5605 International Financial Management
Daniel Hill, MSc (WU)
Contact details
Weekly hours
Language of instruction
02/16/23 to 02/28/23
Registration via LPIS
Notes to the course
Subject(s) Bachelor Programs
Day Date Time Room
Tuesday 05/09/23 09:00 AM - 12:00 PM TC.5.18
Tuesday 05/16/23 09:00 AM - 12:00 PM TC.5.18
Tuesday 05/23/23 09:00 AM - 12:00 PM TC.5.18
Tuesday 05/30/23 09:00 AM - 12:00 PM TC.5.18
Tuesday 06/06/23 09:00 AM - 12:00 PM TC.5.18
Tuesday 06/13/23 09:00 AM - 12:00 PM TC.5.18
Thursday 06/15/23 09:00 AM - 11:00 AM TC.5.18
Tuesday 06/20/23 09:00 AM - 11:30 AM TC.3.03
  • Function and structure of the foreign exchange (FX) market
  • Spot and forward FX market
  • International parity relationships (interest rate parity, purchasing power parity, Fisher effects)
  • Exchange rate determination
  • Futures contacts and currency futures relationships
  • Currency options markets
  • International portfolio investment
  • International correlation structure and risk diversification
  • Optimal international portfolio selection & exchange rate effects
  • Sharpe Ratio; Beta
  • International capital structure and the cost of capital (CAPM in international context)
  • Segmented vs. integrated markets
  • International capital budgeting
  • Adjusted Present Value Model (APV)
  • Capital budgeting analysis
Learning outcomes

The students develop an understanding of the fundamental concepts in international finance and financial management (IFM). Concepts covered include the foreign exchange market, including its organization and operation, international parity relationships, as well as the spot, forward, and future markets for foreign exchange market. Additionally, international capital structures and capital budgeting in international terms will be discussed. At the end of the course, the student is able to convert the different currencies, decide on international investments and account for the time value of money.

Attendance requirements

According to the examination regulations, full student attendance is required for a PI. Students are committed to attend all attendance classes in order to pass the course. No information about the absence is necessary. If there is an absence in more than one lecture, a positive completion of the course is not possible.

Teaching/learning method(s)

Learning outcomes are achieved through an interactive lectures, classroom discussions, individual assignments, a case study or group assignment with a presentation, and a final exam focusing on applying key knowledge acquired throughout the semester.


Assignment 20%

Group Presentation 40% 

Final Exam 40%


Individual components map to grades as follows:

Percentage Grade
90,00% - 100,00% 1
80,00% - 89,99% 2
70,00% - 79,99% 3
60,00% - 69,99% 4
0,00% - 59,99% 5

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Recommended previous knowledge and skills

Basic knowledge of macroeconomics (i.e., market imperfections, economies of scale, etc.) and finance (i.e., time value of money, capital budgeting).

It is strongly recommended that student's familiarize themselves with at least the first 3 chapters of the recommended book; this material will be provided to you before the start of the course on LEARN.

Availability of lecturer(s)

For administrative matters, registration and waitlist questions, please contact

You can contact the lecturers by email at Office hours by appointment only.


Unit details
Unit Date Contents


Foundations of International Financial Management

  • What's special about International Finance?
  • Goals for International Financial Management
  • Globalization of the World Economy: Major Trends

International Monetary System

  • Evolution of International Monetary System
  • The Flexible Exchange Rate Regime
  • The Current Exchange Rate Arrangements
  • Fixed vs. Flexible Exchange Rate Regimes

The Market for Foreign Exchange

  • Function and Structure of the FX Market
  • Spot Market
  • Forward Market
  • Exchange Traded Currency Funds

International Parity Relationships and Forecasting Foreign Exchange Rates

  • Interest Rate Parity
  • Purchasing Power Parity
  • Fisher Effects
  • Forecasting Exchange Rates
  • Exchange Rate Determination



Future and Options on Foreign Exchange

  • Future Contracts and Currency Futures Relationships
  • Currency Options Markets
  • Currency Futures Options
  • American and European Option-Pricing Relationships

International Portfolio Investment

  • International Correlation Structure and Risk Diversification
  • Optimal International Portfolio Selection
  • Exchange Rate Effects

International Capital Structure and the Cost of Capital

- Cost of Capital in Segmented vs. Integrated Markets


International Capital Budgeting

  • Review of Domestic Capital Budgeting
  • Adjusted Present Value Model
  • Capital Budgeting from the Parent Firm's Perspective
  • Analysis


Last edited: 2022-10-19