CRICOS code 00025B
FINM 7406 International Financial
Management
Revision Lecture S1 2023
Khoa Hoang, PHD
UQ Business School, University of Queensland
CRICOS code 00025B
• 2-hour open-book online exam 7 June 2023 11:15am. Please check date and
time on the exam timetable and adjust to your local time.
• This is the central exam so the time is very strict. Note that you only have 15
minutes for the submission. DO NOT SUBMIT IN THE LAST MINUTES.
• Structure:
• 4 Problem Solving Questions: Theories and Calculations.
• You can use Excel to do the calculations but we won’t mark them. So you need
to write your workings and answers to the word doc or scanned handwritten
pdf.
• Coverage: Topic 1 to 10 but the focus is on 5 to 10.
Exam Info
Revision Lecture
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• You have roughly more than 3 weeks. So plan your study now. Time
management is the key.
• Last minute study will not work.
• Make sure you go through EVERYTHING:
• Lecture notes: Understand inside out.
• Tutorial questions
• Case studies/Including the guest lecture
• It is an open book so don’t memorise. Understanding the materials is key.
• I will provide extra consultations during the exam week and SWOTVAC.
Study Plan
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• Key points:
• Forward/Futures/Options
• Pro and cons to use the tools to hedge.
• Swap
• Interest rate swap
• Cross-currency swap
Topic 5: FX Derivatives
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• Transaction (Contractual) Exposure
• How is it measured?
• Methods of Hedging Transaction Exposure
• Financial instruments (Futures/Forward, MMH, Option)
• Operational Hedges
• Translation (Accounting) Exposure
Topic 6: Transaction and Translation Exposure
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• What is it?
• How does it impact the firm?
• How do we measure it?
• How do we hedge and should we hedge at all?
Topic 7: Economic Exposure
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• Why should we diversify internationally?
• Why don’t we diversify as much as we should?
• The home bias puzzle
• Is currency risk important?
• Measuring foreign investment performance (Return vs Risk)
Topic 8: International Portfolio Management
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• Capital Market Integration/Segmentation and its impact on the cost of capital
• What is political risk and how do we measure it?
• How do we manage political risk?
• Avenues to raise capital
• International Bond Market
• International Equity Markets
Topic 9: Cost of Capital and Political Risk
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• How do we decide whether a firm should proceed with foreign project(s)?
• What are we maximizing?
• How does international capital budgeting differ from the domestic setting?
Topic 10: International Capital Budgeting
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• I hope that you have learnt a few things from the course.
• My advice for you from here:
• Take professional exams – CFA.
• GPA is important but your curiosity and networking matter. GPA gets you to
(not through) the interviews.
• I’ve enjoyed teaching. Hopefully we will see each other on campus.
• Keep in touch – I would like to hear about your success stories .
Finally
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Good luck