International Financial Management

Course Director: Mariassunta Giannetti

Purpose
Countries, corporations and people are increasingly globally integrated in their economic activities. Globalization offers opportunities but also poses risks as shown by the recent financial crisis. This course covers fundamental economic concepts to help students understand the opportunities and risks of globalization and prepare them for careers in international finance.

Content
The contents of the course will cover: 1) Foreign exchange rate markets and quotations; 2) Interest rate and purchasing power parities; 3) Balance of payments; 4) Measuring and managing real exchange rate risks; 5) International financing activities; 6) International asset pricing; 7) International capital budgeting; 8) Foreign direct investments and joint ventures; 9) International financial markets; 10) Political and country risks.

Format and Structure
The course will be based on lectures and cases. The lectures will cover the theories and methods, and will develop the analytical framework needed for understanding international financial markets. In the cases, the students will implement the theory and methods in solving practical case problems encountered in international financial markets. Class attendance is compulsory.

Course Administrator:Kirandeep.Saini@hhs.se

After completing this course, students should be able to:

1. Describe how foreign exchange rate markets work, compare and contrast various exchange rate theories and predict exchange rates using alternative methods
2. Define various ways of measuring exchange rate exposures, evaluate if and when a corporation or investment manager needs to hedge exchange rate exposures and describe different ways of implementing exchange rate hedging programs
3. Identify, discuss and measure various sources of risk and return in both direct and indirect (financial) foreign investments
4. Calculate cost of capital for and estimate values of international investment projects and international corporate acquisitions
5. Describe and analyze differences across international equity and debt markets
6. Evaluate and implement international equity and debt issues

This course is an elective for all MSc Finance & Accounting students who specializes in either Corporate Finance or Investment Management. The course assumes knowledge of financial theory equivalent to the level and topics covered in a textbook such as "Corporate Finance" by Berk & DeMarzo.

Students who are neither in the Corporate Finance (CF) or Investment Management (IM) specializations must obtain prior approval to attend the course. The purpose is to ascertain that students from other specialisations/programs satisfy the course prerequisites. Therefore, "non-finance" students interested in taking the course must provide relevant information about previously taken finance course to the course administrator well before the end of the registration period. The student will then be notified whether (s)he indeed meets the course requirements. Please note that, unless approval is granted, a student cannot register for the course, or equivalently, her/his registration is void, and (s)he will not be allowed to attend the course.

I suggest the following textbook:

International Financial Management by Geert Bekaert and Robert Hodrick, 2nd edition (Pearson-Prentice Hall) [any edition is fine].

The material I will cover in class goes well beyond the textbook and covers the most recent research in international finance, which I deem important for the understanding of international financial markets and the problems firms and investors face. Reading the textbook is a useful background reading especially if you are not familiar with the basics. Depending on your previous knowledge, you may decide not to read the textbook and concentrate on the research papers and lecture notes.

I will provide specific additional readings and my slides on the class website.

The final grade on the course will be determined by the weighted average of the final examination score, class participation, especially in the case discussions. Active class participation is crucial and will count 30% of the grade.

The examination consists of a closed book written exam covering the intended learning outcomes as outlined in this document.

Find the course schedule in TimeEdit

Have you been granted educational support because of a documented disability? If so, please contact the course director as soon as possible so that adequate accommodations can be made.

Contact specialneeds@hhs.se if you have questions about being granted educational support or need a copy of your educational support certificate.

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