698-EFIC: International Finance, Investment and Capital Flow
This course will introduce the essential topics of international finance and investment. It will familiarise students with an analytical framework within which the key international finance issues, such as exchange rate movements, the volumes of exports and imports, risks associated with exchange rate fluctuations, and international capital flows can be analyzed. The latest and emerging issues related to international financial transactions and investment activities will be discussed to understand the relevance of the topics in the real world context. The course will also provide the necessary foundation for understanding the role of money and monetary policy in the global context.
After taking this course students will develop a better insight into how countries around the world are connected via trade, cross-border investments, multinational firms, and cross-border mergers and acquisitions. It will also provide a solid understanding of how movements of the exchange rate and the risks associated with such movements affect domestic and foreign business activities and the impact these might have on the overall performance of the domestic economy. Thus, students working in the financial services industry, foreign trade, or any other sector that manage their day–to-day operations by having an eye on the changes taking place in the international financial system will be able to directly apply the analytical tools learnt from this course. The knowledge and tools offered through this course will also better equip such professionals to manage the risk underlying any business operations that extend beyond national borders.
All MBA program students must complete Phase 1 before registering in electives. Accelerated MBA and transfer students must have prior knowledge of an introductory university-level course in economics or finance. The additional prerequisite for this course is Macroeconomics and Global Economic Trends (EMGT-692) or an equivalent.
Students will develop an understanding of:
- the structure and functions of the foreign exchange market where currencies are bought and sold
- the history of the international monetary system
- how exports, imports and investments across national borders affect a country’s financial status and how it matters for the whole economy
- the various types of risk related to exchange rate fluctuations and how they influence the future exchange rate at which people make international financial contracts in advance
- the financial assets/instruments that can be prudently utilised to minimise the risk that are related to exchange rate fluctuations
- the relationship between the interest rate and the exchange rate
- how prices of goods in different countries can be compared in relation to the exchange rates and how regional economic integration (such as the European Union and NAFTA) might influence such comparisons
- the challenges that multinational firms face regarding the cash management for different currencies
- the incentives for investment in foreign countries
- the factors that cause capital flows across national borders and how such capital flows might contribute to the potential for international lending crises
The grade for this course is based on individual assignments and contributions to collaborative online discussions.