International Finance

Financial calculation and accounting

The teaching of the curricular unit is based on recent research materials and on experience gained through practice. The pedagogy of the course is strongly interactive. It seeks substantial student participation and know-how-based learning. Teaching methods include discussion and analysis of real cases. Emphasis is placed on helping students relate concepts, ideas and theories to actual practice.

Classes are theoretical-practical, and attendance (and active participation) in classes is optional, although strongly advised.

Offer students the necessary bases to rationalize the economic and financial problems of companies in a broader perspective, incorporating more urgently the international dimension, seeking to present with rigor and depth a conceptual and methodological framework for their analysis.

At the level of knowledge and understanding, the student is expected to be able to:

1. interpret the international economic and financial phenomena that affect the activity of companies;

2. analyze and use international parity conditions;

3. use financial instruments to manage exchange rate and interest rate risk;

4. analyze and assess the economic exposure of companies;

5. analyze and evaluate the accounting exposure of companies;

6. analyze and evaluate foreign investment decisions;

7. analyze and evaluate foreign currency financing decisions;

8. Determining the value of some real options in international investment decisions.

I – Introduction

II – International Monetary System

1. Introduction to the exchange rate market;

2. Balance of payments;

3. International parity conditions.

III – Exchange Risk Management

1. Types of Exposure: Transaction, economic and accounting;

2. Hedging mechanisms: Money market, forwards, futures, options and swaps.

IV – Foreign Direct Investment

1. Determinants and theories;

2. Political risk;

3. Evaluation;

4. NPV, VALA and cost of capital;

5. Taxation;

6. Coordination and control;

7. Real Options.

V – External financing

1. Financing in international markets;

2. Financing of MNCs;

3. Financing of imports and exports.

NAO

a) Main Bibliography

Eiteman, D.K., Moffett, M.H. and Stonehill, A.I. (2016). Multinational Business Finance, 14th edition. Pearson.

Krugman, Paul R., Obstfeld, Maurice, Melitz, Marc J. (2022), International Finance: Theory And Policy (Global Edition). Pearson Education Limited.

Silva, Eduardo Sá, Pereira, Adalmiro, Queirós, Mota, Carlos (2016). International Finance and Risk Management. Economic Life.

Pacheco, Luís, Tavares, Fernando, Salazar, Vasco, Vieira, Elisabete, Peguinho, Cristina (2017). International Finance -Theory and Practice, Sílabo Editions.

b) Complementary bibliography

Levi, M.D. (2009). International Finance. Taylor & Francis.