Unit 1018: International Finance

1. Overview of International Finance

• Definition and scope of international finance
• Importance of global financial markets
• Exchange rates: concepts and determinants
• Role of multinational corporations in the global economy

2. Foreign Exchange Markets

• Structure and participants in foreign exchange markets
• Spot exchange rates and transactions
• Forward exchange rates and contracts
• Currency trading mechanisms
• Impact of exchange rate fluctuations on international trade and investment

3. Balance of Payments

• Definition and purpose of the balance of payments (BOP)
• Components of BOP:
  • Current account (trade balance, services, income, current transfers)
  • Capital account
  • Financial account
• Interpreting BOP data and its implications for economic health

4. International Monetary System

• Historical overview of international monetary systems:
  • Gold standard
  • Bretton Woods system
  • Current floating exchange rate system
• Comparison and implications for global financial stability

5. Foreign Direct Investment (FDI)

• Definition and types of FDI
• Motives behind FDI: market seeking, resource seeking, efficiency seeking
• Benefits of FDI to host countries
• Challenges and risks associated with FDI
• Impact of FDI on domestic industries and economic development

6. International Financial Institutions

• Overview of major institutions:
  • International Monetary Fund (IMF)
  • World Bank
  • Regional development banks (e.g., Asian Development Bank, African Development Bank)
• Roles and functions in promoting financial stability and development
• Conditionality and policy advice

7. Currency Risk Management

• Types of currency risks (transaction, translation, economic)
• Hedging techniques:
  • Forward contracts
  • Futures
  • Options and swaps
• Importance of risk management policies in international business

8. Sovereign Debt and Financial Crises

• Causes of sovereign debt crises
• Economic and social consequences
• Case studies of past crises (e.g., Latin American debt crisis, Asian financial crisis)
• Role of international financial institutions in crisis management and resolution

9. Global Capital Markets

• Structure and participants of global capital markets
• Equity markets: international stock exchanges and cross-listings
• Bond markets: sovereign and corporate bonds
• Role of financial intermediaries and regulatory frameworks
• International capital flows and their effects on economies

10. Corporate Finance in a Global Context

• Financial decision-making by multinational corporations
• Managing cross-border investments and financing
• Currency exposure and capital budgeting
• Strategies to maximize shareholder value in a globalized economy