The aim of this course is to introduce students into international financial management. Firms acquiring and investing funds not only in the domestic market but also beyond borders encounter a broader set of opportunities but also face additional risks. The course focuses on the main tools that international finance managers use to analyze investment across countries or to make the best business decisions.

The main topics covered in this course are:

1. Spot Markets for Foreign Currency

2. Forward Markets for Foreign Currency

3. Currency Options

4. Relevance of Hedging Foreign Exchange Risk

5. Measuring Exposure to Exchange Rates

6. Cost of International Capital

7. International Capital Budgeting

On successful completion of this course, students will have acquired an understanding about:
i) characteristics and mechanisms of currency markets and the most important financial instruments operating in these markets,
ii) how these instruments can be used to measure and manage foreign exchange risk,
iii) how to set the cost of capital and adjust domestic capital budgeting for international projects.

Attendance is mandatory (80%).

The teaching method is an interactive style. We will have some parts with frontal lecture but many parts with interactive participation of students via examples and exercises.

The evaluation is based on:

1. Assignments: 30%

2. Exercises: 30%

3. Final Exam: 40%

grades: 1: at least 90%, 2: at least 80%, 3: at least 70%, 4: at least 60%, 5: less than 60%

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hannelore.desilva@wu.ac.at