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.
- 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
Learning outcome knowledge
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.
- Written assignment: 100%