International Corporate Finance
||Professor David McMillan
||Lectures and Seminars: 2 hrs lecture per week and 1hr seminar per week
||Assessment will comprise a one and a half hour class test (100 per cent of the module grade). The class test will contain both short and longer (essay-style) answers. There will be no multiple choice.
To provide an understanding of the key areas of finance within an international environment. Attention will be focused on:
- the operation of the foreign exchange market;
- the determinants of foreign exchange rates and changes in rates
- the relationship between exchange rates, interest rates and inflation rates;
- the use of the main derivative products (futures and options) in international finance;
- the measurement of foreign exchange risk;
- the management of foreign exchange risk;
- international investments and aspects of portfolio management;
- the cost of capital of multinational corporations
Knowledge and understanding of:
- Understand the mechanics of the foreign exchange market and how exchange rates are quoted.
- Identify and exploit opportunities to make money from currency arbitrage.
- Understand the factors and different theoretical models that determine exchange rates
- Understand the nature of the relationship between spot and forward exchange rates and how these relate to interest rates and inflation rates.
- Identify and exploit opportunities to make money from covered (and uncovered) interest arbitrage.
- Appreciate the differences between the major derivative instruments and identify the types of foreign exchange risk and interest rate risk that they may be used to hedge against.
- Appreciate the types of foreign exchange risk faced by exporters, importers and multinational companies.
- Calculate the hedged domestic value of future foreign currency cash flows using a money market hedge and a forward market hedge.
- Understand potential government influence on exchange rates.
- Understand the international aspects of portfolio management and the nature of correlations between markets and assets.
- Understand the key components of international asset pricing models.
- numeracy, through the manipulation and interpretation of financial data
- methodical working through planning and prioritisation
- effective listening
- presentational skills
- effective time management and the ability to work under pressure
- the ability to analyse information and solve structured problems
- the ability to identify arguments and think critically
Division: Accounting & Finance
This module information is representative of what is included in the module in a given year. Details of actual reading, lectures and coursework may vary year to year and will be available at the beginning of the semester.