Student guide Facoltà di Economia A.A. 2011/12

International financial markets are a powerful engine of both growth and disaster for the global economy. They facilitate the transmission of positive and negative economic shocks among nations and pose challenges and opportunities to firms and investors. Aim of the course is to let you master the mechanics and the economic rationale of international portfolio diversification and of foreign exchange markets, as well as to gain an insight about many current crucial issues concerning the international financial markets and their impact on the global economy.

The course aims at developing a sound conceptual background together with a strong focus on everyday FX market practice. In order to achieve this task, the course revolves around a continuous blend between the macroeconomics and the microeconomics of international financial markets, while shedding light on daily FX market functioning and trading mechanisms.

Great attention will be paid to the historical evolution of the international financial infrastructure, as a necessary prerequisite to develop a stronger understanding of the complex mechanics laying behind the current global markets.

This implies a major focus on:

I.       FX markets’ functioning;

II.       Exchange rate parity conditions and exchange rate determination;

III.       Exchange rate risk management;

IV.       FX markets efficiency and exchange rate predictability;

V.       Diversified international investments

A detailed schedule will be handed out during the first lesson.

a.    International financial markets and the global economy;

b.    The infrastructure of international finance: from the gold standard to the current economic and financial crisis;

c.    Focus on FX market dynamics: quoting conventions, traded instruments, settlement procedures and non-arbitrage relationships;

d.     Exchange rate parity conditions and their empirical relevance;

e.    BoP accounting and models of foreign exchange rate determination;

f.      Risks, exposures and hedging techniques in an international environment;

g.    FX markets efficiency and exchange rate forecasting;

h.    International portfolio diversification.

For students attending classes, grades are based on a closed book exam that will take place at the end of the course. This grade will be marked up / down depending on the student’s proactiveness throughout the course

All the other students should pass an oral examination covering the material outlined above.

Attending students are responsible for all the lecture contents (slides provided throughout the course, selected textbook’s chapters as well as any supporting material).

The whole course is structured to reward student for being proactive learners, not passive listeners.    

Students not attending classes will be responsible for the entire material of International Finance, M.D. Levi, 5^th edition 2009, Routledge.