GRA 6553 International Finance and the Firm
GRA 6553 International Finance and the Firm
This course is identical to the first part of the course GRA 6552 International Finance (6 ECTS), and therefore both courses cannot be chosen by the same student.
The overall goal of the course it to provide the participants with a sound understanding of foreign exchange markets and their role for the economy in general and for financial decision-making in the multinational firm in particular.
Economies and firms are increasingly becoming exposed to the international economy. This creates both opportunities and challenges for firms, investors and policy makers. A sound understanding of international markets is needed to deal with these opportunities and challenges.
The course can be broadly split into three parts. In the first part of the course the students learn about the history and organization of international financial markets, with special emphasis on the foreign exchange market. In the second part, students learn different models for exchange rate determination, with special emphasis on macroecnomic determinants of exchange rates. The third part of the course will give students knowledge on issues in corporate finance, like capital budgeting, in an international setting.
During the acquisition of the above-mentioned knowledge, the students will acquire the following skills:
- Understand why FX-rates fluctuate.
- Produce and evaluate FX-rate forecasts.
- Calculating the value of multinational companies.
The international economy provides opportunities and challenges to market participants. With increased globalization these markets have become more important, and more complex. No models are able to capture this complexity.
Multinational corporations operate in this complex environment need to critically assess different models and show their limitations with empirical tests. Similarly, policy makers and investors need to understand the environment where they operate.
Thus, an important learning outcome of this course is to understand the shortcomings of the models as this will be important for the decision-making process.
- Background: International monetary system;
- Foreign Exchange Markets; International trade and capital flows. International markets for short-term debt instruments.
- Parity relations: Covered and Uncovered Interest rate Parity; Purchasing Power Parity; International Fisher effect.
- Testing parity conditions.
- Exchange Rate determinantion
- International capital budgeting; Capital structure and cost of capital
Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class that is not included on the course homepage/itslearning or text book.
All parts of the assessment must be passed in order to get a grade in the course.
Honour Code
Academic honesty and trust are important to all of us as individuals, and represent values that are encouraged and promoted by the honour code system. This is a most significant university tradition. Students are responsible for familiarizing themselves with the ideals of the honour code system, to which the faculty are also deeply committed. The expected behaviour and honour code is outlined here.
Any violation of the honour code will be dealt with in accordance with BI’s procedures for cheating. These issues are a serious matter to everyone associated with the programs at BI and are at the heart of the honour code and academic integrity. If you have any questions about your responsibilities under the honour code, please ask.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 100 Grouping: Group (3 - 5) Duration: 2 Week(s) Exam code: GRA65531 Grading scale: ECTS Resit: Examination when next scheduled course |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 3 ECTS credit corresponds to a workload of at least 80 hours.