Overview of course contents and structure for International Finance 2

• Relevance of hedging foreign exchange risk (core reading: Sercu, chapter 12)
• Measuring and managing currency exposure (core reading: Sercu, chapter 13)
• International cost of capital (core reading: Sercu, chapter 19)
• International capital budgeting (core reading: Sercu, chapter 21)

Learning objectives of the specialization `International Finance'

The aim of this course is to introduce students to the international dimension of 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. Upon completion of this course, students will have an understanding about

(i) the mechanics of currency markets and its most important instruments,
(ii) how these instruments can be used to measure and manage risks associated with international nancial management, and
(iii) how to set the cost of capital and adjust standard capital budgeting for international projects.

The course International Finance 1 covers (i) and some aspects of (ii). The course International Finance 2 continues from (ii) and covers (iii) in detail.

Students shall attend at least 80% of the lectures.

Lectures with exercises. The course will be online.

Textbook and teaching materials
The reference textbook for both courses is International Finance: Theory into Practice by Piet Sercu (Princeton University Press, 2009). You can find more information about and resources related to the book at http://press.princeton.edu/titles/8907.html.

On the website, you also find a solutions manual to the end-of-chapter questions in the book. While these questions are very useful for practicing, be aware that there are a few mistakes in this solutions manual; in most cases these are obvious, e.g. currencies in the exercise text and in the solution text do not match.

The lectures and exercise classes mostly follow the structure of this book but teaching materials will also include additional readings such as, e.g., case studies, academic articles, reports from policy makers or nancial institutions.
All other materials used in class and relevant for the exam will be made available on learn.wu.ac.at.

Students' performance will be as follows:

• We will have a total of three home assignments. Two will be summaries of case studies, each worth 15% of the grade. One home assignments will be exercises covering the contents of the lectures and will be worth 30% of the grade. These assignments have to be uploaded to learn before the given due date. For the assignment with the exercises, I will randomly pick a student who has indicated that she/he has solved the exercise to present her/his solution in front of class. Details of the procedures will be discussed in our first class.
• Final exam, worth 40% of the grade. Details to be discussed.
• The grade will be determined as illustrated below.

• Completion of the assessment phase

• Successful completion of 8 courses within the subject "Grundlagen Finanzwirtschaft, Rechnungswesen und Steuern" ("Basics in Finance, Accounting and Taxes")

• Allocation to the elective

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