Course unit details:
||FHEQ level 7 – master's degree or fourth year of an integrated master's degree
||Alliance Manchester Business School
|Available as a free choice unit?
Applied and theoretical papers on:
Trading activity and the operational and institutional structure of foreign exchange markets
The choice of exchange rate regime and macroeconomic performance
Market microstructure and structural approaches to exchange rate determination
Forecasting exchange rates
Foreign exchange market efficiency. Covered interest parity and the forward premium puzzle
Carry trades and other models of speculative activity in currency markets and empirical determinants of currency risk premium
Factors underpinning international financial market integration and the international transmission of financial crises
BMAN71181 Programme Req: BMAN71181 is only available as an elective to students on MSc Accounting & Finance and MSc Finance
This course undertakes a detailed analysis of recent developments in a select number of major international financial markets, with a major focus on the operation of, and information transmission mechanism in, the foreign exchange (FOREX) market. We consider at variety of theories underlying the determination of exchange rates. To provide the requisite foundations, the course includes a critical appraisal of the major asset based/structural theories of exchange rate determination and also considers more recent market microstructure approaches. Particular attention will be given to recent efforts to resolve several puzzles in international finance, namely: the exchange rate determination puzzle; the excess volatility puzzle and the forward premium bias puzzle. In the process we consider the factors underpinning FOREX market efficiency, time varying risk premium and the international transmission of financial crises. The course incorporates both theoretical and applied material.
On completion of this unit successful students will have achieved the following learning outcomes:
- An understanding of the structure and operation of foreign exchange markets, including the nature and pattern of trading activity and the growth of algorithmic and high frequency trading in FOREX.
- An understanding of, and ability to, critically evaluate the major existing theories of exchange rate determination and the empirical evidence relating to these theories.
- Be able to critically evaluate the existing thinking and evidence relating to three major puzzles in the pattern of exchange rate dynamics: the determination, excess volatility and forward premium bias puzzles.
- Be able to critically evaluate the existing thinking regarding the nature and causes of currency crises, and the potential for their transmission internationally
Group Case Study - 1,500 words (30%)
Written Examination - 2 hours (70%)
Informal advice and discussion during a lecture, seminar, workshop or lab.
Online exercises and quizzes delivered through the Blackboard course space.
Responses to student emails and questions from a member of staff including feedback provided to a group via an online discussion forum.
Written and/or verbal comments on assessed and non-assessed formative coursework.
Written and/or verbal comments after students have given a group presentation.
Generic feedback posted on Blackboard regarding overall examination performance.
There is not a single textbook which covers all the material on the course. The following book will familiarise students with the underpinnings of international finance theory at an intermediate (IFM) level. It contains much, but not all, of the basic course material.
G. Bekaert and R. Hodrick, International Financial Management, Prentice Hall, 3rd edition, 2018. (henceforth IFM)
Other useful sites for information, research and policy material include:
www.bis.org www.ecb.int www.imf.org www.nber.org www.bankofengland.co.uk
|Scheduled activity hours
|Assessment written exam
|Independent study hours
Informal Contact Methods
Online Learning Activities (blogs, discussions, self assessment questions)
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