ECP2721

Trade finance and foreign exchange

Lecturer to be advised

6 points
* 3 hours per week
* First semester (Caulfield)
* Second semester (Peninsula)
* Prerequisite ECX1710

Objectives On completion of this subject a student should be able to understand the operation of foreign exchange markets and alternative exchange rate systems; appreciate the methods of managing foreign exchange risk and operating exposure; understand the mechanism for financing international trade; appreciate the roles of short and long term international financing.

Synopsis The importance of international finance; foreign exchange markets - spot, forward, futures and options markets; the determination of exchange rates; purchasing power parity and interest rate parity; hedging and speculating in foreign exchange markets, Eurodollars and Euro-currencies; aspects of short term and long term financing; operating exposure.

Assessment Major essay (1500 words): 20%
* Tutorial exercises: 10%
* Examination (2 hours): 70%

Prescribed texts

Levi M D International finance latest edn, McGraw-Hill