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International finance course syllabus

Outline by Talib M. Awad, University of Jordan, Department of Economics, 2004

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This course examines international trade, finance and investment. Essential topics include: the international balance of payments, foreign exchange with emphasis on exchange rate determination, exchange risk, hedging, and interest arbitrage, international money and capital markets, international financing, and international portfolio management.

International Finance


Course Syllabus


Professor: Talib M. Awad

Phone Number: 8355000 ext.3378

E-mail: t.awad@uj.edu.jo

Office: Department of economics (Building B), Faculty of Humanities and Social

Sciences, The University of Jordan.

Office Hours: SMTWR 10:00 - 11:00am, & by appointment



COURSE DESCRIPTION:

This course in undergraduate international finance (1707449) examines the international aspects of trade, finance and investing. Essential topics include: the international balance of payments, foreign exchange with emphasis on exchange rate determination, exchange risk, hedging, and interest arbitrage, international money and capital markets, international financing, and international portfolio management.


Course Objectives

This course will provide an introduction to the functioning of international

money markets, the behavior of exchange rates and their derivatives and the

basic models used by economists to explain the behavior of exchange rates and

their derivatives, and the working of open macroeconomy.


Intended Learning Outcomes

Successful completion of this course should lead to the following learning outcomes:

a- Knowledge and understanding:


A1) Understand basic concepts international monetary system, foreign exchange markets, balance of payment and open macroeconomics.

A2) Demonstrate a knowledge of different foreign exchange rates definitions

A3) Understand basic concepts of double accounting and its relevance to balance of payments surplus/deficit

A4) Describe and understand the role of main international monetary and financial

institutions.

A5) Compare and contrast export/import financing


b- Intellectual skills:

B1) Prepare and present reports using critical thinking, trade data, and international finance theories

B2) Explain the workings and mechanisms of the international exchange markets

B3) Comprehend and develop skills of balance payments accounting.

B4) The ability to relate local financial developments to international developments

B5) The ability to use computers and internet to access basic international financial institutions and financial data sources

c- Subject specific skills:

C1) Apply international finance theories to relate balance of payments surplus/deficits to real economy

C2) Employ foreign exchange forecasting and use hedging methods to reduce

foreign exchange risks

C3) Assess the effectiveness of past and present international financial

institutions in relation to global trade, finance, and investments

C4) Compare and contrast how spot and futures foreign exchange

markets work and appreciate their importance in international trade and

international financial transactions

C5) Develop the skills required to relate domestic economy equilibrium/disequilibrium to domestic and foreign influences.


d- Transferable skills:

D1) Gather data for basic economic research from various sources, including the computer and other forms of electronic media, such as the Internet.

D2) Acquire English language command of international financial concepts and definitions.

D3) Acquire the ability of rational financial investment

D4) Demonstrate knowledge and skills necessary for contacting international financial parties

D5) Integrate information technology into global financial activities and policies

Teaching Methods

Duration: 16 weeks, 48 hours in total

Lectures: 28 hours, 3 per week (including two 1-hour midterm exams)

Case study: 8 hours

Tutorials: 6 hours

Applications: 6 hours

Laboratory: -

Teaching Methods

Methods

Lectures

Case study

Tutorials

Laboratory

Applications

Objectives learning outcomes

A1 A2 A3 A4 A5

B1 B2 B3 B4

C1 C2 C3 C5

D2

A3 A4

B1 B2 B5

C1 C2

D1 D3 D5

A4 A5

B1 B5

C4

D1

-

A4

B3 B5

C1 C2 C4

D1 D3 D4 D5

assessments

Exams +

Assignments

Exams +

Assignments

Project +

presentation

Project +

Assignments

Exams +

Assignments

COURSEBOOKS:

  1. Maurice Levi, International Finance, McGraw-Hill, Inc., 1988.

  2. Enders W., and H. Lapan. International Economics, Prentice Hall Inc., NJ, 1987.

  3. Talib Awad, International Trade: Theory and Policy, The University of Jordan, Amman, 1995.

COURSE OUTLINE:

Unit 1: International Monetary Arrangements (6 Hrs)

The Gold Standard

Bretton Woods Agreement

Flexible Exchange Rates

Other Exchange Rate Systems


Unit 2: Open Economy Macroeconomics (8 Hrs)

National Income and Expenditures: The IS Curve

Bond and Money Markets: The LM Curve

The Balance of Payments: The BP Curve

Policy Analysis Under Fixed Exchange Rates

Policy Analysis Under Floating Exchange Rates

Capital Mobility Assumptions

Fiscal and Monetary Policy Shocks

Exam #1


Unit 3: The Market For Foreign Exchange (8 Hrs)

The FOREIGN EXCHANGE Market

Composite Currencies

FOREIGN EXCHANGE Arbitrage

Goods Prices and Exchange Rates

The Forward Market

Hedging FOREIGN EXCHANGE Risk

Covered Interest Parity

Uncovered Interest Parity

Unit 4: Interest Rates, Yield Spreads and Derivative Securities (6 Hrs)

Interest Rates

Yield Spreads and the Term Structure

Hedging, Speculation and Derivatives

Common Derivatives


Unit 5: International Capital Markets (4 Hrs)

Portfolio Diversification

Eurocurrencies

Capital Market Integration


Exam #2

Unit 6: Theories of Exchange Rate Determination (10 Hrs)

The Elasticities Approach

J-Curve Effects

The Absorption Approach

The Monetary Approach To Exchange Rate Determination

Other approaches To Exchange Rate Determination


Exam #3 (Final): Cover all units with higher weights given to units not

covered in the previous exams.






POLICY

UJ Policies regarding class attendance, course pre-requisites, academic honesty, drop-add, grading, incompletes, and final exams will be observed as stated in the University of Jordan. You are responsible for all material discussed in class and assigned in the textbook. Missing class is strongly discouraged. Your professor is far less sympathetic to those who miss class regularly. If you miss class, you are responsible to get the notes from a classmate.


Communication & Interaction: You may contact me at my office during office hours at economic department (building B), leave a message at the department secretary office, or arrange for specific appointment. Please do not call me at home.


Exams: In addition to final exam, there are two exams, each worth 20% of your grade. In addition, 10 points will be allocated for homework, class interaction and attendance. The exams may be fully or partially of multiple choice questions. There are no make-up exams without proper and certified excuse. I hold the right to move students and/or sign the answer sheet during an exam, if I suspect you or your neighbor of academic dishonesty. Final Exam worth 50% of your grade. You must take the final exam for this course during the time stated in the Final Exam Schedule, which will be announced in advance. If you have three final exams officially to be taken on one day, you

must speak to me one week in advance, so that a solution is reached. No other

times will be offered to take the final exam.

Final Term Grade Calculation: Your performance in this class will be determined by your performance on the exams. Your final grade will be calculated by adding the points you have received, and then translated into letter grade according to a selected scale suitable to the average performance of the class.


Academic Misconduct: Any type of academic misconduct will result in (F). By

enrolling in this course, you agree with the UJ Policy on Academic Misconduct.


SUCCESSFUL STUDENT STRATEGIES:

1. Has excellent attendance.

2. Reads text before class.

3. Asks questions, when material is unclear.

4. Reviews notes, graphs and text after class.

5. Studies in advance of the next exam

6. Work text examples and exercises.

7. Learn from the experience of past exams.


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