UNIVERSIDAD RICARDO PALMA

Facultad de Ciencias Econmicas y

Empresariales
Escuela Acadmico Profesional de Administracin de
Negocios Globales
SYLLABUS
I.

GENERAL INFORMATION:
1.1. Subject
1.2. Code
1.3. Credits
1.4. Kind of subject
1.5. Hours
1.6. Requirements
1.7. Academic period
1.8. Academic cycle
1.9. Professor
II.

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INTERNATIONAL FINANCE I
NG02903
04
Mandatory
6(2T-4P)
Fall 2014 (2014-1)
IX
: Melo-Vega Angeles, Oscar Eduardo
E-Mail: oscar.melovega@urp.pe

DESCRIPTION

This class addresses the following main topics: exchange rate determination in open
economy models, failures of the law of one price and pricing to market, international business
cycles transmission in general equilibrium models, exporter dynamics, short and long run
adjustments of trade flows, determinants of international capital flows and multinational
production. The readings for the class will be equally split between theory and empirical papers.
We will discuss stylized facts and the empirical performance of the models on these facts as well
as major theoretical puzzles. We will also discuss topics for new research questions on the
empirical and theoretical front.

III. OBJECTIVES
Provide a theory and technical analysis about the international financial market to incorporate
action plans in investment definitions and business finances.
IV. SUBJECT COMPETENCES
o
Analyze the essential facts and events that change the international financial
system.
o
Identify financial trends and facts that use to generate international financial crisis.
o
Study the money and foreign exchange markets.
o
Identify, quantify and design policies to manage external risks (interest, exchange,
market, operational, etc..) Associated with international financial management
o
Present the major financial innovations to cover financial risks.

UNIVERSIDAD RICARDO PALMA

Facultad de Ciencias Econmicas y

Empresariales
Escuela Acadmico Profesional de Administracin de
Negocios Globales
V.
Globalization
International
Environment
International
System

LEARNING NETWORK

Financial

Foreign Exchange
Market

Monetary

Exchange Rates

Global Cost
of Capital

Multinational
Operations
Imports
Exports

VI. LEARNING UNITS

PART 1: ENTORNO FINANCIERO INTERNACIONAL
Mandatory reading
Week
International finance, globalization and multinationalo KOZI, Chapter.1
1
enterprises
What are international finance. Globalization. Criticism of
globalization. Multinational companies.
Learning objective:
Define the international financial environment, structure, actors, instruments and types of
international markets.
The International Monetary System (IMS). Exchange
o KOZI, Ch.2
2
Rate Regimes
Exchange rate regimes. The European Monetary Union and
the euro. History of the international monetary system. The
collapse of Bretton Woods. The role of the International
Monetary Fund. Types of fixed versus flexible exchange
rates.
Learning objective:
Present the historical development of the IMS. Describe the regimes of exchange and explain
the international strength of a country through its international transactions
Balance of Payments (BOP)
o KOZI, Ch.3
3
Accounting balance of payments. Statistical discrepancy.
Deficit in BP. National accounts and BOP.
Learning objective:
Know the different accounts of the BOP. To analyze the influence of the imbalance of the
accounts on the exchange rate.
Current account and exchange rate
o KOZI, Ch.4
4
Exchange rate equilibrium. Effectiveness devaluation to
balance the current account. The exchange rate and domestic
spending and capital account.
Learning objective:
Define the equilibrium exchange rate. Analyze the effectiveness of the exchange rate as an
instrument of devaluation and restore the current account imbalance.
The Foreign Exchange Market
o BMM, Ch.22
5, 6

UNIVERSIDAD RICARDO PALMA

Facultad de Ciencias Econmicas y

Empresariales
Escuela Acadmico Profesional de Administracin de
Negocios Globales
Definition. The resurgence of FOREX. Functions. Segments. o KOZI, Ch.5
Participants. Types of direct and cross rate. Arbitration.
Speculation on the spot market.
Learning objective:
Know the functions of the foreign exchange market. Calculate the exchange rate directly and
indirectly.
International money markets and capital
o BMM, Ch.22
International
banking.
International
money
market. o KOZI, Ch.6
International debt crisis. International bond market.
International market share: ADRs (American depository
receipts), WEBs crossed Listed shares.

Learning objective:
Analyze the various sources of money and capital in the world.
MIDTERM EXAM
8
PART 2: EXCHANGE RATES AND CONDITIONS OF PARITY
Mandatory reading
Week
Exchange rate and interest rate parity
o BMM, Ch.22
9, 10
Investment portfolios. Comparison of yields in different currencies. o KOZI, Ch.7
Parity interest rates. Equilibrium in the foreign exchange market.
Covered interest arbitrage.
Learning objective:
Check parity interest rates and the exchange rate. Knowing covered interest arbitrage
Exchange rate and purchasing power parity
o BMM, Ch.22
11, 12
The law of one price. Absolute and relative parity exchange rate. o KOZI, Ch.8
The monetary approach. Relationship between interest rates and
inflation rates.
Learning objective:
Studying the relationship of interest rates and inflation to the exchange rate through absolute focus on parity
and the monetary approach.
General model of the exchange rate in the long term
o BMM, Ch.22
13, 14
The real exchange rate. General model of the exchange rate. Parity o KOZI, Ch.9
of real interest rates. Changing the actual parity, overvaluation,
undervaluation.
Learning objective:
Define the real exchange rate. Analyze the influence of real interest rates on the exchange rate.
Final Presentation of Group Work
14, 15
FINAL EXAM
16, 17
VII. METODOLOGY
The teaching methodology seeks to raise interest in learning, with practical methods,
case resolution and dynamics.
The activities developed are related to the daily control of variables assigned to each
student, a survey of individual risk profiles, to exhibitions of the teacher, the students
exposures, analysis, discussion and solution of cases and exercises.

UNIVERSIDAD RICARDO PALMA

Facultad de Ciencias Econmicas y

Empresariales
Escuela Acadmico Profesional de Administracin de
Negocios Globales
VIII. EVALUATION:
Final score= (ME+FE+PPRA)/3
Continuous activities (PPRA): (PRA1+PRA2 +PRA3+TRP) /4
o PRA1, PR2 y PR3 : Practice
o TRP : Group or personal activities
IX. TEXTBOOK/ CLASS NOTES
Recommended Textbook:

o Brealey, R.; Myers, S. and Marcus, A. (2009). Fundamentals of Corporate Finance,

Sixth edition. McGraw-Hill Irwin, New York. (BMM)
o Kozikowski, Z. (2007). Finanzas Internacionales. Segunda edicin. McGraw-Hill,
Mexico, DF.(KOZI)
Supplementary material:

o Moffett, M.; Stonehill A.; and Eiteman, D. (2011). Fundamentals of Multinational

Finance.4th Edition. Pearson Higher Education.
o Ross, S.; Westerfield, R.; Jaffe, J.; and Jordan, B. (2008). Modern Financial
Management. Eighth edition. McGraw-Hill Irwin, New York. (RWJJ)

www.bancomundial.org
www.imf.org
www.iadb.org
www.federalreserve.gov
www.eclc.cl
www.bcrp.gob.pe
www.mef.gob.pe
www.ft.com
www.conasev.gob.pe
www.sbs.gob.pe
www.sec.gov
www.google.finance.com
www.quote.com
www.invertia.com
www.today.reuters.com
http://online.wsj.com/public
4

UNIVERSIDAD RICARDO PALMA

Facultad de Ciencias Econmicas y

Empresariales
Escuela Acadmico Profesional de Administracin de
Negocios Globales
www.cemla.org
www.bis.org
http://web.mit.edu/krugman/www/
www.wws.princeton.edu/~pkrugman/
www.forex.com/
http://www.bloomberg.com/

Fall 2014