Unit information: International Finance in 2017/18

Unit name	International Finance
Unit code	ECONM2031
Credit points	15
Level of study	M/7
Teaching block(s)	Teaching Block 2 (weeks 13 - 24)
Unit director	Professor. Hill
Open unit status	Not open
Pre-requisites	None
Co-requisites	None
School/department	School of Accounting and Finance - Business School
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

As national economic boundaries have been eroded and the international elements of business have expanded, an understanding of the operation of international financial markets is becoming ever more important. This unit examines the risks and opportunities available within an international environment. It covers the international parity relations, exchange rate determination, international stock markets and the assessment and management of risk.

Intended Learning Outcomes

Having successfully completed this unit students should be able to:

1. Describe the basic international arbitrage relationships and understand why deviations may occur.
2. Outline the theories underlying the determination of exchange rates within a free-floating environment
3. Have a good grasp of the risks and opportunities offered in an international environment.

Teaching Information

Lectures and workshops

Assessment Information

Summative assessment:

Three-hour examination in the Summer term following the course – testing learning outcomes 1-3

The unit is assessed via a three-hour examination in the Summer term. The exams contain a range of discursive questions aimed at testing students’ depth of knowledge of areas such as international financial architecture as well as numerical questions that evaluate students’ ability to derive the theoretical results they have seen. There will also be some questions involving calculation aimed at demonstrating that a student can apply some of the techniques encountered.

Formative assessment:

Solutions to problems set distributed throughout the term – learning outcomes 1-3.

Reading and References

Main text-book:

• Solnik, B., and McLeavey, D., 2009, ‘Global Investments’, International edition, published by Pearson.

Required Articles (available via Blackboard):

• Levi, H., & Lim, K.C., 1994, ‘Forward exchange bias, hedging and the gains from international diversification of investment portfolios’, Journal of International Money and Finance, pp. 159 - 170

• Sarno, L, and Taylor, M.P., ‘Purchasing Power Parity and the Real Exchange Rate’ IMF Staff Papers, Vol. 49, pp. 65-105

Additional reading:

• The following book is a useful guide to the basics of Capital Market Theory

Bodie, Kane and Marcus, 2005, ‘Investments’, McGraw Hill International, 6th Edition.