International Financial Management

Relations:

It is not possible to register for the course G63E1302 if the student is concurrently registered for or has previously completed the course 32ME-P-IFMN-01 (mutually exclusive courses).

The requirement for course G63E1302 can be fulfilled by substitution with the course 32ME-P-IFMN-01.

Course guarantor:

Lecturer:

Tutor:

Supervisor:

Institute of Economic Studies

Synopsis:

This course provides concepts related to financial management of any multinational company functioning in several countries and thus dealing with exchange rate and interest rate risks. The hedging strategies against those risks are covered via money market and financial derivatives such as forwards, futures, options, and swaps. Profitable situations in the foreign exchange market are also described using locational arbitrage, triangle arbitrage, and covered interest arbitrage. Operational aspects of managing financially a multinational company are presented as well. The main textbook is Eun, Resnick, and Chuluun (2021), yet Madura and Fox (2020) can be also read for this course. There will be lectures and exercise sessions, where different problem sets based on lecture materials are solved together in class.

Requirements:

Midterm and non-cumulative final exams count for 40% each of grade. Individual or group ten-minute presentation of students (up to three people), on any subject of this course, counts for the next 20%. Students have a chance to improve their grades by earning additional ten points (max) through a written submission of solutions to problems covered in one of the entire exercise sessions of their choice. Attendance at classes is expected to pass successfully the course.

Syllabus of lectures:

The foreign exchange market and currency derivatives

Spot and forward markets for foreign exchange

International parity relationships

Futures and options on foreign exchange

Interest rate and currency swaps

Foreign exchange exposure

Management of transaction exposure

Management of economic exposure

Management of translation exposure

Financial management of a multinational firm

Foreign direct investment and cost of capital

International capital budgeting and cash management

International trade finance

International tax environment and transfer pricing

Syllabus of tutorials:

There are exercises and problem sets solved together in class on each topic of lectures.

Study Objective:

The main goal is to equip students with knowledge of how financial derivatives work in the foreign exchange market and can be used for managing risks faced by a multinational firm.

Study materials:

1) Eun, C. S., Resnick, B. G., & Chuluun, T. (2021). International financial management. New York: McGrew Hill, 1-568.

2) Madura, J., and Fox, R. (2020). International financial management. England, Andover: Cengage Learning, 1-658.

Note:

We are now living in a world where all the major economic functionsconsumption, production, and investmentare highly globalized. It is thus essential for financial managers to fully understand vital international dimensions of financial management. This global shift is in marked contrast to a few decades ago, when international aspects of finance were largely ignored. (Eun, Resnick & Chuluun, 2021).

Further information:

No time-table has been prepared for this course

The course is a part of the following study plans:

• Financial management, AR 22/23, prezenční forma (compulsory course of the branch)