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ECON360 – International Finance

2017 – S2 Evening

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Unit Convenor
Geoff Kingston
Contact via 98507063
E4A 411
Monday 3-4 pm
Marjan Nazifi
Credit points Credit points
3
Prerequisites Prerequisites
6cp at 200 level including (ECON200 or ECON201 or ECON203 or ECON204)
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description
The aim of this unit is to analyse the structure, functions and operations of the international financial system and to evaluate its impact on the Australian economy. Topics include: international capital flows and balance of payments; analysis of foreign exchange markets, arbitrage and speculation; discussion of purchasing power parity and real exchange rates; currency and commodity swaps; corporate management of exchange rate risk exposure in spot and forward markets; currency futures and options; Eurodollar markets; models of exchange rate determination; exchange rate forecasting techniques; international trade finance; international taxation; and foreign and direct portfolio investments; and international capital budgeting.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at http://students.mq.edu.au/student_admin/enrolmentguide/academicdates/

Learning Outcomes

  1. To allow students to truly understand what to do when confronted with an international financial decision.
  2. To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  3. To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  4. To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  5. To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

General Assessment Information

Successful applicants for Disruption to Studies regarding the Final Examination will ordinarily be eligible to sit a Supplementary Examination.

Assessment Tasks

Name Weighting Hurdle Due
Class Test 20% No Week 7
Review Essay 20% No 10am Tuesday 10 October
Final Examination 60% No University Examination Period

Class Test

Due: Week 7
Weighting: 20%

1.   Your class test is 60 minutes. The class test will be held in place of the regular lectures in Week 7. It will be based primarily on the numeric/short answer tutorial questions and lectures presented from weeks 1 to 6.

2.     Failure to attend the class test without the submission based on Disruption of Studies, on the grounds of illness or unavoidable mishap, together with the required supporting documentation, will result in a mark of zero for the assessment.

3.     Students who make a successful Disruption to Studies application regarding the class test will have to write a second Review Essay..


This Assessment Task relates to the following Learning Outcomes:
  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Review Essay

Due: 10am Tuesday 10 October
Weighting: 20%

1.    Write a 1600 word summary and evaluation of any single one of the three classic articles on international finance detailed in the Week 1 Lecture and on the class website.. A "review essay" is a summary of your own words of the article you have chosen to review, together with an appraisal of it. Your review essay should be at lerast 20% appraisal. Summary means you summarize the main points and explain the chosen article in your own words. Figures, tables, or equations in the article may not be included in your essay. Appraisal means you express your thoughts about the article. For example, whether the article is full of insightful remarks, whether the article gives adequate consideration/analysis of the main issues, or if the article covers too much or too little ground, any additional aspects should be included in the article. Your bibliography can be minimal.

2.    Submit electronically via Turnitin and hardcopy via BESS by 10am Tuesday 10 October. You MUST keep a copy of the essay you submit.

3.    Each essay must represent the student's own work. The copying of another student's essay, or from somewhere else is clearly regarded as plagiarism. All essays will be scanned by software that detects plagiarism. Cases of plagiarism will be dealt with severely. For further information on plagiarism and how to avoid it, please refer to the Policies and Procedures section.

4.    Essays will be marked out of 20 marks. Late essays will be accepted up to 72 hours after the submission deadline. There will be a deduction of 10% of the total available marks for each 24 hour period, or part thereof, that the submission is late (for example, 25 hours late in submission means a 20% penalty). This penalty does not apply for cases in which special consideration is approved under the Disruption to Studies policy.  Failure to submit the essay will result a mark of zero for the assessment. Successful applicants for Disruption to Studies will be required to write a second Review Essay. 

5.    Marks will be deducted (20% of the total awarded mark) for essays that exceed more than 10% of the word limit indicated.


This Assessment Task relates to the following Learning Outcomes:
  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  • To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Final Examination

Due: University Examination Period
Weighting: 60%

  1. The final exam will be held at a time and place to be announced in due course by the University. For details check: http://www.timetables.mq.edu.au/exam
  2. It will be based on lectures and tutorials from weeks 1 to 13 (see below), with an emphasis on material presented after the class test.
  3. 3. Students who make a successful Disruption to Studies application may be eligible to sit a Supplemntary Examination.

This Assessment Task relates to the following Learning Outcomes:
  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  • To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Delivery and Resources

Required and Recommended Texts and/or Materials

Geert Bekaert and Robert Hodrick, 2012 (2nd edition), International Financial Management, Pearson International. ISBN-13: 978-0-13-284298-3. Its associated website is http://www.prenhall.com/bekaert

Technology Used and Required

Unit Web Page

Students will be able to access the unit web page by using their normal university Student ID Number and Password on http://ilearn.mq.edu.au. Further help may also be provided by the Learning and Teaching Centre: http://www.mq.edu.au/ltc

Unit Schedule

Week Topic Chapter
1 GLOBALIZATION/THE FOREIGN EXCHANGE MARKET Chapters 1 - 2 (pp1-68)
2 FORWARD MARKETS & TRANSACTION RISK/THE BALANCE OF PAYMENTS

Chapters 3-4 (pp69-132)

Extra reading: Becker, C & Fabbro, D (2006), “Limiting foreign exchange exposure through hedging: The Australian experience”, Reserve Bank Discussion Paper.

3 EXCHANGE RATE SYSTEMS/INTEREST RATE PARITY Chapters 5-6 (pp133 - 204)
4 SPECULATION & RISK/PURCHASING POWER PARITY & REAL EXCHANGE RATES Chapters 7-8 (pp205 – 280)
5 EXCHANGE RISK/EXCHANGE RATE DETERMINATION & FORECASTING Chapters 9-10 (pp281 – 353)
6 INTERNATIONAL DEBT & EQUITY FINANCING Chapters 11-12 (pp354 – 427)
7 CLASS TEST  
  MID-SESSION RECESS (2 weeks)  
8 INTERNATIONAL CAPITAL MARKET EQUILIBRIUM/POLITICAL & COUNTRY RISK Chapters 13-14 (pp428 – 520)
9 Week 9 (Monday 5 October/Friday 9 October) NO LECTURES OR TUTORIALS (Labour Day Weekend)

 

10 INTERNATIONAL CAPITAL BUDGETING/RISK MANAGEMENT

Chapters 15-17 (pp521 – 615)

Extra reading: Becker, C & Fabbro, D (2006).

11 FINANCING TRADE/WORKING CAPITAL/FUTURES & OPTIONS

Chapters 18- 20 (pp616 –722)

Extra reading: Becker, C & Fabbro, D (2006).

12 INTEREST RATE & FOREIGN CURRENCY SWAPS

Chapter 21 (pp723-753)

Extra reading: Becker, C & Fabbro, D (2006).

   

 

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html

Assessment Policy http://mq.edu.au/policy/docs/assessment/policy_2016.html

Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html

Complaint Management Procedure for Students and Members of the Public http://www.mq.edu.au/policy/docs/complaint_management/procedure.html​

Disruption to Studies Policy (in effect until Dec 4th, 2017): http://www.mq.edu.au/policy/docs/disruption_studies/policy.html

Special Consideration Policy (in effect from Dec 4th, 2017): https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policies/special-consideration

In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/

Results

Results shown in iLearn, or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au.

Academic Honesty

The nature of scholarly endeavour, dependent as it is on the work of others, binds all members of the University community to abide by the principles of academic honesty. Its fundamental principle is that all staff and students act with integrity in the creation, development, application and use of ideas and information. This means that:

  • all academic work claimed as original is the work of the author making the claim
  • all academic collaborations are acknowledged
  • academic work is not falsified in any way
  • when the ideas of others are used, these ideas are acknowledged appropriately.

Further information on the academic honesty can be found in the Macquarie University Academic Honesty Policy at http://www.mq.edu.au/policy/docs/academic_honesty/policy.html

Grades

Macquarie University uses the following grades in coursework units of study:

  • HD - High Distinction
  • D - Distinction
  • CR - Credit
  • P - Pass
  • F - Fail

Grade descriptors and other information concerning grading are contained in the Macquarie University Grading Policy which is available at:

http://www.mq.edu.au/policy/docs/grading/policy.html

Grading Appeals and Final Examination Script Viewing

If, at the conclusion of the unit, you have performed below expectations, and are considering lodging an appeal of grade and/or viewing your final exam script please refer to the following website which provides information about these processes and the cut off dates in the first instance. Please read the instructions provided concerning what constitutes a valid grounds for appeal before appealing your grade.

http://www.businessandeconomics.mq.edu.au/new_and_current_students/undergraduate_current_students/how_do_i/grade_appeals/

Special Consideration Policy

The University is committed to equity and fairness in all aspects of its learning and teaching. In stating this commitment, the University recognises that there may be circumstances where a student is prevented by unavoidable disruption from performing in accordance with their ability. A special consideration policy exists to support students who experience serious and unavoidable disruption such that they do not reach their usual demonstrated performance level. The policy is available at:

http://www.mq.edu.au/policy/docs/special_consideration/policy.html

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

Equity Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

Discipline Specific Knowledge and Skills

Our graduates will take with them the intellectual development, depth and breadth of knowledge, scholarly understanding, and specific subject content in their chosen fields to make them competent and confident in their subject or profession. They will be able to demonstrate, where relevant, professional technical competence and meet professional standards. They will be able to articulate the structure of knowledge of their discipline, be able to adapt discipline-specific knowledge to novel situations, and be able to contribute from their discipline to inter-disciplinary solutions to problems.

This graduate capability is supported by:

Learning outcomes

  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  • To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Assessment tasks

  • Class Test
  • Review Essay
  • Final Examination

Critical, Analytical and Integrative Thinking

We want our graduates to be capable of reasoning, questioning and analysing, and to integrate and synthesise learning and knowledge from a range of sources and environments; to be able to critique constraints, assumptions and limitations; to be able to think independently and systemically in relation to scholarly activity, in the workplace, and in the world. We want them to have a level of scientific and information technology literacy.

This graduate capability is supported by:

Learning outcomes

  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  • To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Assessment tasks

  • Class Test
  • Review Essay
  • Final Examination

Problem Solving and Research Capability

Our graduates should be capable of researching; of analysing, and interpreting and assessing data and information in various forms; of drawing connections across fields of knowledge; and they should be able to relate their knowledge to complex situations at work or in the world, in order to diagnose and solve problems. We want them to have the confidence to take the initiative in doing so, within an awareness of their own limitations.

This graduate capability is supported by:

Learning outcomes

  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To equip students with tools that enable them to understand the risks that businesses and investors may face in the international market, to recognize and know when and how to hedge such risks.
  • To prepare students to deal with real-world issues such as how fluctuations in exchange rates create risks and rewards for multinational corporations, and how those risks can be managed.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Assessment tasks

  • Class Test
  • Review Essay
  • Final Examination

Effective Communication

We want to develop in our students the ability to communicate and convey their views in forms effective with different audiences. We want our graduates to take with them the capability to read, listen, question, gather and evaluate information resources in a variety of formats, assess, write clearly, speak effectively, and to use visual communication and communication technologies as appropriate.

This graduate capability is supported by:

Learning outcomes

  • To allow students to truly understand what to do when confronted with an international financial decision.
  • To provide students with analytical tools that enable them to research or engage with confidence in international business decisions.
  • To extend students' numeric and writing skills which might help them to do a real data analysis and write a case-study report.

Assessment tasks

  • Class Test
  • Review Essay
  • Final Examination

Changes since First Published

Date Description
31/07/2017 Correction of due date for essay