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King Abdulaziz University Faculty of Economics and
Administration Department of Finance International Finance (FIN436) Syllabus, Spring Semester-1436 /2015
Course Details
Instructor: Dr. Suha M Alawi, Assistant Professor of Finance Lecture Hours: Sunday, Tuesday & Thursday 12-1
Office Hours: Sunday, Tuesday & Thursday 9-12, Monday & Wednesday 11-12, and by appointment
E-mail: [email protected] Room number: 640/ Building 6 Mobil: 0550516671
COURSE DESCRIPTION:
This course will cover issues related to both international financial markets and the financial operations of a firm within the international environment. The course discusses theoretical basis on the various issues, it also mixes in empirical evidence and discussion of firms' actual behaviors with International portfolio of Ethical, behavioral, Islamic and microfinance and investment. It also discusses the structure of derivatives, the Bonds and hedging after global financial crises.
COURSE OBJECTIVE:
1. Overview of market risks, international monetary systems and institutions.
2. Theoretical determinants of currency prices and equilibrium conditions, determination of currency prices.
3. Hedging currency and interest rate risks: instruments and strategies.
4. Raising capital in international markets: international Bond and equity markets 5. The international cost of capital.
6. Political risk and its impact on corporate financial decisions LEARNING OUTCOMES:
By the end of this course, students should be able to:
1. Understand the market risk and monetary systems.
2. Explain the typical International Trade.
3. Be aware of Exchange Rate Determination, and Currency Derivatives.
4. Gain insight into the foreign exchange market.
5. Measure the foreign exchange exposure.
2 COURSE MATERIAL:Required Text
International Financial Management, by Eun, C. and Resnick, B., Published by:
McGraw-Hill, 6th edition, (2012).
Supplementary (but optional) Texts: Multinational Business Finance. Eiteman, k.
Stonehill, A.Moffett,M. Published by Pearson, 13th Edition (Global Edition), 2012.
Financial News- Saudi Gazette - ة يداص ت قلاا ةد يرج لا-Financial Times
An important complement to class work is following the financial news. There are several sources of information: The Wall Street Journal and its European counterpart, The Financial Times. The business sections of the New York Times and Globe and Mail are very informative, as well as weekly magazines such as Business Week and the Economist.
The Internet offers substantial information resources (Bloomberg, Reuters, NYSE.com, ft.com, and others). It will keep you informed on what is happening in the business world and help you connect the concepts developed during the lectures with the real world.
Course Requirements and Expectations
The course relies on basic concepts from calculus, algebra, and statistics. I will do a review when it is necessary. You will need to use a spreadsheet such as Excel for the class project.
Students should prepare for class by completing all required readings in advance. This class requires a lot of work but I do think that everyone has the capacity to achieve an above average performance or better if they do the work harder.
Course Grading and assessment Methods
Your course grade will reflect your performance on midterm and final exams, class participation, one presentation, and one group project with weights determined as follows:
Class Participation 10%
Assignments/cases 10%
Project 10%
Midterm Examination-1 15%
Midterm Examination-2 15%
Final Examination 40%
HOW TO STUDY FOR THIS COURSE:
Spend some time on the course every day, whether you have class or not.
Take good notes in class and review them frequently, comparing them to corresponding material in the text.
Read the chapter in the textbook (prior to its being covered in class).
Answer and study the questions in the text.
Do homework assignments as soon as possible after they have been assigned
Pay attention to the solutions (i.e., the solution processes), not just the answers
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Get to know the software (Excel) involved so that you feel comfortable using it to solve managerial problems with it without having to spend a great deal of time
Tentative Course Outline
Weeks Chapters Topic Remarks
1 Registration
2 1 Introduction- Globalization and the Multinational Firm
3 2& 3 International Monetary System and Balance of Payments
4 5 Foreign exchange markets: participants, spot and forward markets - Midterm 1
5 6 International Parity Conditions
6 6 Spot rate forecasting
7 7 Currency futures and Currency Options
8 7& 8 Currency and interest option pricing - Midterm 2
9 Springing Vacation
10 8 Greeks, volatility and option strategies Interest rate swaps
11 14 Currency Swaps
12 12 Raising capital in international markets and International Bond markets
13 13& 9 International Equity markets and Financial management of the international firm 14 17 Calculate cost of capital and investments 15
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17-19 Final Exams
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IMPORTANT NOTE
The above syllabus and schedule is tentative and are subject to change at the discretion of the instructor, as necessary. The instructor has to cater the need, background and understanding of the previous finance courses and cover chapters accordingly for Mid Term exams.
If a midterm exam is not completed, the mark assigned to the missed component will be zero except in the case of a valid excuse (illness, death of a close family member, etc.). In the case of a valid excuse the marks associated with the missed component will be re-assigned to the final exam.
In every aspect of the course, students are required to adhere to the standards of conduct in the King Abdulaziz University Honor Code.
IN ADDITION, ACTIVE CELL PHONES ARE NOT ALLOWED DURING CLASS TIME.
