International Finance (in English)

Course Description
This course will explore the world of international finance including the dynamics of
exchange rates, foreign investment, and how these affect international trade. It also
includes a brief introduction to the study of futures, options and currency swaps.

Course Goals and Methodology
The main purpose of this course is to introduce students to the complex world of International
finance. The methodology of the course will be based on slides summarizing key concepts,
problem sets with practical application of financial theory and quizzes that check student’s
understanding of key concepts presented.

The first part of this course is dedicated to establishing that a global marketplace exists and
in order to be competitive you must be an active participant. Various risks that need to be
considered when doing international business and the major difference between domestic
and international finance. Later, the history of today’s international monetary systems, its
major players and the current exchange rate regimes that exist today will be presented. The
current market for foreign exchange will be introduced and students will learn to read and
interpret currency quotes, translate quotes and manipulate currency exchange rates to
create arbitrage opportunities.

Finally, futures contracts and forecasting future exchange rates will be introduced along with
a discussion of various economic theories including: 1) Purchasing Power Parity, 2) the
Fischer Effect, and 3) the International Fischer Effect. The course will conclude with a brief
introduction to the derivatives market including futures and options.

Learning Objectives
At the conclusion of this course students will:
1. Learn and understand the terminology used in international finance (futures,
forwards, arbitrage, inflation, options, etc.)
2. Demonstrate knowledge and ability to forecast currency future values and
properly access whether the currency is over/undervalued and why.
3. Demonstrate ability to analyze and evaluate both international financial
borrowing and investment opportunities.
4. Analyze and evaluate hedging opportunities, making and receiving international
payments, and evaluating transactions in both dollar and foreign currency
terms.

Course Requirements and Grading
Your final grade will be calculated according to the following:
Midterm Exam 20%
Final Exam 30%
Final Project 35%
In-class participation 15%

Midterm and Final Exam: The midterm covers chapters 1-3 and the final exam covers
chapters 4 and 5.

Midterm and Final Exam dates will not be changed under any circumstances.

Quizzes and problem sets will count as part of your participation grade.

Final Project: The final project will be completed in groups of 2. It consists of a 10-15 minute
Powerpoint presentation and a final paper presenting the team’s analisis (approx. 15-21
pages). All group members will receive the same grade on the final paper and the
presentation; therefore, please choose your groups wisely.

There are three main topics to choose from:
1. Developing countries: Analyze the social, political and economic past and
present to forecast the future for one of the countries listed. Your analysis
should include the transgression of an industry sector of your choice to prove
why or why not you would invest in this developing country.
2. Fiscal paradises/Tax havens: Choose two fiscal paradises/tax havens
listed and compare them to identify which one provides a better investment
opportunity depending on a specific type of investor (individual, major
company, etc.) You are expected to analyze what they are, why they exist,
how they work and who is using them.
3. International Stock Markets: Compare and contrast at least two
international stock markets listed below. The final objective is to study
whether a correlation does or does not exist regarding the way the markets
behave in time. If there is no relationship, your challenge will be to explain
why.
Please keep in mind the following deadlines:
In depth discussion about the final project.
Last day to submit project topic.
Must submit rough draft/extended outline by email.
Final paper must be printed and turned in class.
Final Project Presentations. 

COURSE CONTENT:
Chapter 1. Globalization and the Multinational Firm.
Chapter 1 David Ricardo’s Comparative Advantage Theory.
Appendix
Chapter 2. The International Monetary System
Chapter 3. The Market for Foreign Exchange
Chapter 4. International Parity Relationships & Forecasting Foreign Exchange Rates
Chapter 5. Futures and Options on Foreign Exchange (Brief Introduction)