Macroeconomics (with International Finance)
Etablissement : Faculté de Gestion, Economie & Sciences Masters
Langue : Anglais
Formation(s) dans laquelle/lesquelles le cours apparait :
- Aucune formation en lien avec ce cours.
Période : S2
English speaking, basics of economics/finance.
The aims of the course include:
Providing an overview of the international monetary system, foreign exchange market, international parity conditions and foreign exchange exposure.
The objective is to provide a framework for foreign exchange rate determination and its impact on multinational firms.
LEARNING OUTCOMES- At the end of the course, students will:
- have a comprehensive understanding of the structure and functions of the international monetary system (IMS) and foreign exchange (FX) market.
- have an in-depth understanding of international parity conditions and foreign exchange rate determination.
- have an overview of the main instruments that could be used to hedge foreign exchange exposure.
Chapter I: International Finance
- The International Monetary Institutions
- The Balance Of Payment (BOP)
- Evolution of IMS
- The Triffin Paradox
Chapter II: The Foreign Exchange Market
- Key features
- Currency Pairs and quotes
- Bid & Ask spread
- Cross currency rate
Chapter III: International Parity Relationship
- Interest Rate Parity
- Absolute Purchasing Power Parity (PPP)
- Relative PPP
- International Fisher Effect
- Forward Expectation Parity
- Uncovered Interest Rate Arbitrage
Chapter IV: Forex Risk Hedging
- Interest Rate Swap
- Currency Swaps
- Risk of using Swap
- Different Types Of Options (Call vs. Put; American vs. European)
- Currency Options Markets
- Basic Option-Pricing Relationships
Chapter V: Management of FX Exposure
- Define Currency Exposure and Motivation Why Hedge FX Risk
- Three Types of FX Exposure
- Manage transaction exposure internally
- Choice of the invoice currency
- Lead/lag strategy
- Exposure netting
- Risk sharing
