Foreign Exchange Management

Curriculum Guideline

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Course
FINC 4405
Discontinued
No
Course Code
FINC 4405
Descriptive
Foreign Exchange Management
Department
Finance
Faculty
Commerce & Business Administration
Credits
3.00
Start Date
End Term
201330
PLAR
No
Semester Length
15 Weeks X 4 Hours per Week = 60 Hours
Max Class Size
35
Contact Hours
Lecture: 3 Hours Seminar: 1 Hour Total: 4 Hours
Learning Activities

Lectures, seminars, case studies.

Course Description
This course addresses the problems faced by small business firms in handling foreign exchange (FX) transactions. The first part of the course examines the working of FX markets and the settlement systems used by small companies. The second section of the course investigates how exchange rates are determined and if changes in the exchange rate can be predicted. The third part of the course studies why firms position against exchange risk and how to measure exposure to exchange rates. In the fourth section of the course, we examine the valuation of international products, and the financial risk faced with delays in foreign exchange settlements.
Course Content
  1. Foreign Exchange Risk Management

 

                .  Measuring foreign exchange (FX) risk and exposure for small business operators

                .  Managing FX risk

                .  Foreign currency risk and its impact on internal operations

 

  1. Foreign Exchange Market

 

                .   Organization, mechanism of Foreign Exchange Market

                .  The Spot Market

                .  The Forward Market

 

  1. Measuring Exchange Risk in Foreign Settlements

 

                .   Operational and financial tools for measuring, containing, and settling of FX transactions

                .   Equity investing and participation

                .   Optimal international asset allocation, and product pricing strategies

 

  1. International Banking, Settlement Trends and Strategies

 

                .   Banking activities, settlement and payment vehicles and procedures

                .   Euromarket international banking activities

 

  1. Designing an Optimal, Risk-Free (FX) Global Financial Strategies

 

                .   Minimizing expected after-tax FX costs

                .   Reducing operational FX risks

                .   Country risk financial analysis and predictive models

                .               FX risk preventive strategies

Learning Outcomes

The student will be able to:

 

1.       identify foreign exchange risk management and the techniques available to small business operators for risk exposure containment;

 

2.       analyze alternative currency translation methods for settlement of goods;

 

3.       examine the organization of the Foreign Exchange Market, the Spot Market, and the Forward Market, and how the information driven in these markets can be used by small business operators in controlling and managing foreign exchange;

 

4.       be able to identify operational difficulties in financing, and settling in foreign currency, and currency forecasting;

 

5.       evaluate the intercompany funds-flow mechanisms, cost and benefits, pertaining to all foreign sales and settlements;

 

6.       explain foreign exchange units in financial intermediaries;

 

7.       describe operational benefits of Electronic Data Interchange (EDI), Letters of Credit  (LC) and other exchange mechanisms, in settling foreign accounts.

Means of Assessment

Class participation                 10%

Presentation of case              15%

In-class quizzes                    15%

Cases (5-10)                         30%

Final examination                 30%

                                        100%

Textbook Materials

Textbooks and Materials to be Purchased by Students

 

Mishkin, Frederic S.  Financial Markets, Institutions, and Money, Latest Ed.  South-Western Publishing.

 

Jain, Arvind K.  International Financial Markets and Institutions, Latest Ed.  Miami:  KolbPublishing.

Prerequisites

BUSN 3400 and BUSN 2403 and BUSN 3404 and FINC 3305 and FINC 2340

Which Prerequisite

BUSN 3400 and BUSN 4401