Master 2021/2022

International Financial Management

Type: Compulsory course (Master in International Management)

Area of studies: Management

Delivered by: Department of Financial Management

Where: Graduate School of Business

When: 1 year, 3 module

Mode of studies: offline

Open to: students of all HSE University campuses

Instructors: Dmitry Malov

Master’s programme: Международный менеджмент

Language: English

ECTS credits: 5

Contact hours: 40

Course Syllabus

Abstract

In the modern climate, values of the traditional market economy are being revised. Hence, the concept of sustainable company development has become widespread superseding the concept of profit maximization. This goal is applicable not only to firms that focus on domestic business, but also to companies that operate internationally. Another noticeable trend in company development is expansion at an international level as an important mean of enhancing value for many companies. Since foreign markets can be distinctly different from local markets, they create opportunities for improving profits using advanced financial instruments and concepts. Many barriers to entry into foreign markets have been reduced or removed recently, not least due to the internet, thereby encouraging firms to pursue international business. Consequently, many firms have evolved into multinational companies (MNCs). We start by an overview of financial management and company in which it operates. Next, we focus on the critical factors that affect exchange rates and discuss various functions involved in managing exposure to exchange rate risk. We finally cover how MNCs manage long-term assets and liabilities (financial modelling) in the context where international investments face a much higher degree of political, economic, and regulatory risk than domestic investments. Knowledge of quantitative analysis will often be required to comprehend material and successfully complete exercises and exam questions. Therefore, students should be comfortable with basic statistics concepts. Students should also be able to use Excel for basic statistical analyses.

Learning Objectives

• The goal of this course is to provide students with the big picture of international business – from various methods MNCs use to enter foreign markets to different types of financial risks that they face and how they manage them on international financial markets.

Expected Learning Outcomes

• Student will get to know: - Specifics of company analysis based on the principles of corporate finance; - Principles of forming company’s cash flows; - Criteria for selection of investment projects both related and non-related to the concept of net present value; - Forecasting exchange rates. Measuring exposure to exchange rate fluctuations. Managing transaction exposure. Managing economic and translation exposure.

Course Contents

• International Financial Management: Overview, Problems and Development
• Principles of company’s cash flow formation.
• Risks and return on financial assets. Capital Asset Pricing Model (CAPM)
• Specifics of company analysis based on principles of corporate finance
• Criteria for selection of investment projects both related and non-related to the concept of net present value
• Derivatives and their implementation in the current operations of the company
• Exchange Rate Fluctuations and Foreign Currency Derivatives
• Financial management in start-ups.
• Required return of an international corporation. Cost of capital for international projects.

Assessment Elements

• Proactive attitude and presentations
• Homework
  The first assignment consists of theoretical exercises on principles and models covered in lectures. The second assignment requires to build a cash-flow model for the company of student’s choice. The final assignment is a short essay about current international economic problems (topic TBD). The essay should discuss key economic issues including the main economic indicators and include deep economic analysis of financial statistics. Each homework will have a description of grading scale.
• Case studies work
  Case studies involve solving practical problems using real data. There are given premises that describe a current economic problem, and several questions the answer to which requires students to analyze the premise and use their fundamental knowledge of economics and finance. Each case will have a description of grading scale.
• Mid-term exam
• Final individual closed-book exam

Interim Assessment

• 2021/2022 3rd module
  0.4 * Final individual closed-book exam + 0.25 * Mid-term exam + 0.15 * Proactive attitude and presentations + 0.1 * Case studies work + 0.1 * Homework

Bibliography

Recommended Core Bibliography

• Damodaran, A. (2012). Investment Valuation : Tools and Techniques for Determining the Value of Any Asset (Vol. 3rd ed). Hoboken, New Jersey: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=442924
• Fundamentals of futures and options markets, Hull, J. C., 2005

Recommended Additional Bibliography

• International financial management, Madura, J., 2011