Learning objectives
a) Knowledge and understanding of: the functioning of the foreign exchange market; the main problems related to the financial management of multinational firms; capital budgeting.
b) Ability to apply knowledge in order to: measure the exposure to foreign exchange risk; manage the transaction risk of international operations; assess investment projects.
c) Ability to integrate knowledge and handle complexity, and formulate judgements with incomplete or limited information in order to: choose instruments appropriate for managing the financial risks of multinational operations.
d) Students will have the ability to communicate their conclusions and the underpinning knowledge and rationale to financial operators as well as to non-specialist audiences using a proper technical language.
e) Since a problem solving approach will be adopted, together with the analysis of case studies, students will learn to study in a largely selfdirected and autonomous manner.
Prerequisites
Basic knowledge of financial mathematics.
Suggested reading: D. Luenberger, "Investment Science", Oxford University Press, 1998, Chapter 2 "The Basic Theory of Interest".
Basic knowledge of financial reports (balance sheet and income statement).
Course unit content
The aim of the course is to analyse the functions of a financial system in providing services to multinational firms.
The course focuses on the role of financial institutions and markets in providing financial services to multinational firms. The international financial environment is examined, with a particular focus on the monetary policy along with foreign exchange markets. The way multinational
firms finance international trade, consolidate and manage their financial flows, measure and manage exposures to currency risks, and make their capital budgeting decisions are analysed.
Full programme
- Meaning and determinants of interest rates.
- Sustainable finance.
- Capital budgeting and investment appraisal.
- Foreign exchange markets.
- Managing the currency risk: transaction exposure.
- Financing the firm’s international trade.
- Balance of payments.
- Monetary policy of the ECB.
Bibliography
The reading material (textbook and readings) will be indicated during the course and on Elly.
Teaching methods
Lectures, exercises, and analysis of specific cases based on newspaper articles.
Assessment methods and criteria
STANDARD EXAM
Written exam. Knowledge and understanding, the ability to study in a largely autonomous manner, the ability to formulate judgements with
incomplete data, and the ability to communicate conclusions will be assessed through 2 open-ended questions for up to 12 marks and 2 true or false questions (with argumentation) for up to 8 marks.
The application of knowledge and understanding through problem solving abilities in new or unfamiliar environments will be assessed through 2 or 3 exercises, for up to 10 marks.
During the exam devices such as smartphones, smartwatches, tablets, etc. are strictly forbidden.
The final grade is published on Esse3.
The final exam might be replaced by partial exams during the course. Dates and structure of possible partial exams will be communicated during the first weeks and on Elly.
ONLINE EXAM (if necessary due to the pandemic)
The exam structure and the marking scheme will be communicated as soon as possible during the course and on Elly.
Other information
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