TON DUC THANG UNIVERSITY
FACULTY OF FINANCE AND BANKING
HoChiMinh City, …………………….
UNDERGRADUATE DEGREE PROGRAM IN FINANCE AND BANKING
INTERNATIONAL FINANCE
1. Course Name: INTERNATIONAL FINANCE
2. Course Code: B02041
3. No. of credits: 3(3.0)
4. Degree level: Bachelor in Finance and Banking Code: 52340201
5. Time allocation:
- Theory: 45 teaching hours
- Practice : 0 teaching hours
- Self – study: 90 hours
6. Requirements:
- Prior - completion: English 2, Business Finance
7. Description:
This subject is designed for upper-division undergraduate students who have a good understanding
of basic economics, corporate finance, and asset valuation. It studies the foreign exchange markets
such as the balance of payments, the arbitrage, the purchasing power parity, the interest rate parity,
the foreign exchange derivative markets and the international financial market…etc. It also studies
how corporate make wealth – maximizing decisions. Besides that, this subject studies “hot” topics,
such as international finance crisis and the problem of sovereign debt…, which are affecting the
international finance.
8. Main objectives:
- Knowledge:
Providing a market-based understanding of exchange rates and shows how exchange rate volatility
affects corporate decision-making.
Providing a general understanding of market functioning. The course will not only develop the
institutional and quantitative details of markets, but also introduce a “financial” way of thinking
about costs and risks.
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- Skills: It is expected that students maintain a current awareness ofthe international finance events
from following daily events in selected newspapers and other periodicals and from financial market
reporting on television and recommended websites.
- Thinking:It is expected that students perceive the role and purpose of science, knowledge through
their studying and researching activities.
- Attitude and behavior:It is expected that students comply with the principles, ethics in the
scientific research.
9. Brief course content:
Chapter 1: Multinational Financial Management: An Overview
Chapter 2: International Flow of Funds (BOP)
Chapter 3: International Financial Markets
Chapter 4: Exchange Rate Determination
Chapter 5: Currency Derivatives
Chapter 6: International Arbitrage and Interest Rate Parity
Chapter 7: Relationships among Inflation, Interest Rates, and Exchange Rate
Chapter 8: Forecasting Exchange Rates
Chapter 9: Measuring Exposure to Exchange Rate Fluctuations
Chapter 10: Managing Transaction Exposure
Chapter 11: Managing Economic Exposure and Translation Exposure
10. Outcomes of the course:
Results
Understand:Student will be able to understand the main concepts and the implied
1 ideas of case studies in each chapter. They could draw the content mind map after
completing each chapter.
Remember: Student will be able remember the main concepts of the chapters and
2
important conclusions of all case studies.
Apply: Students could implement relevant theories to solve all the case studies in
each chapters individually as well group assignments and discussion. They can be
3 able to read and understand reports and papers about international finance. Finally,
students might explain the practical issues in international finance specifically and
economic issues in general.
4 Analyze: Students will be able to analyze how exchange rate volatility affects
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corporate decision-making and how corporates make wealth – maximizing
decisions. Besides that, students analyze some “hot” topics, such as international
finance crisis and the problem of sovereign debt…, which are affecting the
international finance.
Judge: Students will demonstrate their understandings of this course through
5 ongoing evaluation methods such as in class exercises, group assignments, midterm
examination and final reports.
6 Offer: none
11. Student’s task
The highest professional standards are expected of all students who study this course. The collective
class reputation and the value of the program’s experience hinges on this. This includes:
Being on-time and in your seat when class starts
Staying until the end of class
Being constructive to the learning environment
Being “present” in the class and focused on class material
Coming prepared to contribute to the class
Communication with the lecturer
Think about this class as though it was a job, and professionalism in class is a good discipline to
prepare you for the real world.
12. Teaching materials
Textbook:
[1]Jeff Madura (JM), [2008], 9th Edition, International Financial Management, Thomson South –
Western
Supplementary Readings& Lecture Slides:
[2]Cheol Eun and Bruce Resnick (ER),[2014], 7th Edition, International Financial Management, the
McGraw-Hill Companies
[3] Nguyễn Văn Tiến, [2014], Giáo trình Tài Chính Quốc Tế, NXB Thống Kê
Additional Readings
[4] Đinh Trọng Thịnh, [2006], Tài Chính Quốc Tế, NXB Tài Chính
[5] Dương Đăng Chinh, [2002], Tổng Quan Về Tài Chính Quốc Tế, NXB Thống Kê
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[6] All supplementary readings listed in the syllabus and lecture slides will be available on-line
Library. Lecture Slides (if any) will be available following the class. Lecture Slides are meant as an
outline to reduce the amount of rote copying of definitions and formulas but certainly not as a self-
contained lecture summary. Reading the lecture slides without attending class will most likely be of
little benefit.
13. Assessment scheme
On-going assessment:
- Process point 1: 10%
- Process point 2: 20%
- 01 mid-term test: 20%
- Final Exam: 50%
Completion Criteria: Final Result >=5
14. Scoring scale: 10 points
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15. Schedule (T: Theory, E: Exercise, P: Practice, D: Discuss)
Organizationof
Self-
Session Content teaching Outcomes Requirement Student’s task
study
T E P D
Chapter 1: Multinational 3 0 0 0 6 [1] - [3] Preparation
Financial Management: An Reading:
Overview [1] Chapter 1 (P2 - P21)
1.1. Managing the Multinational [3] Chapter 1 (P16 – P37)
Corporation (MNC) [4] Chapter 1 (P5 – P20)
- Facing Agency problems [5] Chapter 1 (P5 – P21)
- Management structure of an MNC At class: None
1.2. Why Firms Pursue After class
International Business Reading: Blades, Inc. Case: Decision
1
-Theory of Comparative Advantage to Expand Internationally, [1]
- Imperfect Markets Theory Chapter 1 (P19)
- Product Cycle Theory FYI: Should an MNC Reduce Its
1.3. How Firms Engage in EthicalStandards to Compete
International Business Internationally? [1] Chapter 1 (P16)
Practicing the questions and
problems at the end of [1] Chapter 1
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Chapter 2: International Flow of 2 0 0 1 6 [1] - [3] Preparation
Funds [1] Chapter 2 (P22 – P49)
2.1. Balance of Payments [3] Chapter 4 (P231 – P294)
- Current account At class
- Capital and Financial Accounts - Discussion of previous problems
2.2. International Trade Flows - Discussion of the Vietnamese BOP
2
2.3. International Trade Issues After class
Reading: Blades, Inc. Case:
Exposure to International Flow of
Funds, [1] Chapter 2 (P47)
Practicing the questions and
problems at the end of [1] Chapter 2
2.4.FactorsAffectingInternational 2 0 0 1 6 [1] - [3] Preparation
Trade Flows [1] Chapter 2 (P22 – P49)
- Impact of Inflation [3] Chapter 4 (P231 – P294)
- Impact of National Income At class
- Impact of Government Policies - Discussion of previous problems
3
- Impact of Exchange Rates After class
- Interaction of Factors Practicing the questions and
2.5. Correcting a Balance – of – problems at the end of [1] Chapter 2
Trade Deficit
2.6. International Capital Flows
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2.7. Agencies that Facilitate
International Flows
Chapter 3: International 2 0 0 1 6 [1] - [3] Preparation
Financial Markets [1] Chapter 3 (P50 – P59)
3.1. Foreign Exchange Market [3] Chapter 2 (P38 – P109)
- History of Foreign Exchange At class
- Foreign Exchange Transactions - Discussion of previous problems
- Foreign Exchange Quotations - Discussion of the Vietnamese
Foreign Exchange Market
4
After class
Reading: Blades, Inc. Case:
Decisions to Use International
Financial Markets, [1] Chapter 3
(P74)
Practicing the questions and
problems at the end of [1] Chapter 3
3.2. International Money Market 1.5 0 0 1.5 6 [1] - [3] Preparation
3.3. International Credit Market [1] Chapter 3 (P59 - P76)
3.4. International Bond Market [2] Chapter 2 (P27 – P61)
5
3.5. International Stock Market [3] Chapter 10 (P522 – P555)
3.6. How Financial Markets At class
Facilitate MNC Functions - Discussion of previous problems
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- Discussion of the Vietnamese
Money Market
- Discussion of the Vietnamese
Credit Market
- Discussion of the Vietnamese
Bond Market
- Discussion of the Vietnamese
Stock Market
After class
Practicing the questions and
problems at the end of [1] Chapter 3
Chapter 4: Exchange Rate 2 0 0 1 6 [1] - [3] Preparation
Determination [1] Chapter 4 (P85 – P102)
4.1. Measuring Exchange Rate [3] Chapter 8 (P446 – P472)
Movements At class
4.2. Exchange rate Equilibrium - Discussion of previous problems
- Demand for a Currency After class
6
- Supply of a Currency for Sale Reading: Blades, Inc. Case:
- Equilibrium Assessment of Future Exchange Rate
4.3. Factors that Influence Movements, [1] Chapter 4 (P101)
Exchange Rates FYI: How Can Persistently Weak
- Relative Inflation Rates Currencies Be Stabilized? [1]
Chapter 4 (P97)
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- Relative Interest Rates
- Relative Income Levels Practicing the questions and
- Government Controls problems at the end of [1] Chapter 4
- Expectations
- Interaction of Factors
4.4. Speculating on Anticipated
Exchange Rates
Chapter 5: Currency Derivatives 2 0.5 0 0.5 6 [1] - [3] Preparation
5.1. Forward Market [1] Chapter 5 (P103 – P108)
- How MNCs Use Forward [2] Chapter 14 (P348 – P365)
Contracts [3] Chapter 3 (P110 – P181)
- Non - Deliverable Forward At class
Contracts - Discussion of previous problems
5.2. Currency Swaps Market - Discussion of the Vietnamese
7
- The Swap Bank Currency Derivative Instruments
- Swap Market Quotations After class
- Interest Rate Swaps Reading: Blades, Inc. Case: Use of
- Currency Swaps Currency Derivative Instruments, [1]
Chapter 5 (P133)
Practicing the questions and
problems at the end of [1] Chapter 5
8 5.3. Currency Futures Market 2 0.5 0 0.5 6 [1] - [3] Preparation
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- Contract Specifications [1] Chapter 5 (P108 – P114)
- Trading Futures [3] Chapter 3 (P182 – P197)
- Comparison of Currency Futures At class
andForward Contracts - Discussion of previous problems
- Pricing Currency Futures - Discussion of the Vietnamese
- Credit risk of Currency Futures Currency Derivative Instruments
Contracts (cont.)
- Speculation with Currency After class
Futures FYI: Should Speculators Use
- How Firms Use Currency Futures Currency Futures or Options?, [1]
- Closing Out a Futures Position Chapter 5 (P126)
- Trading Platforms for Currency Practicing the questions and
Futures problems at the end of [1] Chapter 5
5.4. Currency Options Market 2 0.5 0 0.5 6 [1] - [3] Preparation
- Option Exchanges [1] Chapter 5 (P114 – P139)
- Over-the-Counter Market [3] Chapter 3 (P197 – P230)
- Currency Call Options At class
9 - Currency Put Options - Discussion of previous problems
- Contingency Graphs for Currency - Discussion of the Vietnamese
Options Currency Derivative Instruments
(cont.)
After class
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FYI: Should Speculators Use
Currency Futures or Options?, [1]
Chapter 5 (P126) (cont.)
Practicing the questions and
problems at the end of [1] Chapter 5
Chapter 6: International 2 0 0 1 6 [1] - [3] Preparation
Arbitrage and Interest Rate [1] Chapter 7 (P188 – P213)
Parity [3] Chapter 6 (P375 – P413)
6.1. International Arbitrage At class
- Locational Arbitrage - Discussion of previous problems
- Triangular Arbitrage After class
- Covered Interest Arbitrage Reading: Blades, Inc. Case:
- Comparison of Arbitrage Effects Assessment of Potential Arbitrage
10 Opportunities, [1] Chapter 7 (P211)
6.2. Interest Rate Parity (IRP)
- Derivation of IRP FYI: Does Arbitrage Destabilize
- Determining the Forward Foreign Exchange Markets?, [1]
Premium Chapter 7 (P208)
- Graphic Analysis of IRP Practicing the questions and
- How to Test Whether IRP Exists problems at the end of [1] Chapter 7
- Interpretation of IRP
- Does IRP Hold?
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Chapter 7: Relationships among 2 0 0 1 6 [1] - [3] Preparation
Inflation, Interest Rates, and [1] Chapter 8 (P214 – P241)
Exchange Rate [2] Chapter 7 (P414 – P445)
7.1. Purchasing Power Parity At class
(PPP) - Discussion of previous problems
- Interpretations of PPP After class
- Rationale behind PPP Theory Reading: Blades, Inc. Case:
- Derivation of PPP Assessment of Purchasing Power
- Using PPP to Estimate Exchange Parity, [1] Chapter 8 (P238)
11 FYI: Does PPP Eliminate Concerns
Rate Effects
- Graphic Analysis of PPP about Long-Term Exchange Rate
- Testing the PPP Theory Risk? [1] Chapter 8 (P233)
- Why PPP does not occur Practicing the questions and
- PPP in the long run problems at the end of [1] Chapter 8
7.2. International Fisher Effect
(IFE)
7.3. Comparison IRP, PPP, and
IFE theories
Chapter 8: Forecasting Exchange 2 0 0 1 6 [1] - [3] Preparation
Rates [1] Chapter 9 (P250 – P278)
12
8.1. Why Firms Forecast [2] Chapter 6 (P140 – P171)
Exchange Rates At class
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8.2. Forecasting Techniques - Discussion of previous problems
- Technical Forecasting After class
- Fundamental Forecasting Reading: Blades, Inc. Case:
- Market-Based Forecasting Forecasting Exchange Rates
- Mixed Forecasting Instruments, [1] Chapter 9 (P277)
8.3. Forecasting Services Practicing the questions and
8.4. Forecasting Error problems at the end of [1] Chapter 9.
Chapter 9: Measuring Exposure 2 0 0 1 6 [1] - [3] Preparation
to Exchange Rate Fluctuations [1] Chapter 10 (P280 – P306)
9.1. Is Exchange Rate Risk At class
Relevant? - Discussion of previous problems
- Purchasing Power Parity After class
Argument Reading: Blades, Inc. Case:
- The Investor Hedge Argument Assessment of Exchange Rate
13 - Currency Diversification Exposure, [1] Chapter 10 (P304)
Argument Practicing the questions and
- Stakeholder Diversification problems at the end of [1] Chapter 10
Argument
- Response from MNCs
9.2. Types of Exposure
9.3. Transaction Exposure
9.4. Economic Exposure
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9.5. Translation Exposure
Chapter 10: Managing 2 0 0 1 6 [1] - [3] Preparation
Transaction Exposure [1] Chapter 11 (P307 – P341)
10.1. Transaction Exposure [2] Chapter 8 (P198 – P224)
10.2. Hedging Exposure to At class
Payables - Discussion of previous problems
- Forward or Futures Hedge on After class
Payables Reading: Blades, Inc. Case:
- Money Market Hedge on Management of Transaction
Payables Exposure, [1] Chapter 11 (P338)
14 Practicing the questions and
- Call Option Hedge
10.3. Hedging Exposure to problems at the end of [1] Chapter
Receivables 11
10.4. Limitations of Hedging
10.5. Hedging Long – Term
Transaction
10.6. Alternative Hedging
Techniques
Chapter 11: Managing Economic 2 0 0 1 6 [1] - [3] Preparation
15 Exposure and Translation [1] Chapter 12 (P346 – P366)
Exposure [2] Chapter 9-10 (P225 – P261)
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11.1. Economic Exposure At class
11.2. Hedging Exposure to Fixed - Discussion of previous problems
Assets After class
11.3. Managing Translation Reading: Blades, Inc. Case:
Exposure Assessment of Economic Exposure,
- Use of Forward Contracts to [1] Chapter 12 (P363)
Hedge Translation Exposure Practicing the questions and
- Limitations of Hedging problems at the end of [1] Chapter
Translation Exposure 12
16. Description of Evaluation
Evaluation Scope of knowledge and skill of
Weight Duration Type of questions Number of questions
Category questions
In class (depend on Random Exercises+ Multiple Integration of studied knowledge and
Process point 1 10% At least 2 exercises
lecturer) choice questions skills of chapters from 1 to 4
In class (depend on At least 2 exercises or Integration of studied knowledge and
Process point 2 20% Presentation + Team Projects
lecturer) small speech skills of chapters from 4 to 11
Integration of studied knowledge and
Mid-term test 20% 30 - 45 minutes Multiple choice questions At least 30 questions
skills of chapters from 1 to 4
At least 30 questions Integration of studied knowledge and
Multiple choice questions +
Final exam 50% 60 - 75 minutes and one or more skills of chapters from 1 to 11
Exercises
exercises
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Course Designer Dean of Faculty
Bùi Thị Phương Thảo Hoàng Cẩm Trang
Reviewer Head of Undergraduate Studies Department
Nguyễn Gia Đường Vũ Quảng Hà
Head of Division Chair of Academic Committee
President
Lê Bảo Thy Prof. Dr. LÊ VINH DANH
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