SFB12614 International Finance (Spring 2022)

The course is connected to the following study programs

Compulsory for students on  the Business Administration Programme, specializing in International Business or Economic Analysis.

Absolute requirements

All courses in first year must be passed before students can start in third year in the study programme.

Recommended requirements

Microeconomics/Mikroøkonomi 

Lecture Semester

6th semester (spring).

The student's learning outcomes after completing the course

This subject will enable the student to achieve the following learning outcomes.

Knowledge

The student will have gained knowledge of:

• the functioning of the system of international finance both from the perspective of the international macro economy and from the perspective of a firm operating in international markets.

• wide spectrum of concepts, such as the idealized concept of 'purchasing power parity', the benefits and costs of hedging and speculating with derivatives and the effects portfolio diversification.

• understanding that risk cannot be eliminated - it can only be re-distributed to others.

Skills

The student will have learned to:

• analyze and interpret key markets, institutions, processes and instruments of the global financial economy.

• understand the theoretical concepts, based on mathematical models, graphical representation and text- and data analysis.

• evaluate the benefits, costs and risks of globalization.

General competence

The student will:

• have built a frame of reference for understanding and evaluating the functioning of the global financial markets, its opportunities, challenges and risks.

• be ready to use the above mentioned methods of analysis to arrive at answers to specific questions under the uncertainties presented by global financial conditions - be it in the pursuit of more advanced academic degrees, or be it in the student's future role as economist, entrepreneur, administrator, policy-maker or educator.

Content

This course is built around three central questions: 'How does the system of international finance function?' ' What are the specific instruments that, for better or for worse, are used by the participants in international financial markets for the purpose of hedging against risk, and for the purpose of embracing risk through speculation?', and 'How could things go so wrong to produce a financial crisis that has led to world recession?'

Topics are:

• The Foreign Exchange Market

• International Parity Conditions

• The International Monetary System and Exchange Rate Regimes

• Speculation, Hedging, and Foreign Currency Derivatives

• Forwards, Future, Option, and Swaps

• Exchange Rate Determination

Forms of teaching and learning

Students will participate in the following learning activities:

Lectures, Seminars, group work, and group discussions and presentations.

Workload

The course will give the student approximately 280 hours of work.

Coursework requirements - conditions for taking the exam

A group written assignment will be assessed on a pass/fail basis.

A 'pass' on the assignment is necessary to obtain permission to take the final exam.

Examination

Four hours individual written examination

Aids allowed: approved calculator, mother tongue - English - mother tongue dictionary.

Grades: A - F.

Examiners

One internal and one external examiner, or to internal examiners.

Course evaluation

To improve the course, we need the evaluations from the students. The course is evaluated by the students and the evaluations from the students are treated by the staff and the faculty's committee for quality of education.

Literature

The readinglist was last updated 10.11.2021. Changes can be made before semester start.

Mandatory literature: 

Textbook: Eiteman, David K., Arthur I. Stonehill, and Michael H. Moffett, Multinational Business Finance, 14th ed. (Global Edition), Boston (available at the bookstore at HIOF, Halden Campus).

There will be additional texts (handouts) available on Canvas. These texts are part of mandatory literature, and they are exam relevant.

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Additional Literature:

Arnold, Glen (2020). Financial Times Guide to Investing: The Definite Companion to Investment and the Financial Markets (The FT Guides).

4th edition. Publisher: FT Publishing International. (January 24, 2020).

Bellamy Foster John and Fred Magdoff (2009). The Great Financial Crisis: Causes and Consequences. Monthly Review Press.

Ezroj, Aaron (2020) Carbon Risk and Green Finance (Banking, Money and International Finance). Routledge; 1st edition (December 27, 2020).

Fox, Justin (2009). The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street. Harper Collins Publishers.

Hull, John (2018). Risk Management and Financial Institutions. 5th edition. Publisher: Wiley.

Krugman, Paul R., Maurice Obstfeld, Marc Melitz (2015). International Finance: Theory and Policy. 10th edition. Publisher: Pearson.

Madura, Jeff (2020). International Financial Management. 14th edition. Publisher: Cengage Learning.

Madura, Jeff (2020). International Financial Management. 14th edition. Publisher: Cengage Learning.

McFarland, Evan (2021). Blockchain Wars: The Future of Big Tech Monopolies and the Blockchain Internet. Kindle Edition (Amazon)

Moffet, Michael H., Arthur I. Stonehill, and David K. Eiteman (2017), Fundamentals of Multinational Finance, Publisher: ‎ Pearson; 6th edition (May15, 2017)

Neal, Larry (2016), A Concise History of International Finance: From Babylon to Bernanke (New Approaches to Economic and Social History). Part of: New Approaches to Economic and Social History (9 books). Jan 13, 2016.

Piketty, Thomas (2014), "Capital in the Twenty-First Centtury", (translated into English by Arthur Goldhammer), Belknap Press.