SFB12614 International Finance (Spring 2027)

Compulsory for students on

• the Bachelor Programme in Business Administration specializing in International Business
• the Bachelor Programme in Business Administration specializing in Economic Analysis

6th semester (spring) - Full-time students

8th semester (spring) - Part-time students

This course is built around three central questions: 'How does the system of international finance function?' ' What are the specific instruments that, for better or for worse, are used by the participants in international financial markets for the purpose of hedging against risk, and for the purpose of embracing risk through speculation?', and 'How could things go so wrong to produce a financial crisis that has led to world recession?'

Topics are:

• The Foreign Exchange Market
• International Parity Conditions
• The International Monetary System and Exchange Rate Regimes
• Speculation, Hedging, and Foreign Currency Derivatives
• Forwards, Future, Option, and Swaps
• Exchange Rate Determination

This subject will enable the student to achieve the following learning outcomes.

Knowledge The student will have gained knowledge of:

• the functioning of the system of international finance both from the perspective of the international macro economy and from the perspective of a firm operating in international markets.
• wide spectrum of concepts, such as the idealized concept of 'purchasing power parity', the benefits and costs of hedging and speculating with derivatives and the effects portfolio diversification.
• understanding that risk cannot be eliminated - it can only be re-distributed to others.

Skills The student will have learned to:

• analyze and interpret key markets, institutions, processes and instruments of the global financial economy.
• understand the theoretical concepts, based on mathematical models, graphical representation and text- and data analysis.
• evaluate the benefits, costs and risks of globalization.

General competence The student will:

• have built a frame of reference for understanding and evaluating the functioning of the global financial markets, its opportunities, challenges and risks.
• be ready to use the above mentioned methods of analysis to arrive at answers to specific questions under the uncertainties presented by global financial conditions - be it in the pursuit of more advanced academic degrees, or be it in the student's future role as economist, entrepreneur, administrator, policy-maker or educator.

Students will participate in the following learning activities:

Lectures, seminars, group work, and group discussions and presentations.

A group written assignment will be assessed on an approved / not approved basis.

An 'approved' on the assignment is necessary to obtain permission to take the final exam.

Four hours individual written examination on campus Aids allowed:

• calculator with empty memory, incapable of symbolic computation or wireless communication
• mother tongue - English - mother tongue dictionary.

Grades: A-F.