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JOHN CABOT UNIVERSITY

COURSE CODE: "FIN 330-2"
COURSE NAME: "International Finance"
SEMESTER & YEAR: Spring 2014
SYLLABUS

INSTRUCTOR: Stefano Di Colli
EMAIL: [email protected]
HOURS: MW 6:00 PM 7:15 PM
TOTAL NO. OF CONTACT HOURS: 45
CREDITS:
PREREQUISITES: Prerequisite: FIN 301
OFFICE HOURS: at the end of each class and by appointment

COURSE DESCRIPTION:

The aim of this course is to study the role that international trade and investment, currency movements, derivative instruments, hedging strategies, international financial markets, and international agreements and institutions play in the management of multinational corporations. The focus will be on the markets for spot exchange, currency forwards, options, swaps, international bonds, international equities and commodities. For each of these markets, students will study the valuation of instruments traded in these markets and, through cases, the application of these instruments to the following corporate decisions: (i) managing exposure to exchange rates and country risk, (ii) financing in international capital markets, and (iii) international capital budgeting in the presence of multiple currencies, international tax regulations, and sovereign risk.

SUMMARY OF COURSE CONTENT:

1) Introduction to the financial system
2) Basic principles of finance: a review
3) Financial institutions, central banking and monetary policy
4) Overview of the most important financial markets: 
    4.1) Money markets
    4.2) Bond markets
    4.3) Stock exchange markets 
    4.4) Foreign exchange markets
5) The international financial system: functions and risks 
6) How to manage international financial risks: derivatives products
  6.1) Derivatives markets and types of traders 
  6.2) Futures
        6.2.1) Mechanics of futures markets
        6.2.2) Hedging strategies
        6.2.3) Forward and future prices
  6.3) Options
        6.3.1) Mechanics of options markets
        6.3.2) Options pay-off
        6.3.3) Trading strategies
        6.3.4) Binomial Trees
  6.4) Swaps
7) Financial crises

LEARNING OUTCOMES:

At the conclusion of this course students will:

  1. Develop knowledge of and ability to use the language of International Finance.
  2. Develop knowledge of the institutions of international finance and use that knowledge to predict and assess the impacts and responses of governments, markets, and firms to various international situations.
  3. Demonstrate knowledge and ability to use various theories to forecast currency future values and assess the pressure currency values are under.
  4. Understand the linkages between countries and the causes of international flow of funds.
  5. Demonstrate their ability to analyze and evaluate both international financial borrowing and investment opportunities.
  6. Dissect the basic factors that affect currency values and the nature of central bank intervention in foreign exchange markets.
  7. Understand why firms and nations seeks out and benefit form international business activities.
TEXTBOOK:
Book TitleAuthorPublisherISBN numberLibrary Call NumberCommentsFormatLocal BookstoreOnline Purchase
Options, Futures, and Other Derivatives, 8/E (Book 2)John HullPrentice Hall0132164949     
Financial Markets and Institutions, 8/E (Book 1)Frederic S Mishkin and Stanley EakinsPrentice Hall 013342362X     
REQUIRED RESERVED READING:
NONE

RECOMMENDED RESERVED READING:
Book TitleAuthorPublisherISBN numberLibrary Call NumberComments
International Finance: Theory into PracticePiet SercuPrinceton University Press9781400833122  
GRADING POLICY
-ASSESSMENT METHODS:
AssignmentGuidelinesWeight
Final ExamThis exam will consist of essay-type questions, graphic analysis, as well as some problems that require quantitative analysis, in which the student is asked to explain and/or solve with accuracy and clarity issues of a particular topic covered by the syllabus.60%
Class participationThe class participation grade will reflect the students' attention in attending the class, her or his ability to follow the flow of class discussion, and her or his interventions during the class. Unjustified absences will negatively affect the class participation grade.10%
Mid Term examsTwo mid-term exams (15% each) will consist of essay-type questions, graphic analysis, as well as some problems that require quantitative analysis, in which the student is asked to explain and/or solve with accuracy and clarity issues of a particular topic covered by the syllabus30%

-ASSESSMENT CRITERIA:
AWork of this quality directly addresses the question or problem raised and provides a coherent argument displaying an extensive knowledge of relevant information or content. This type of work demonstrates the ability to critically evaluate concepts and theory and has an element of novelty and originality. There is clear evidence of a significant amount of reading beyond that required for the course
BThis is highly competent level of performance and directly addresses the question or problem raised.There is a demonstration of some ability to critically evaluatetheory and concepts and relate them to practice. Discussions reflect the student’s own arguments and are not simply a repetition of standard lecture andreference material. The work does not suffer from any major errors or omissions and provides evidence of reading beyond the required assignments.
CThis is an acceptable level of performance and provides answers that are clear but limited, reflecting the information offered in the lectures and reference readings.
DThis level of performances demonstrates that the student lacks a coherent grasp of the material.Important information is omitted and irrelevant points included.In effect, the student has barely done enough to persuade the instructor that s/he should not fail.
FThis work fails to show any knowledge or understanding of the issues raised in the question. Most of the material in the answer is irrelevant.

-ATTENDANCE REQUIREMENTS:
The University attendance policy is described in the catalogue. Persistent absence or tardiness usually precludes satisfactory performance in the course, and jeopardizes that part of the grade that is based on class presentation and participation. Students are expected to arrive to class on time; students are responsible for all material covered by the syllabus and/or discussed in class, whether or not they are actually present in class. Please refer to the university catalogue for the attendance and absence policy.
ACADEMIC HONESTY
As stated in the university catalog, any student who commits an act of academic dishonesty will receive a failing grade on the work in which the dishonesty occurred. In addition, acts of academic dishonesty, irrespective of the weight of the assignment, may result in the student receiving a failing grade in the course. Instances of academic dishonesty will be reported to the Dean of Academic Affairs. A student who is reported twice for academic dishonesty is subject to summary dismissal from the University. In such a case, the Academic Council will then make a recommendation to the President, who will make the final decision.
STUDENTS WITH LEARNING OR OTHER DISABILITIES
John Cabot University does not discriminate on the basis of disability or handicap. Students with approved accommodations must inform their professors at the beginning of the term. Please see the website for the complete policy.

SCHEDULE

  Session Focus Reading Assignments Exam Dates
Week 1 Introduction to the course and to the financial system Book 1,  Chapters 1-2
Week 2 Basic principles of finance: a review Book 1,  Chapters 3-5; Book 2 Chapter 4
Week 3 Financial institutions, central banking and monetary policy / Money markets Book 1,  Chapters 7&9-10
Week 4 Bond markets and stock exchange markets Book 1,  Chapters 12-13
Week 5 Foreign exchange markets and the int. financial system Book 1,  Chapters 14-15
Week 6 Introduction to derivative markets and Futures (I) Book 2, Chapters 1-2
Week 7 Futures (II) Book 2, Chapters 3&5-6
Week 8 Review and Mid Term Exam (I)  - 03/05/2014
Week 9 Options (I) Book 2, Chapter 9
Week 10 Sping break -
Week 11 Options (II) Book 2, Chapter 11
Week 12 Options (III) Book 2, Chapter 12
Week 13 Review and Mid Term Exam (II)  - 04/16/2014
Week 14 Swaps Book 2, Chapter 7
Week 15 Financial Crises Book 1, Chapter 8; Book 2, Chapter 8