Module Information

Module Identifier
ECM2220
Module Title
International Finance and Capital Markets
Academic Year
2019/2020
Co-ordinator
To Be Arranged
Semester
Semester 1

Course Delivery

 

Assessment

Assessment Type Assessment length / details Proportion
Semester Exam 3 Hours   Unseen written exam  75%
Semester Assessment 2000 word written essay  25%
Supplementary Exam 3 Hours   Unseen written exam  100%

Learning Outcomes

On successful completion of this module students should be able to:

* Analyse the advantages and disadvantages of different exchange rate regimes;

* Evaluate the interactions between foreign exchange instruments and the opportunities that arise from intermarket arbitrage;

* Explain the role expectations and monetary policy play in the spot and forward currency markets;

* Discuss the main approaches to exchange rate determination and use insights from these to analyse potential drivers of currency crises in emerging economies;

* Analyse the main types of currency exposures encountered by MNEs and potential strategies they can use to manage such exposures;

* Examine the instruments available to the global firm to finance its operations and consider the effects of market liquidity and segmentation on the cost of capital.

Aims

This module is designed to provide students with a solid grounding in key aspects of international finance and capital markets. More specifically, it examines the economics of exchange rates, the spot and the forward foreign exchange markets, interventions by central banks, the main forex-related exposures encountered by global firms, and the costing of global capital, potential strategies when sourcing equity globally and the characteristics of international debt instruments used by MNEs and their affiliates.

Brief description

The module provides a thorough exposure to the global financial system, notably the international monetary system, the theories and markets for foreign exchange, foreign exchange exposures and international financial arbitrage, the financing of the global firm and the determinants of foreign investment decisions.

Content

I. The Foreign Exchange Market

  • The structure and working of the foreign exchange market
  • Distinctions between spot, forward, swaps and other types of forex instruments
  • Intermarket arbitrage
II. Exchange Rate Determination and International Investments

  • The role of expectations and monetary policy in the spot and forward currency markets
  • The forward market efficiency hypothesis
  • Three major approaches to exchange rate determination (parity conditions, BoP and asset approaches)
  • Basics of forecasting
III. Open Economy Macroeconomics

  • Measuring international economic activity using the BoP accounts
  • Examine how changes in the exchange rate and its volatility influences the trade balance
  • The inter-relationships between the goods, money and asset markets both under fixed and floating exchange rate regimes
  • Stabilisation policy under fixed and floating exchange rate regimes
IV. International Capital Markets and the Global Firm

  • Main currency exposures experienced by firms and the potential strategies to manage such risks
  • Market liquidity, segmentation and the cost and availability of capital
  • Sourcing equity globally and the characteristics of various debt instruments available to MNEs
  • Foreign investment risks and their specific sources.

Module Skills

Skills Type Skills details
Application of Number Solving numerical problems in tutorials, assignment and final exam
Communication Seminar discussions
Improving own Learning and Performance Preparation of assignment, revision materials for final exam
Information Technology Word processing, specialist software to conduct relevant data analysis, accessing various financial and economic databases, use of Blackboard
Personal Development and Career planning In addition to the skills above, students are expected to acquire skills in time management, writing and analytical skills
Problem solving Treated in lectures and applied in seminars
Research skills Collecting relevant information from a variety of sources for expanding on lecture materials and for using in seminars
Subject Specific Skills Problem-solving, application of technical economic and financial models and data analysis
Team work Seminar sessions include elements of group work

Notes

This module is at CQFW Level 7