International Finance

FIE433 International Finance

Autumn 2020

  • Topics

    The course is built around the following four areas:

    1) 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, cross-border M&A, transfer pricing within multinational firms.

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

  • Learning outcome

    The course 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 mitigate political risks. 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.

    Upon successful completion of the course, students should 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


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

  • Teaching

    Lectures, Tutorials and Class Discussions.

  • 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.

  • Requirements for course approval

    To earn course approval, students are required to earn a 'pass' on a written, individual homework assignment. The homework assignment is handed out in the middle of the term and graded on a approved/fail basis. 

    Students that have a passing grade in FIE433 from a previous semester are exempted from submitting course approval in the spring semester of 2020.

  • Assessment

    Due to the ongoing Corona pandemic, the assessment for the spring semester 2020 has been changed:

    Individual home exam. 4 hours

    Exam dates have not been changed.


    Original assessment form spring 2020 – cancelled:

    3 hours written school exam. The exam will be written in English and has to be answered in English.

  • Grading Scale

    Grading scale spring 2020:


    (Originally planned: A-F)

  • Literature

    I will provide self-contained lecture slides, which will serve as the main reference. In addition, I will assign specific articles for you to read. 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.


ECTS Credits
Teaching language

Spring. Offered spring 2020.

NB! The assessment form has been changed due to the ongoing corona pandemic.

See assessment section for details.

Course responsible

Associate Professor Konrad Raff, Department of Finance, NHH