INTERNATIONAL FINANCIAL MANAGEMENT

FIN5IFM

2016

Credit points: 15

Subject outline

In this subject, students will develop an understanding of the structure and operation of the international financial system, including an understanding of the process via which exchange rates are derived. Students will also develop a thorough knowledge and understanding of the logic and relevance of the four major international parity conditions: Purchasing Power Parity; Covered Interest Parity; Uncovered Interest Parity; and Real Interest Parity. Based on their understanding of these parity conditions, students will evaluate the relative merits and the risks associated with investing in a foreign currency.

SchoolLa Trobe Business School

Credit points15

Subject Co-ordinatorTu Nguyen

Available to Study Abroad StudentsYes

Subject year levelYear Level 5 - Masters

Exchange StudentsYes

Subject particulars

Subject rules

PrerequisitesN/A

Co-requisites FIN5DER

Incompatible subjectsN/A

Equivalent subjectsN/A

Special conditionsN/A

Learning resources

Readings

Resource TypeTitleResource RequirementAuthor and YearPublisher
ReadingsGlobal investmentsPrescribedSolnik B., & D.McLeaveyPEARSON ADDISON WESLEY, 2006, 6TH EDITION

Graduate capabilities & intended learning outcomes

01. Analyze currency exchange rates

Activities:
Topic 1: Currency Exchange Rates (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

02. Discuss foreign exchange fundamentals; in particular the balance of payments, exchange rate regimes, and international parity relations and their implications. Discuss exchange rate determination theories and their potential implications.

Activities:
Topic 2: Foreign Exchange Parity Relation (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

03. Discuss the evolution of international monetary arrangements, the empirical evidence on the various parity conditions, and the analysis of exchange rate forecasting and its use and performance.

Activities:
Topic 3: Foreign Exchange Rate Determination and Forecasting (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

04. Explain and discuss the international asset pricing model (ICAPM), in particular, discuss the relation between exchange rates and asset prices.

Activities:
Topic 4: International Asset Pricing (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

05. Evaluate the implications of international diversification and discuss risk and return in international investment.

Activities:
Topic 5: Equity: Concepts and Techniques (lecture and tutorial) and Assessment components Topic 6: Global Bond Investing (lecture and tutorial) and Assessment components Topic 7: Alternative Investments (lecture and tutorial) and Assessment components Topic 8: The Case for International Diversification (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Literacies and Communication Skills (Writing,Speaking)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

06. Discuss the management of foreign exchange risk.

Activities:
Topic 9: Currency Risk Management (lecture and tutorial) and Assessment components
Related graduate capabilities and elements:
Literacies and Communication Skills (Writing,Speaking)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Inquiry and Analytical Skills (Critical Thinking,Creative Problem-solving,Inquiry/Research)
Discipline -Specific Knowledge and Skills (Discipline-Specific Knowledge and Skills)

Subject options

Select to view your study options…

Start date between: and    Key dates

Melbourne, 2016, Semester 1, Day

Overview

Online enrolmentYes

Maximum enrolment sizeN/A

Enrolment information

Subject Instance Co-ordinatorTu Nguyen

Class requirements

Tutorial Week: 10 - 22
One 1.0 hours tutorial per week on weekdays during the day from week 10 to week 22 and delivered via face-to-face.

Lecture Week: 10 - 22
One 2.0 hours lecture per week on weekdays during the day from week 10 to week 22 and delivered via face-to-face.

Assessments

Assessment elementComments% ILO*
(1- to 2-page group write-up) case study15 01, 05, 06
1-hour mid-semester exam25 01, 02, 03, 04
one 3-hour final examinationHurdle requirement: Students must achieve at least 50% in the final examination as well as a minimum of 50% in the sum of the marks for all assessment tasks to pass the subject50 01, 02, 03, 04, 05, 06
tutorial homework10 01, 02, 03, 04, 05, 06

Vietnam, 2016, Week 40-47, Day

Overview

Online enrolmentYes

Maximum enrolment sizeN/A

Enrolment information

Subject Instance Co-ordinatorTu Nguyen

Class requirements

Lecture Week: 40 - 47
Two 4.0 hours lecture per week on any day including weekend during the day from week 40 to week 47 and delivered via face-to-face.

Assessments

Assessment elementComments% ILO*
(1- to 2-page group write-up) case study15 01, 05, 06
1-hour mid-semester exam25 01, 02, 03, 04
one 3-hour final examinationHurdle requirement: Students must achieve at least 50% in the final examination as well as a minimum of 50% in the sum of the marks for all assessment tasks to pass the subject50 01, 02, 03, 04, 05, 06
tutorial homework10 01, 02, 03, 04, 05, 06