Year
2021
Units
4.5
Contact
1 x 1-hour lecture weekly
1 x 2-hour tutorial weekly
Prerequisites
BUSN1014 - Financial Markets
Enrolment not permitted
BUSN3012 has been successfully completed
Topic description

Subject areas covered in this topic include the International Monetary System and exchange rate arrangements, the foreign exchange market, cross exchange rates, forward exchange rates and arbitrage, covered interest parity, further parity relations, foreign exchange exposure and management, eurocurrency markets and short-term financing instruments, Eurobonds and the International Bond Market, the International Equities Market, international portfolio diversification, foreign development investment (FDI) and international capital budgeting.

Educational aims

This topic aims to provide a detailed introduction to the operations of the major international financial markets, namely foreign exchange markets, eurocurrency markets, international bond markets and equity markets. Spot and forward exchange, international parity relations, some hedging foreign exchange strategies, eurocurrency and international banking, eurobonds and foreign bonds, and international portfolio analysis are discussed.

Expected learning outcomes
On completion of this topic you will be expected to be able to:

  1. Explain the evolution of the exchange rate system into its present form and the continuing debate over its form in the future
  2. Describe the functioning of spot and forward markets for foreign exchange
  3. Identify and characterise the parity relations linking exchange rates, interest rates and inflation rates
  4. Evaluate some alternative strategies for hedging against FX
  5. Describe the functioning and role of eurocurrency markets and international bond and equity markets
  6. Explain how firms make international financing and investment decisions
  7. Perform numerical calculations as required of participants in international financial markets

Key dates and timetable

(1), (2)

Each class is numbered in brackets.
Where more than one class is offered, students normally attend only one.

Classes are held weekly unless otherwise indicated.

FULL

If you are enrolled for this topic, but all classes for one of the activities (eg tutorials) are full,
contact your College Office for assistance. Full classes frequently occur near the start of semester.

Students may still enrol in topics with full classes as more places will be made available as needed.

If this padlock appears next to an activity name (eg Lecture), then class registration is closed for this activity.

Class registration normally closes at the end of week 2 of each semester.

Classes in a stream are grouped so that the same students attend all classes in that stream.
Registration in the stream will result in registration in all classes.
  Unless otherwise advised, classes are not held during semester breaks or on public holidays.