EPOKA UNIVERSITY
FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES
DEPARTMENT OF BANKING AND FINANCE
COURSE SYLLABUS
2024-2025 ACADEMIC YEAR
COURSE INFORMATIONCourse Title: MULTINATIONAL FINANCE |
| Code | Course Type | Regular Semester | Theory | Practice | Lab | Credits | ECTS |
|---|---|---|---|---|---|---|---|
| BAF 306 | B | 6 | 3 | 0 | 0 | 3 | 6 |
| Academic staff member responsible for the design of the course syllabus (name, surname, academic title/scientific degree, email address and signature) | Dr. Nertil Mera nmera@epoka.edu.al |
| Main Course Lecturer (name, surname, academic title/scientific degree, email address and signature) and Office Hours: | Dr. Nertil Mera nmera@epoka.edu.al , Friday 09:40 AM - 11:40 AM |
| Second Course Lecturer(s) (name, surname, academic title/scientific degree, email address and signature) and Office Hours: | NA |
| Language: | English |
| Compulsory/Elective: | Compulsory |
| Study program: (the study for which this course is offered) | Bachelor in Banking and Finance (3 years) |
| Classroom and Meeting Time: | E-211 (11:40-14:30) |
| Teaching Assistant(s) and Office Hours: | NA |
| Code of Ethics: |
Code of Ethics of EPOKA University Regulation of EPOKA University "On Student Discipline" |
| Attendance Requirement: | 75% Required |
| Course Description: | In this course we will explore the characteristics of international financial markets and multinational enterprises to evaluate the associated risks and benefits involved in operating globally. In this course we will address the distinct risk exposures multinationals face (as opposed to purely domestic firms), the available financial tools they use to address them, their capital budgeting, their tax and working capital management, their capital structure, their investment decisions, and the specificity of their valuation. We will further look into the perspective of the international investor – what is the cost and benefit of international portfolio diversification, and what are the available instruments (currency swaps, futures and options, etc) to conduct diversification. |
| Course Objectives: | The primary objective of this course is to aid the students with the understanding of the global financial environment. To help them comprehend global markets with all the different currency regimes and provide them with a financial management dimension of working internationally. In particular it will enable students to understand the theory and practice of foreign currency, inflation and interest rate risk management, international financing and investment. In addition, through the Group VCL (Virtual Collaborative Learning) Project, it is aimed at offering students a learner-centered approach. The VCL project will be an interdisciplinary one and will revolve around a realistic scenario, offering flexibility through synchronous and asynchronous work. Student will collaborate in mixed groups for 2 months using MS Teams as the main technical platform. It is expected that the benefits and potential of VCL include enhanced problem-solving skills, increased student engagement, and the capacity to prepare learners for complex, real-world challenges. Students will also have the option to chose between the VCL project and an individual project for this course. |
|
BASIC CONCEPTS OF THE COURSE
|
| 1 | Multinational Corporations: A multinational corporation (MNC) is a company that has business operations in at least one country other than its home country. |
| 2 | Balance of Payments: The balance of payments (BOP), also known as the balance of international payments, is a statement of all transactions made between entities in one country and the rest of the world over a defined period, such as a quarter or a year. |
| 3 | Exchange Rate: An exchange rate is a rate at which one currency will be exchanged for another currency and affects trade and the movement of money between countries. |
| 4 | Cross Exchange Rate: A cross rate is a foreign currency exchange transaction between two currencies that are both valued against a third currency. |
| 5 | Currency Arbitrage: A currency arbitrage is a forex strategy in which a currency trader takes advantage of different spreads offered by brokers for a particular currency pair by making trades. |
| 6 | Currency Futures: Currency futures are an exchange-traded futures contract that specify the price in one currency at which another currency can be bought or sold at a future date. |
| 7 | Currency Options: A currency option (also known as a forex option) is a contract that gives the buyer the right, but not the obligation, to buy or sell a certain currency at a specified exchange rate on or before a specified date. |
| 8 | Interest Rate Parity: (IRP) is a theory according to which the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. |
| 9 | Purchasing Power Parity: (PPP) is an economic theory that compares different countries' currencies through a "basket of goods" approach showing the differences on economic productivity and standards of leaving among countries. |
| 10 | International Fisher Effect: (IFE) is an economic theory stating that the expected disparity between the exchange rate of two currencies is approximately equal to the difference between their countries' nominal interest rates. |
|
COURSE OUTLINE
|
| Week | Topics |
| 1 | Review of Syllabus and Introduction to the Course. Details about the course content and evaluation. Introducing the Course Project, which is an option between an individual project related to course content and an interdisciplinary VCL (Virtual Collaborative Learning) project with mixed groups of students from different study programs and courses. The purpose of this group project is to engage students in a comprehensive exploration of different cases, collaborate virtually across different student groups, and present sustainable solutions to real-world challenges. |
| 2 | Chapter 1 - Multinational Financial Management: An overview (Managing the MNC, Why Firms Pursue International Business, How Firms Engage in International Business, Valuation Model for a MNC. (Pages 3-30) |
| 3 | Chapter 2 - International Flow of Funds: Balance of Payments, Growth in International Trade, Factors Affecting International Trade Flows, International Capital Flows, Agencies that Facilitate International Flows. (Pages 31-60) |
| 4 | Chapter 3 - International Financial Markets: Foreign Exchange Market, International Money Market, International Credit Market, International Bond Market, International Stock Markets, How Financial Markets Serve MNCs. (Pages 61-100) |
| 5 | Chapter 4 - Exchange Rate Determination: Measuring Exchange Rates Movement, Exchange Rate Equilibrium, Factors that Influence Exchange Rates, Movements in Cross Exchange Rates, Capitalizing on Expected Exchange Rate Movements. (101-130) |
| 6 | Chapter 5 - Currency Derivatives: Forward Market, Currency Futures Market, Currency Options Market, Currency Call Options, Currency Put Options. (Pages 131-184) |
| 7 | Review for Midterm Exam |
| 8 | Midterm Exam |
| 9 | Chapter 7 - International Arbitrage and Interest Rate Parity: International Arbitrage, Interest Rate Parity (IRP), Variation in Forward Premiums. (Pages 227-258) |
| 10 | Chapter 8 - Relation among Inflation, Interest Rates and Exchange Rates: Purchasing Power Parity (PPP), International Fisher Effect (IFE), Tests on the International Fisher Effect, Comparison of the IRP, PPP and IFE. (Pages 259-296) |
| 11 | Chapter 9: Forecasting Exchange Rates: Why Firms Forecast Exchange Rates, Forecasting Techniques, Forecast Errors, Using Interval Forecasts. (Pages 299-324) |
| 12 | Chapter 10: Measuring Exposure to Exchange Rate Fluctuations: Relevance of Exchange Rate Risk, Transaction Exposure, Economic Exposure, Translation Exposure. (Pages 325-354) |
| 13 | Project Submission and Feedback for the Individual Course Project and Project Pitches for the VCL Interdisciplinary Group Project |
| 14 | Review for Final Exam |
| Prerequisite(s): | |
| Textbook(s): | Madura, J. International Financial Management, 14th Edition, Cengage Learning |
| Additional Literature: | Fundamentals of Multinational Finance, 6th Edition - Pearson, by (MICHAEL H. MOFFETT, ARTHUR I. STONEHILL and DAVID K. EITEMAN) |
| Laboratory Work: | - |
| Computer Usage: | MS Teams for Course Materials and for the VCL Group Project |
| Others: | No |
|
COURSE LEARNING OUTCOMES
|
| 1 | To understand the global financial environment and the effects of globalization |
| 2 | To understand the balance of payments and its role. |
| 3 | To analyze different foreign exchange rate systems and the determination of the exchange rates. |
| 4 | To understand cross exchange rates, arbitrage and how to gain from discrepancies in exchange rates. |
| 5 | To understand the foreign currency derivatives and the foreign exchange exposure. |
| 6 | To enhance teamworking skills by working in mixed teams in a virtual collaboration environment using platforms like MS Teams. |
| 7 | To foster communication, collaboration and social competencies by working in mixed teams with peers from 3 different study programs and courses. |
| 8 | To develop digital readiness and digital collaboration skills as well as project management skills by creating a comprehensive project plan with tasks, milestones, and deadlines. |
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COURSE CONTRIBUTION TO... PROGRAM COMPETENCIES
(Blank : no contribution, 1: least contribution ... 5: highest contribution) |
| No | Program Competencies | Cont. |
| Bachelor in Banking and Finance (3 years) Program | ||
| 1 | The students gain the ability to look at the problems of daily life from a broader perspective with an increased awareness of the importance of moral/ethical considerations and professional integrity in the workplace. | |
| 2 | They develop their knowledge and understanding of banking and finance including concepts, theories, and analytical tools that serve both in national and international markets. | |
| 3 | They gain an understanding of the role of financial management in business firms and the essentials of corporate finance and further develop their knowledge in the field. | |
| 4 | They are able to apply valuation models to estimate the price of different financial assets, measure risk and describe the risk-return tradeoff. | |
| 5 | They are provided with the knowledge and understanding of the regulatory framework and functioning of banking system and central banking as well as international banking system. | |
| 6 | They are able to understand and use fundamental economic theories and tools to solve economic problems in banking and financial services industry. | |
| 7 | They have the ability to develop and utilize accounting, financial and economic data as well as other information to solve different business problems by making use of basic mathematical and statistical models. | |
| 8 | They are expected to develop their numerical and IT skills as well as knowledge of databases in order to address the significant development in the delivery and use of financial services known as FinTech. | |
| 9 | They develop their ability to think critically, do research, analyze, interpret, draw independent conclusions, and communicate effectively, both individually and as part of a team. | |
| 10 | They are provided with opportunities to acquire the necessary skills and competencies to develop professionalism in the banking and financial services industry or to move on to further study within the discipline. | |
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COURSE EVALUATION METHOD
|
| Method | Quantity | Percentage |
| Midterm Exam(s) |
1
|
20
|
| Project |
1
|
25
|
| Final Exam |
1
|
45
|
| Attendance |
10
|
|
| Total Percent: | 100% |
|
ECTS (ALLOCATED BASED ON STUDENT WORKLOAD)
|
| Activities | Quantity | Duration(Hours) | Total Workload(Hours) |
| Course Duration (Including the exam week: 16x Total course hours) | 16 | 3 | 48 |
| Hours for off-the-classroom study (Pre-study, practice) | 16 | 3 | 48 |
| Mid-terms | 1 | 9 | 9 |
| Assignments | 1 | 25 | 25 |
| Final examination | 1 | 20 | 20 |
| Other | 0 | ||
|
Total Work Load:
|
150 | ||
|
Total Work Load/25(h):
|
6 | ||
|
ECTS Credit of the Course:
|
6 | ||
|
CONCLUDING REMARKS BY THE COURSE LECTURER
|
|
In conclusion, the Multinational Finance course has provided a comprehensive exploration of key topics essential for understanding the complexities of global financial management. Beginning with an overview of multinational financial management and the motivations behind international business, each week has deepened our understanding. We examined the international flow of funds, exploring factors influencing trade and capital flows, and delved into international financial markets, including the foreign exchange, money, credit, bond, and stock markets. Discussions on exchange rate determination, currency derivatives, and international arbitrage highlighted strategies for managing currency risks effectively. Additionally, we explored the relationships among inflation, interest rates, and exchange rates, and learned techniques for forecasting exchange rate movements and measuring exposure to exchange rate fluctuations. Finally, the course project has reinforced practical application of these concepts, equipping students with essential skills to navigate global financial challenges with confidence. |