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International Finance REVISION FOR GRADUATION EXAMINATION.

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Presentation on theme: "International Finance REVISION FOR GRADUATION EXAMINATION."— Presentation transcript:

1 International Finance REVISION FOR GRADUATION EXAMINATION

2 Lecture 1 BOP Current Account Capital Account

3 Lecture 2 1. Factors Affecting International Trade Flows Inflation National Income Government Restrictions Exchange Rates 2. Factors affecting International Capital Flows Factors Affecting DFI Factors Affecting International Portfolio Investment

4 Lecture 4 Factors that Influence Exchange Rates Relative Inflation Rates Relative Interest Rates Relative Income Levels Government Controls Speculating on Anticipated Exchange Rates

5 Lecture 5 1. Government Intervention Direct Intervention Indirect Intervention 2. Intervention as a Policy Tool Influence of a Weak Home Currency on the Economy Influence of a Strong Home Currency on the Economy

6 Lecture 6 International Arbitrage Locational Arbitrage Triangular Arbitrage Covered Interest Arbitrage

7 Lecture 7 + 8 1. Parity Conditions Interest Rate Parity (IRP) Purchasing Power Parity (PPP) International Effect 2. Comparison of parity conditions

8 Lecture 10 Political Risk Factors Attitude of Consumers in the Host Country Attitude of Host Government Blockage of Fund Transfers Currency Inconvertibility War Bureaucracy Corruption

9 Lecture 10 Financial Risk Factors Current and Potential State of the Country’s Economy Indicators of Economic Growth Types of Country Risk Assessment Macro-Assessment of Country Risk Micro-Assessment of Country Risk

10 Graduation Examination Multiple Choices: 10 Qs10 marks Short Answer: 1 Q 8 marks Applications:1 Q15 marks

11 MCQ Theoretical questions Calculation questions Change in the exchange rate Bid-Ask spread Forward premium/ discount Cross Exchange rate Change in the exchange rate with parity Forward premium/ discount with parity Country risk rating Locational arbitrage profit

12 Short Answer Factors Affecting International Trade Flows - Lecture 2 Factors affecting International Capital Flows - Lecture 2 Factors that Influence Exchange Rates - Lecture 4 Speculating on Anticipated Exchange Rates - Lecture 4

13 Problem Arbitrages - Lecture 6 Triangular Arbitrage Covered Interest Arbitrage


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