TEACHING PLAN FOR INTERNATIONAL FINANCE 1. Basic description Name of the course: International Finance Academic year: 2012-2013 Term: 1 st 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 G.P.3. Moral commitment and ethical sense. Generic systemic competences G.S.3. Ability to think globally. Competences for applicability G.A.1. Ability to apply acquired knowledge and skills. G.A.2. Ability to use quantitative criteria and qualitative insights when taking decisions. G.A.3. Ability to search and exploit new information sources. 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 E.P.1. Ability to understand the decisions taken by economic agents and their interaction in the markets. E.P.2. Ability to analyse economic and market indicators when taking decisions within the organisation. E.P.9. Assess and discuss the economic and financial position of an organisation. E.P.17. Ability to express and understand spoken and written communication in English at an advanced level in the international business environment. 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 Throughout the semester Type of assessment Assessment agent Type of activity Comp Opt Lecturer Selfassesassess Co- X X Conceptual and application Week 6 X X Conceptual, application, and overall understanding Grouping Weight (%) Indiv Group (#) X 20% X 20% Group project Week 11 X X Application X 20% Final exam (a minimum grade of 4 is required to pass the course) Extra credit: class participation Exam Week X X Conceptual, application, and overall understanding Ongoing X X Analysis, application and synthesis X 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 Session In class Class preparation Week 1 Lecture 1 Lecture 2 Course presentation. Globalization and the MNC Balance of Payments: accounts Madura, chapter 1 Krugman, Obstfeld, Melitz, chapter 13 Week 2 Lecture 3 Lecture 4 Balance of Payments: global capital flows and imbalances Foreign Exchange Markets: spot vs. forward rates, swaps Krugman, Obstfeld, Melitz, chapter 13 Krugman, Obstfeld, Melitz, chapter 14 Week 3 Lecture 5 Lecture 6 Foreign Exchange Markets: exchange rate determination Foreign Exchange Markets: interest rates & exchange rates Krugman, Obstfeld, Melitz, chapter 14 Krugman, Obstfeld, Melitz, chapter 15 Week 4 Lecture 7 Lecture 8 Intervention in Foreign Exchange Markets International Capital Markets: Credit and Money Markets Madura, ch. 6 and Krugman at al. ch. 18 Madura, chapter 3 and selected readings Week 5 Lecture 9 Lecture 10 International Capital Markets: Debt and Equity Financing Globalization and Market Integration Madura, chapter 3 and selected readings Selected readings (tba) Week 6 Lecture 11 Lecture 12 Midterm exam Forecasting Exchange Rates Madura, chapter 9 Week 7 Lecture 13 Lecture 14 Measuring Exposure to Exchange Rate Fluctuations Currency Derivatives Madura, chapter 10 Madura, chapter 5 Week 8 Lecture 15 Lecture 16 Managing Transaction Exposure Managing Economic and Translation Exposure Madura, chapter 11 Madura, chapter 12 Week 9 Lecture 17 Lecture 18 Foreign Direct Investment Financing in the Long-Term Madura, chapter 13 Madura, chapter 18 Week 10 Lecture 19 Financing International Trade Madura, chapter 19 Lecture 20 Financing in the Short-Term Madura, chapter 20 Week 11 Lecture 21 International Cash Management Madura, chapter 21 Lecture 22 Presentation of projects Exams week Final exam