
Lecture 14
Lecture 15
Lecture 16
Lecture 17
Lecture 18
Lecture 19
Lecture 20
Lecture 21
Lecture 22
In class
Course presentation. Globalization and the MNC
Balance of Payments: accounts
Balance of Payments: global capital flows and imbalances
Foreign Exchange Markets: spot vs. forward rates, swaps
Foreign Exchange Markets: exchange rate determination
Foreign Exchange Markets: interest rates & exchange rates
Intervention in Foreign Exchange Markets
International Capital Markets: Credit and Money Markets
International Capital Markets: Debt and Equity Financing
Globalization and Market Integration
Midterm exam
Forecasting Exchange Rates
Measuring Exposure to Exchange Rate Fluctuations
Currency Derivatives
Managing Transaction Exposure
Managing Economic and Translation Exposure
Foreign Direct Investment
Financing in the Long-Term
Financing International Trade
Financing in the Short-Term
International Cash Management
Presentation of projects
Final exam
Class preparation
Madura, chapter 1
Krugman, Obstfeld, Melitz, chapter 13
Krugman, Obstfeld, Melitz, chapter 13
Krugman, Obstfeld, Melitz, chapter 14
Krugman, Obstfeld, Melitz, chapter 14
Krugman, Obstfeld, Melitz, chapter 15
Madura, ch. 6 and Krugman at al. ch. 18
Madura, chapter 3 and selected readings
Madura, chapter 3 and selected readings
Selected readings (tba)
Madura, chapter 9
Madura, chapter 10
Madura, chapter 5
Madura, chapter 11
Madura, chapter 12
Madura, chapter 13
Madura, chapter 18
Madura, chapter 19
Madura, chapter 20
Madura, chapter 21