ACF 713: International Business Finance

Credit Hours: 2
Contact Hours: 3
Prerequisite Course: ACFN 624

COURSE DESCRIPTION:
This course is designed to help students develop basic financial management tools necessary for
evaluation and analysing international financial markets. As an increasingly large number of
corporations, multinational institutions, and countries enter the international financial markets for
their financing, investment, hedging, etc., the globalization of financial innovations keeps
creating new instruments. Thus it becomes important for corporate managers and investors
properly applying these tools in international context to gain a control over their cash flows and
returns. Though out the course strategic and financial issues of multinational corporations, risk
management and regulatory environment will be emphasised.
The focus of this course is on the international financing and investment decisions of the firms
and the international financial environment that impinges on them. The theory and techniques of
international financing within the context of different currencies, changing exchange rates and
the barriers to capital flows will be covered. Topics covered include: international capital
markets, foreign exchange markets, arbitrage and parity condition, exchange rate forecasting,
government intervention, target zones, currency crisis, foreign exchange rate explores and
hedging: currency derivatives, financial structure and cost of capital, international capital
budgeting.
COURSE OBJECTIVE
Cross border trade and investment have continued to increase. Yet differences in economic,
political and socio-cultural environments around the world challenge business with opportunities
and risks. As new communication technologies and global migration are becoming more
prominent than ever. To help students understand the intricacy of the global economy,
Learning objectives of this course are:
 To understand the current important trade and investment trends.

 To develop the ability to comprehend international economic and financial issues.

  To understand the role of cultural differences that affect international businesses.

 To learn how the foreign exchange market works and to understand the role of the global
monetary system.

 To examine the role of international institutions and regional trade agreements.

Teaching/Learning Methods and strategies:

This course is designed to combine lectures with in- class group exercises, case analysis, and
case discussions. Students will learn how to react to situations that multinational firms face in
their international operations. It specifically uses, lecture classes, assigned exercise, case
analysis, preparation and presentation of reports require during critical surveys of empirical
literature/article review, solution of assigned problems, developing the use of concepts and
models, presentation of group practical exercises.
Course contents
Chapter 1: Globalization
1.1 What is Globalization?
1.2 Drivers of globalization
1.3 The Changing demographics of the global economy
1.4 The globalization debate: prosperity or impoverishment?
Chapter 2: International Trade: Theory and Political Economy
2.1 An Overview of the trade theories
2.2 Trade Theories: mercantilism, absolute advantage comparative advantage, Huckster-Ohlin
theory, The Product life cycle theory, The new trade theory, Porter's national competitive
advantage.
2.3 The political economy of International trade: Instruments of trade policy: tariff and non-tariff
barriers, political and economic reasons for government intervention in free trade, development
of world trading system: GAAT and WTO
Chapter 3: Foreign Direct Investment: Theory and political economy
3.1 Foreign Direct investment in the world economy: growth and direction
3.2 Horizontal and Vertical Foreign Direct Investment
3.3 Political Ideology and FDI
3.4 The benefit and costs of FDI in host and home countries
3.5 Government policy instruments and FDI.
Chapter 4: Regional Economic Integration
4.1 Levels of Economic integration: free trade area, Customs union, Common Market, Economic
union, political union
4.2 The case for and against regional integration
4.3 Regional Economic Integration in Europe, in Americas, Asia
Chapter 5: The Balance Payment
5.1 Balance of Payment Accounts: The current account, the capital account, statistical
discrepancy, official reserve account
5.2 The balance of Payment identify
5.3 Balance of payment trends in major countries
Chapter 6: The Foreign Exchange Market
6.1 The Functions and nature of the foreign exchange market
6.2 Economic theories of exchange rate determination: Purchasing power Parity, International
Fisher Effect, investor’s psychology and bandwagon effects
6.3 Exchange rate forecasting: the efficient and inefficient market schools
6.4 Currency convertibility and counter trade.
Chapter 7: The International Monetary System
7.1 The Gold Standard, The Breton Woods System and, the Floating Exchange rate regime
7.2 The case for and against fixed versus floating exchanges rates
7.3 Exchange rate regimes in Practice: Pegged system and currency boards
7.4 Recent t Activities and the future of IMF
Chapter 8: The Global Capital Market
8.1 Benefits and Growth of the Global Capital Market
8.2 The Eurocurrency market, the Global Bond Market, and the Global Equity Market
8.3 Foreign Exchange Risk and the Cost of Capital.
Assessment:
Case study reports/Article Review/ 30%
Midterm (Quizzes) 25%
Final Exam 45%
TOTAL 100%
References:
1. Ball, Donald (2003), International Business, The challenge of Global Competition, Pearson
education.

2. Czinkota, ronkainen, Moffett, Marinova, Marinov (2009), International Business: European

edition.

3. Grant (2010), Contemporary strategy analysis and Cases: Text & Cases, 7th, edition.

4. Lane, Maznevski, Deetz, Distefano (2009), International Management Behavior: Leading

with a Global Mindset, 6th Edition.

5. Lane, Maznevski, Deetz, distefano (2009), International Management Behavior: Leading

with a Global Mindset, 6th edition.

6. McAuley (2001), International Marketing consuming globally. Thinking Locally.

7. Mead, Andrews (2009), International Management, 4th Edition.

8. Phatak, Arvind (2004), International dimensions of Management, south-western College

Publishing.

9. Ricks (2006), Blunders in International Business, 4th Edition.

10. Storehouse, Campbell, Ham ill, Purdie (2008), Global and Transnational Business: strategy
and management, 2nd edition.