The purpose of this module is to study the international financial environment – including financial markets – within which business operates. (Financial Management within the international environment is covered in BAFI 532). We begin BAFI 530 by discussing international capital flows and foreign exchange markets. We consider the different parts of the market involving bank notes, bank drafts, forward exchange, currency swaps, futures and options. We next investigate the connection between interest rates, inflation, and exchange rates, including concepts of purchasing power parity and interest parity. After the different parts of the foreign market have been described, we move on to the factors causing exchange rates to change. We begin by looking at a country’s international accounts and then discuss supply and demand for currencies, exchange rate determination and the stability/volatility of exchange rates. Finally, we investigate different exchange rate systems and discuss the circumstances under which a common currency, such as the euro, is appropriate.
Instructor Biography - Glen Donaldson
Course Outline - Class of 2018 (updated July 21, 2016)
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