Course Syllabus
FIN 436: International Finance
Semester 1 2013
Instructor: Dr. Ishaq Bhatti, Professor of Finance
Lecture Hours: 9 to 10 AM, Boys: Room 106, Girls TA Miss Batool: Room 905
Office Hours: Sunday, Tuesday & Thursday 12.30 - 14.30, and by appointment
E-mail: IBKAAU@gmail.com
Office Phone: (02) 6952000 - Ext. 65316
COURSE DESCRIPTION:
This course will cover issues related to both international financial markets and the financial
operations of a firm within the international environment. The course discusses theoretical basis on
the various issues, it also mixes in empirical evidence and discussion of firms' actual behaviors with
International portfolio of Ethical, behavioral, Islamic and microfinance and investment. It also
discusses the structure of derivatives, the Bonds and hedging after global financial crises.
COURSE OBJECTIVE:
1. Overview of market risks, international monetary systems and institutions.
2. Theoretical determinants of currency prices and equilibrium conditions, determination of
currency prices.
3. Hedging currency and interest rate risks: instruments and strategies.
4. Raising capital in international markets: international Bond and equity markets
5. The international cost of capital.
6. Political risk and its impact on corporate financial decisions
LEARNING OUTCOMES:
By the end of this course, students should be able to:
1. Understand the market risk and monetary systems.
2. Explain the typical International Trade.
3. Be aware of Exchange Rate Determination, and Currency Derivatives.
4. Gain insight into the foreign exchange market.
5. Measure the foreign exchange exposure.
COURSE MATERIAL: Required Text
- Multinational Business Finance. Eiteman, k. Stonehill, A.Moffett,M. Published
by prentiahall, 13th Edition 2012.
Supplementary (but optional) Texts: International Financial Management, by Eun, C. and Resnick,
B., Published by: McGraw-Hill, 6th edition, (2012). Additional readings and reference materials will
be announced during the semester.
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An important complement to class work is following the financial news. There are several
sources of information: The Wall Street Journal and its European counterpart, The
Financial Times. The business sections of the New York Times and Globe and Mail are
very informative, as well as weekly magazines such as Business Week and the Economist.
The Internet offers substantial information resources (Bloomberg, Reuters, NYSE.com,
ft.com, and others). It will keep you informed on what is happening in the business world
and help you connect the concepts developed during the lectures with the real world.
Course Requirements and Expectations
The course relies on basic concepts from calculus, algebra, and statistics. I will do a review
when it is necessary. You will need to use a spreadsheet such as Excel for the class project.
Students should prepare for class by completing all required readings in advance. This class
requires a lot of work but I do think that everyone has the capacity to achieve an above
average performance or better if they do the work harder.
Course Grading and assessment Methods
Your course grade will reflect your performance on midterm and final exams, class
participation, one presentation, and one group project with weights determined as follows:
Class Participation
Assignments/cases
Midterm Examination-1
Midterm Examination-2
Final Examination
10%
10%
20%
20%
40%
Special Notes
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The final exam is comprehensive but it focuses mostly on issues covered after the
midterm examination - 2. All exams are closed book tests.
Assignments will not be accepted via email to Dr Ishaq Bhatti. Please hand in your
assignments to Teaching Assistants (Girls – Ms. Batool) and (Boys – myself) and
negotiate with them if they accept the assignment via e-mail.
The student is responsible for missed classes and any assignments made during that
time. The class Participation marks are handled by TA’s.
HOW TO STUDY FOR THIS COURSE:
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Spend some time on the course every day, whether you have class or not
Take good notes in class and review them frequently, comparing them to corresponding
material in the text
Read the chapter in the textbook (prior to it's being covered in class)
Answer and study the questions in the text
Do homework assignments as soon as possible after they have been assigned
Pay attention to the solutions (i.e., the solution processes), not just the answers
Get to know the software involved so that you feel comfortable using it to solve managerial
problems with it without having to spend a great deal of time
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Tentative Course Outline
Weeks
1
2&3
Topic
Course presentation, topics overview
International Monetary System and Balance of
Payments
4
Foreign exchange markets: participants, spot and
forward markets
5
International Parity Conditions
6
Spot rate forecasting and Midterm 1
7
Currency futures and Currency Options
8
Currency and interest option pricing
9 & 10
Remarks
Greeks, volatility and option strategies Interest rate
swaps
11
Currency Swaps and Midterm 2
12
Raising capital in international markets and
International Bond markets
13
International Equity markets and Financial
management of the international firm
14
Calculate cost of capital and investments
Note: The above syllabus and schedule are subject to change at the discretion of the instructor, as
necessary.
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IMPORTANT NOTE
If a midterm exam is not completed, the mark assigned to the missed component will be
zero except in the case of a valid excuse (illness, death of a close family member, etc.). In
the case of a valid excuse the marks associated with the missed component will be reassigned to the final exam.
In every aspect of the course, students are required to adhere to the standards of conduct in
the King Abdulaziz University Honor Code.
IN ADDITION, ACTIVE CELL PHONES ARE NOT ALLOWED DURING CLASS TIME.
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