Ethiopian Civil Service University

Department of Accounting & Finance

MSc. in Accounting & Finance
International Financial Management
Course Outline

Course Instructor: Elefachew Mossisa, (PhD)

Course description:
There is no such thing as a purely national economy in modern world. The international financial
environment has experienced major changes in the recent few decades. Many countries that were
closed to the rest of the world have undergone a transition toward free enterprise and
international integration. The global economy is becoming ever more closely integrated. Thus,
the course focuses on the international business environment and examines the major influencing
issues in conducting business such as the international economy and trade issues, legal and
political context differences, governmental actions, exchange rates and international currency
markets, international institutions like the world Trade Organization and the International
Monetary fund.

It also provides an assessment of why firms internationalize their operations, how they can
internationalize, and key areas such as direct foreign investment, multinational capital
budgeting, country risk analysis and multinational cost of capital. In addition, the course
covers topics such as international arbitrage and interest rate parity, forecasting exchange rates
and financing international trade.

Course objectives
At the end of the course, students will have
 Understood the rationale for business to expand beyond national borders
 Learned how the foreign exchange market works and exchange rate forecasting
techniques.
 Examined the role of international institutions and regional trade agreements.
 The ability to undertake multinational capital budgeting decisions
 Understood country risk analysis and multinational cost of capital and their impact on
multinational capital budgeting decisions
 Understood the different forms of international arbitrage, interest rate parity and
financing international trade

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Course Content
Chapter 1: Multinational Financial Management: An overview
 Madura J.(2017) International Financial Management. south-western College Publishing,
13th edition
1.1. Goal of the MNC
1.2. Theories of international business
1.3. International business methods
Chapter 2: International Flow of funds
2.1.Balance of Payments
2.2. International trade flows
2.3. Factors affecting international trade flows
2.4 International capital flows
2.5 Factors affecting international capital flows
2.6 Agencies that facilitate international flows

Chapter 3 : Exchange Rates: Determination and Behavior

 Madura J.(2017) International Financial Management. South-Western College
Publishing, 13th edition.

3.1 Measuring Exchange Rate Movements,

3.2 Exchange Rate Equilibrium
3.3 Factors That Influence Exchange Rates
3.4 Movements in Cross Exchange Rates
3.5 Capitalizing on Expected Exchange Rate Movements
3.6 Exchange Rate Systems
3.7 Interest rate parity
3.8 Purchasing power Parity
3.9 International Fisher Effect
Chapter 4: Exchange Rate Risk Management
 Madura J.(2017) International Financial Management. south-western College Publishing,
13th edition

4.1 Forecasting exchange rates

4.2 Measuring exposure to exchange rate fluctuations
4.3 Managing transaction exposure
4.4 Managing economic exposure and translation exposure

Chapter 5: Multinational Capital Budgeting and Country Risk Analysis

 Madura J.(2017) International Financial Management. south-western College Publishing,
13th edition
5.1. Factors to consider in multinational capital budgeting
5.2. Country risk analysis
5.3. Incorporating country risk in capital budgeting

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Chapter 6: Financing International Trade (4 Hrs)
 Madura J.(2017) International Financial Management. south-western College Publishing,
13th edition
6.1. Payment methods for international trade
6.2. Trade finance methods
6.3. Use of Letters of Credit (L/C)

Teaching/Learning Strategies:
The teaching methods will consist of a mix of self study, lectures, practical group exercises and
case analysis.
Assessment:
Case analysis 20%
Book Chapter Review 20%
Test 20%
Final Exam 40%
Total 100%

Cases Analysis
Students will be given a few practical cases at the beginning of the semester and each group
comprising of three to four students should read various reading materials pertinent to the case
and submit their written analysis report one week before the end of the semester.

Book Chapter Review - Group

Students should write chapter review report on some of the topics that are expected to be
addressed under this course. Each group should submit their work in hard copy and also present
it in class. The topics/chapters selected for this purpose include:
1. Multinational Capital Budgeting and Country Risk Analysis
2. Financing International Trade
3. Direct Foreign Investment

The Review must include the following:

1. Author: Discuss the author’s background, experience, qualifications to write this book, etc.
You may use on-line or library sources for information. Give appropriate credit to any sources
you use (in parentheses in the text).

2. Introduction: In the introduction summarize the topic of the chapter and tell how it relates to
this course. Also state the author’s primary point/conclusions in the chapter.

3. Main points: Explain the major points/issues and tell how the author supports each point—
what evidence, sources, etc. Write separate paragraphs for each main point or you can use
separate subheadings for each issue but describe the main points for each issue in brief.

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4. Your personal evaluation: What was most interesting—gave you new insights or perspective
on the topic? What did you learn from the chapter? Was the chapter well-written? Did the author
cover the topic as well as you expected? What questions did the chapter not answer? Are the
issues, situations, policies, etc. in this chapter still a concern in today’s world? How is the
chapter relevant to contemporary business?

5. Conclusion: Did the author accomplish his/her purpose? Would you recommend this piece to
another student of this course — why or why not?

Text book:
Madura J.(2017) International Financial Management. south-western College Publishing,
10th edition.
References:
1. Hill C. (2001) International Business, competing in the Global market place, Third
edition, McGraw Hill

2. Ball, Donald (2003), International Business, The challenge of Global Competition,

Pearson education.
3. Czinkota, ronkainen, Moffett, Marinova, Marinov (2009), International Business:
European edition.
4. Grant (2010), Contemporary strategy analysis and Cases: Text & Cases, 7th, edition.
5. Lane, Maznevski, Deetz, Distefano (2009), International Management Behavior: Leading
with a Global Mindset, 13th 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.