International Finance

FIE433 International Finance

Spring 2024

Autumn 2024
  • Topics

    FIE433 provides an introduction to international finance. We will first study the functioning of international financial markets, focusing on currency markets. The second part of the course deals with international portfolio diversification and asset pricing. We will consider puzzles (such as home bias) and investment strategies (such as global macro investing). Next, we will cover investment and financing decisions of firms that operate in an international environment. Special emphasis will be placed on how corporations assess and hedge their currency exposures and on international project finance. The final part of the course deals with the international monetary system. We will study sovereign risk, moral hazard in international lending, and international crises.

    The course is built around the following four areas:

    1) Exchange rates and the foreign exchange markets: Determination of exchange rates, forward and futures markets, purchasing power parity, interest rate parity.

    2) International capital markets: Portfolio choice, international asset pricing models, home bias.

    3) International corporate finance: Cost of capital, management of currency risks and political risks, international project finance, transfer pricing within multinational firms.

    4) International monetary systems: Sovereign borrowing, moral hazard, international debt crises.

  • Learning outcome

    Upon successful completion of the course, students will be able to:


    • Grasp key theoretical concepts of international finance.
    • Use recent empirical evidence to critically reflect on key theoretical concepts and international asset pricing puzzles.
    • Gain in-depth understanding of international financial instruments and international financial markets for debt and equity.
    • Critically evaluate problems inherent in the international monetary system.


    • Assess optimal international portfolio decisions.
    • Assess and hedge a firm's currency risks.
    • Analyze strategies to mitigate a firm's exposure to political risks.
    • Estimate a firm's international cost of capital.
    • Analyze M&A decisions in an international context.
    • Analyze a country's decision whether to fund investment via foreign-currency denominated debt or domestic currency claims.

    General Competence

    • Use the ideas and techniques of financial economics and international finance to deal with applied real-world problems.

  • Teaching

    The teaching consist of lectures and tutorials taught in person.

  • Recommended prerequisites

    There are no formal prerequisites for the course but students are expected to be familiar with basic finance and economics concepts (e.g. NPV; capital asset pricing model; discounted cash flow techniques; arbitrage principle) typically covered in most bachelor-level finance courses or in FIE402 or FIE400.

  • Compulsory Activity

    Two written, individual homework assignments. The homework assignments are graded on an 'approved/not approved' basis. 

  • Assessment

    3 hour individual written school exam with pen and paper. The exam will be written in English and has to be answered in English.

  • Grading Scale


  • Literature

    Self-contained lecture slides serve as the main reference. The textbook for the course is "International Financial Management" by Cheol Eun and Bruce Resnick, 8th edition. McGraw-Hill. This book covers both more and less than what we will do.

  • Permitted Support Material


    One bilingual dictionary (Category I) 

    All in accordance with Supplementary provisions to the Regulations for Full-time Study Programmes at the Norwegian School of Economics Ch.4 Permitted support material and  


ECTS Credits
Teaching language

Spring. Offered spring 2024.

Course responsible

Associate Professor Konrad Raff, Department of Finance, NHH