FNS305 International FinanceIstanbul Okan UniversityDegree Programs Industrial Engineering (English)General Information For StudentsDiploma SupplementErasmus Policy StatementNational Qualifications
Industrial Engineering (English)
Bachelor TR-NQF-HE: Level 6 QF-EHEA: First Cycle EQF-LLL: Level 6

General course introduction information

Course Code: FNS305
Course Name: International Finance
Course Semester: Spring
Course Credits:
Theoretical Practical Credit ECTS
3 0 3 6
Language of instruction: TR
Course Requisites:
Does the Course Require Work Experience?: No
Type of course: University / Foreign Language
Course Level:
Bachelor TR-NQF-HE:6. Master`s Degree QF-EHEA:First Cycle EQF-LLL:6. Master`s Degree
Mode of Delivery: Face to face
Course Coordinator : Prof. Dr. GÖKÇE TUNÇ
Course Lecturer(s): Dr.Öğr.Üyesi TURGAY MÜNYAS
Prof. Dr. HALİT TARGAN ÜNAL
Prof. Dr. GÖKÇE TUNÇ
Course Assistants:

Course Objective and Content

Course Objectives: The main objective of this course is to introduce the topics of globalization of the World economy; evolution of the international monetary system; European monetary system; fixed versus flexible exchange rate regimes; Balance-of-payments accounting; balance-of-payments accounts; the foreign exchange market; the spot market and forward market; international parity relationships and forecasting foreign exchange rates; interest rate parity, purchasing power parity, the Fisher effects; international bond market; international equity market.
Course Content: Globalization of the World economy; evolution of the international monetary system; European monetary system; fixed versus flexible exchange rate regimes; Balance-of-payments accounting; balance-of-payments accounts; the foreign exchange market; the spot market and forward market; international parity relationships and forecasting foreign exchange rates; interest rate parity, purchasing power parity, the Fisher effects; international bond market; international equity market.

Learning Outcomes

The students who have succeeded in this course;
Learning Outcomes
1 - Knowledge
Theoretical - Conceptual
1) Introduce the various types of international monetary systems under which the world economy can function and has functioned at various times.
2) Describe the importance of balance of trade and balance of payments to the development of macroeconomic policy.
3) Identify opportunities for arbitrage and discuss methods to exploit these opportunities in the foreign exchange market.
4) Describe the organization of the foreign exchange market and distinguish between the spot and forward transactions.
5) Define several key international parity relationships, such as interest rate parity and purchasing power parity and judge whether international parity conditions are met.
2 - Skills
Cognitive - Practical
3 - Competences
Communication and Social Competence
Learning Competence
Field Specific Competence
Competence to Work Independently and Take Responsibility

Lesson Plan

Week Subject Related Preparation
1) • Syllabus • Discuss Library Orientation Course, Instructor to verify completion • What’s Special about “International” Finance? • Goals for International Financial Management in accordance with the ethical considerations throughout the world. • Globalization of the World Economy • Evaluation of Multinational Corporations Read the syllabus Read of Seyidoğlu (2013), Chapter 1
2) • Identify the stages of corporate expansion overseas by which companies gradually become MNCs • Identify the advantages of being multinational, including the benefits of international diversification • Describe the general importance of financial economics to multinational financial management • Explain the theory of comparative advantage • Discuss why do firms become multinational • Theory of Comparative Advantage • What is Different about Global Financial Management? • Market Imperfections • Globalization Process • The Process of Overseas Expansion by Multinationals Reading of Seyidoğlu(2013), Chapter 4. Answer the research questions at the end of the chapter and preparing for class discussion.
3) • Structure and Functions of the Foreign Exchange Market • Traders of the foreign exchange market • Spot exchange rate quotation • Buying-selling exchange rate margin • Spot currency transactions • Alternative expressions of cross rates Reading of Seyidoğlu(2013), Chapter 4. Answer the research questions at the end of the chapter and preparing for class discussion.
4) • Triangle (Three-ended) arbitrage • Spot market microstructure • Forward exchange rate quotation • Long and short forward positions • Forward cross rates • Swap transactions • Forward premium Reading of Seyidoğlu(2013), Chapter 6. Answer the research questions at the end of the chapter and preparing for class discussion.
5) • Interest rate parity and the law of one price • Purchasing power parity • Fisher effect • International Fisher effect Reading of Seyidoğlu(2013), Chapter 5. Answer the research questions at the end of the chapter and preparing for class discussion. Prepare for the quiz.
6) • Interest rate parity • Guaranteed interest rate arbitrage • Determination of interest rate parity and exchange rate • Reasons for deviation from interest rate parity • Estimation of exchange rates • Effective market approach • Fundamental analysis approach • Technical analysis approach • Performance of estimation methods • Quiz Reading of Seyidoğlu(2013), Chapter 7. Answer the research questions at the end of the chapter and preparing for class discussion. Preparation for the midterm exam.
7) Midterm Exam None
8) • Features of futures contracts • Currency futures markets • Features of FX futures contracts • Similarities and differences between foreign exchange futures and forward contracts • Futures Contracts: Some Preliminaries Reading Seyidoğlu(2013), Chapter 8. Answer the research questions at the end of the chapter and prepare for class discussion.
9) • Terminology related to options • Currency option markets • Quotation and prices of currency options • Risk and return in option transactions • Value and pricing of the option Reading of Seyidoğlu(2013), Chapter 9. Answer the research questions at the end of the chapter and preparing for class discussion. Prepare for the quiz.
10) • Interest rate risk • Managing interest rate risk • Quiz Reading of Seyidoğlu(2013), Chapter 10. Answer the research questions at the end of the chapter and preparing for class discussion.
11) • Types of currency exposure • Hedging strategy with forward market • Money market hedge strategy • Hedging strategy with options markets Reading Seyidoğlu(2013), Chapter 11. Answer the research questions at the end of the chapter and preparE for class discussion.
12) • Risk sharing agreements • Determining the costs of using different hedging techniques • Defining the operational effect and understanding its difference from the transaction effect • Calculation of transaction effect in certain exchange rate change and cost, income scenarios • Determination of appropriate marketing, production and financing strategies to combat the economic consequences of exchange rate changes. • Impacts of exchange rate risk Reading Seyidoğlu(2013), Chapter 11 Answer the research questions at the end of the chapter and prepare for class discussion.
13) • Identification of the accounting impact • Define the four basic conversion methods • Calculation of accounting impact with different methods • Understanding the management of accounting impact • Conversion methods • Transformation effect and economic reality • Development of accounting hedge strategy Reading of Seyidoğlu(2013), Chapter 3. Answer the research questions at the end of the chapter and prepare for class discussion.
14) • Definition of balance of payments • Structure of the balance of payments • Basic account groups of the balance of payments • Balancing of balance of payments balance Prepare for the final exam
15) Final Exam None

Sources

Course Notes / Textbooks: International Finance
Cheol S. Eun, Bruce G. Resnick
McGrawHill, 7th edition, 2014
ISBN-13: 978-0-07-716161-3
References: Uluslararası Finans
Prof. Dr. Halil Seyidoğlu
Güzem Can Yayınları, 5. Baskı, 2013.
ISBN: 9757516112

Course-Program Learning Outcome Relationship

Learning Outcomes

1

2

3

4

5

Program Outcomes
1) Adequate knowledge in mathematics, science and engineering subjects pertaining to the relevant discipline; ability to use theoretical and applied information in these areas to model and solve engineering problems.
2) Ability to identify, formulate, and solve complex engineering problems; ability to select and apply proper analysis and modelling methods for this purpose.
3) Ability to design a complex system, process, device or product under realistic constraints and conditions, in such a way so as to meet the desired result; ability to apply modern design methods for this purpose. (Realistic constraints and conditions may include factors such as economic and environmental issues, sustainability, manufacturability, ethics, health, safety issues, and social and political issues according to the nature of the design.)
4) Ability to devise, select, and use modern techniques and tools needed for engineering practice; ability to employ information technologies effectively.
5) Ability to design and conduct experiments, gather data, analyse and interpret results for investigating engineering problems.
6) Ability to work efficiently in intra-disciplinary and multi-disciplinary teams; ability to work individually.
7) Ability to communicate effectively i Turkish, both orally and in writing; knowledge of a minimum of one foreign language.
8) Recognition of the need for lifelong learning; ability to access information, to follow developments in science and technology, and to continue to educate him/herself.
9) Awareness of professional and ethical responsibility.
10) Information about business life practices such as project management, risk management, and change management; awareness of entrepreneurship, innovation, and sustainable development.
11) Knowledge about contemporary issues and the global and societal effects of engineering practices on health, environment, and safety; awareness of the legal consequences of engineering solutions.

Course - Learning Outcome Relationship

No Effect 1 Lowest 2 Low 3 Average 4 High 5 Highest
           
Program Outcomes Level of Contribution
1) Adequate knowledge in mathematics, science and engineering subjects pertaining to the relevant discipline; ability to use theoretical and applied information in these areas to model and solve engineering problems.
2) Ability to identify, formulate, and solve complex engineering problems; ability to select and apply proper analysis and modelling methods for this purpose.
3) Ability to design a complex system, process, device or product under realistic constraints and conditions, in such a way so as to meet the desired result; ability to apply modern design methods for this purpose. (Realistic constraints and conditions may include factors such as economic and environmental issues, sustainability, manufacturability, ethics, health, safety issues, and social and political issues according to the nature of the design.)
4) Ability to devise, select, and use modern techniques and tools needed for engineering practice; ability to employ information technologies effectively.
5) Ability to design and conduct experiments, gather data, analyse and interpret results for investigating engineering problems.
6) Ability to work efficiently in intra-disciplinary and multi-disciplinary teams; ability to work individually.
7) Ability to communicate effectively i Turkish, both orally and in writing; knowledge of a minimum of one foreign language.
8) Recognition of the need for lifelong learning; ability to access information, to follow developments in science and technology, and to continue to educate him/herself.
9) Awareness of professional and ethical responsibility.
10) Information about business life practices such as project management, risk management, and change management; awareness of entrepreneurship, innovation, and sustainable development.
11) Knowledge about contemporary issues and the global and societal effects of engineering practices on health, environment, and safety; awareness of the legal consequences of engineering solutions.

Learning Activity and Teaching Methods

Individual study and homework
Lesson
Homework
Project preparation

Assessment & Grading Methods and Criteria

Written Exam (Open-ended questions, multiple choice, true-false, matching, fill in the blanks, sequencing)
Oral Examination
Homework
Individual Project
Group project

Assessment & Grading

Semester Requirements Number of Activities Level of Contribution
Quizzes 3 % 20
Midterms 1 % 35
Final 1 % 45
total % 100
PERCENTAGE OF SEMESTER WORK % 55
PERCENTAGE OF FINAL WORK % 45
total % 100

Workload and ECTS Credit Grading

Activities Number of Activities Workload
Course Hours 16 48
Study Hours Out of Class 16 64
Project 3 15
Homework Assignments 4 8
Quizzes 2 1
Midterms 1 15
Final 1 22
Total Workload 173