International Financial Markets
- 1.5 credits
- Prerequisite: F520 or concurrent enrollment
International Financial Markets is designed to provide an overview of the financial environment that globally operating companies and investors currently face.
- Overview of the Foreign Exchange Market and Exchange Rate Determination
This session will concentrate on exchange rate determination, with an emphasis on empirical tests of the international parity conditions. As a review of the theory, I have prepared two videos for you.
- Market Efficiency in Currencies
The concept of market efficiency plays a crucial role in the study of financial markets. This session examines the principals of market efficiency concentrating on their application to the foreign exchange market.
- Forecasting Exchange Rates
This session examines techniques used to forecast exchange rates. Covered are the criteria by which to judge exchange rate forecasts as well as the latest empirical evidence.
- The Benefits of International Investing: Portfolio Diversification
This session examines the gains to international portfolio diversification, starting with the statistics of portfolio diversification and ending with empirical evidence on the benefits of international diversification.
- Barriers to International Investing and their Effects
This session examines how barriers to capital flows such as corruption, political risk, inadequate information disclosure, poor accounting standards affect investors and their returns.
- Law and Finance
In this session, we ask: Why do some countries have so much bigger capital markets than others? Why do hundreds of companies go public in the United States every year, while only a few dozen went public in Italy over a decade? Why do Germany and Japan have such extensive banking systems, even relative to other wealth economies?
- Securities that Overcome These Barriers
This session examines the financial engineering of international securities that mitigate some of the barriers to international investment.
- The Home Bias of Investors' Portfolios
This session explores an "anomaly" of international finance, the home bias phenomena.
- Global Historical Returns
This session examines the effect of selection bias on the measured benefits of international investing.
Course Materials: Custom Course Packet
Grading Criteria: Average of cases and problem sets, class participation, and final exam.