BUSN2027 International Finance

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.

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.

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