International Finance

BMAN30060 International Finance 20 Full year Undergraduate Level 3 Ian Garrett Unit coordinator Sungjun Cho Unit coordinator 1 FHEQ level (Framework for Higher Education Qualifications) ' Last part of a Bachelors ' European Credit Transfer & Accumulation System Rating : 10.0 As corporations and institutions conduct their businesses in an increasingly integrated world, the need to understand the behaviour of international financial markets becomes ever apparent. In the first semester this course focuses on the foreign exchange market and major approaches to analysing the determination of exchange rates and international asset prices. We also explore the links between exchange rates, macroeconomic activity and a country’s international competitiveness via PPP. To provide the requisite foundations, the course begins with a critical appraisal of the institutional features of foreign exchange markets. The international parity conditions are then considered in some detail. Subsequent to an analysis of purchasing power parity/real exchange rates, and real interest rate parity, the semester concludes with a critical analysis of international portfolio diversification,  international equity asset pricing models and emperical evidence on CIP and UIP. In the second semester, the course unit focuses on the problems faced by firms operating within the international financial environment. Emphasis will be placed on the impact of foreign exchange rate fluctuations on assets and liabilities denominated in foreign currencies, and on theoretical and empirical models of exposure measurement. The importance of international pricing, inflation risk, market efficiency and country risk in terms of their implications for managing and hedging financial risk will also be considered. The process and nature of international capital budgeting and financial decision making will also be studied. As corporations and institutions conduct their businesses in an increasingly integrated world, the need to understand the behaviour of international financial markets becomes ever apparent. In the first semester this course focuses on the foreign exchange market and major approaches to analysing the determination of exchange rates and international asset prices. We also explore the links between exchange rates, macroeconomic activity and a country’s international competitiveness via PPP. To provide the requisite foundations, the course begins with a critical appraisal of the institutional features of foreign exchange markets. The international parity conditions are then considered in some detail. Subsequent to an analysis of purchasing power parity/real exchange rates, and real interest rate parity, the semester concludes with a critical analysis of international portfolio diversification, international equity asset pricing models and emperical evidence on CIP and UIP. In the second semester, the course unit focuses on the problems faced by firms operating within the international financial environment. Emphasis will be placed on the impact of foreign exchange rate fluctuations on assets and liabilities denominated in foreign currencies, and on theoretical and empirical models of exposure measurement. The importance of international pricing, inflation risk, market efficiency and country risk in terms of their implications for managing and hedging financial risk will also be considered. The process and nature of international capital budgeting and financial decision making will also be studied. Familiarise students with: •    The institutional structure, the nature of the trading procedures, and trading activity in foreign exchange (FOREX) markets. •    The international parity conditions: purchasing power parity, covered and uncovered interest rate parity, and real interest parity. •    Issues relating to the efficiency of foreign exchange markets and the forward bias puzzle. •    The pricing of international financial assets and their role in financingand investment decisions. •    The financial management problems faced by firms that operate within the international financial environment. •    The theoretical models of exposure measurement. •    The importance of international pricing strategy, inflation risk, market efficiency and country risk in terms of their implications for managing and hedging financial risk. •    International asset pricing and portfolio diversification. By the end of the course students should have: •    acquired a practical understanding of the relationship between exchange rates and macroeconomic activity, and a country’s competitiveness in international markets via PPP; •    acquired a practical understanding of the operation of the spot and forward foreign exchange (forex) markets; •    acquired an appreciation of the importance of the international parity conditions; •    a strong theoretical and conceptual understanding of the financial and investment problems facing firms that operate in the international global environment and the financial tools that can be used to minimize these problems; •    a practical understanding of how firms manage the problems associated with foreign exchange exposure and the extent to which corporate hedging impacts on the firm’s value.Successful acquisition of these learning outcomes will enhance subject area knowledge and understanding, providing the high-level technical, critical and analytical capabilities required for employment in the financial sector. 44 hours of lectures (22 hours per semester, including the revision lecture). Full details will be provided in the course outline at the start of the course. Total study hours: 200 hours split between lectures, classes, self study and preparation for classes, coursework and examinations.Informal Contact Methods 1. Office Hours 2. Online Learning Activities (discussions, formative assessment questions) 3. Other: Formative Assessment feedback. 0 Other 100% Semester 1: Examination (50%) Semester 2: Examination (50%) For semester 1 only exchange students admitted via the Alliance Manchester Business School International Office take this course as BMAN30891. Exchange Students will take the same Semester 1 Exam as students enrolled on the Full year BMAN30060.     • Informal advice and discussion during a lecture or scheduled office hours. Revision advice scheduled during the final lecture.• Responses to student emails and questions from a member of staff, including feedback provided to a group via an online discussion forum.• Written and/or verbal comments on assessed coursework.• Generic feedback posted on Blackboard regarding overall examination performance.• Formative assessment set regularly with feedback provided on Blackboard. BMAN23000 Foundations of Finance A Pre-Requisite Compulsory BMAN23000B Foundations of Finance B Pre-Requisite Compulsory BMAN23000(A) or BMAN23000(B) is a pre-requisite of BMAN 30060.Pre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme. N Bekaert, G., and Hodrick, R., (2017), International Financial Management, 3rd edition, Cambridge.Eun, C., and Resnick, B., (2017), International Financial Management, 8th edition, McGraw-Hill.     Assessment written exam 3 Lectures 44 0 153 Length of course: 23 weeksPre-requisite course units have to be passed by 40% or above at the first attempt unless a higher percentage is indicated within this course outline. If the pre-requisite unit is defined as a compulsory course unit within your programme of study (Maths with Finance, IBFE, Accounting, BA Econ pathways for example) then progression onto the dependent unit is permitted as long as you have gained the appropriate amount of credit to progress on to the following year of your registered undergraduate programme. Pre-requisites: BMAN23000(A) or (B) Foundations of Finance Co-requisites: None A background in Economics to intermediate (2nd year level) is strongly advised, but not required, prior to taking this course. Dependent course units: NoneProgramme Restrictions: There are no programme restrictions for this course providing the pre-requisites listed below are met.BMAN30060 is available to study abroad and exchange students admitted through the University of Manchester International Programmes Office who will be studying for a full academic year.  For academic year 2024/25Updated: March 2024