FIN 3633 International Financial Management

APPLIES TO ACADEMIC YEAR 2013/2014

FIN 3633 International Financial Management


Responsible for the course
Knut Sagmo

Department
Department of Financial Economics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
English

Introduction
Within business school curriculums, probably no area is more influenced by world integration than the area of investments and finance. Global economic integration and the ever-increasing interdependence between countries create new opportunities as well as risks for domestic and international corporations. The international dimension extends the field of corporate finance into currency and interest rate topics based on deviations from theoretically well-founded and recognized parity relationships. To future business executives and leaders, the importance of understanding how these parities (equilibrating forces) work, can not be overstated.

Learning outcome
Acquired knowledge
Upon completion of the course, students are required to comprehend key concepts and analytics of international investments and finance such as;

  1. Interest and currency risk from a corporate perspective;
  2. distinction between currency exposure and risk from a corporate as well as investor perspective;
  3. political risk influencing corporations' required rates of return on foreign direct and indirect investments.

Acquired skills
Upon completion of the course, students are required to master tasks such as:
  • calculating parity-derived interest and currency rates between two countries for a given time-horizon
  • calculating deviations from established international parity relationships
  • estimating corporate economic consequences of interest rates and exchange rates deviating from international parity relationships
  • estimating required rates of return compensating for business, financial, as well as political risks for international corporations

Reflection
Upon completion of the course, students are required to demonstrate attitudes compatible with appreciating international business. Such attitudes manifests themselves as behavior characterized by an understanding of the need to abide by international laws and regulations in all aspects of conducting business outside of national borders.

Prerequisites
This course is based on skills from other courses from the Bachelor of Finance program, such as
Securities' Law, Corporate Finance and Mathematical Analysis, Financial Management of Commercial Banks and Financial Investment Analysis.

Compulsory reading
Books:
Shapiro, Alan C. 2010. Multinational financial management. 9th ed. Wiley. Latest edition used in class..

Recommended reading
Books:
Eiteman, David K., Arthur I. Stonehill, Michael H. Moffett. 2012. Multinational business finance. 13th ed., Global ed. Pearson

Course outline
  1. International Economics and Finance
  2. Exchange Rate Theory
  3. Exchange Rate Risk and Exposure
  4. Exchange Rate Hedging
  5. Foreign Direct Investment (FDI)
  6. Financing the International Firm

Computer-based tools
Excel spreadsheets and and basic statistical software.

Learning process and workload
The course consists of 36 lecture hours and 9 hours of instructor-guided, in-class problem-solving. Students are recommended to allocate studying hours as follows:

Recommended use of hours:
Activity Hours
Attendance in lectures
36
Independent reading/preparation for class
120
In-class work on home assignments
9
Mandatory three work assignments
9
Preparation for the final examination
26
Total
200

Coursework requirements (Mandatory)
During the course, three mandatory assignments are distributed electronically on Its Learning. The answers to the assignment-problems must be submitted electronically, also. Two out of the three assignments must be approved in order to sit for the final exam. In addition, we'll be solving four home assignments iin class. The examination takes place by the end of the lectures series. Further administrative details are provided in class.

Feedback on the assignment problems is provided in two ways:

  1. It's learning sums up and automatically returns to students their overall score upon submission of the answers.
  2. A review of the assignment problems is given during the first class-meet following each assignment.

Coursework requirements
In order to sit for the final exam, students must get approved a minimum of two out of three assignments during the course. See Learning process and workload.

Examination
A five hour individual written examination concludes the course.

Examination code(s)
FIN 3633 Written examination counts 100% towards the final grade in FIN 3633 International Financial Management (7,5 ECTS credits).

Examination support materials
No support materials allowed except the BI-defined exam calculator TEXAS INSTRUMENTS BA Plus and interest rate tables. For more information, please visit our web-based Student Handbook at http://bi.edu/studenthandbook/examaids

Re-sit examination
A re-sit is possible in connection with the next ordinary course. Students not having approved the mandatory work assignments are required to submit a new series of three work assignments during the nest ordinary lectures series. Students failing the examination, or wishing to improve a previous grade, may retake the examination conditional upon approval of the semester’s work assignments.

Additional information

Semester

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