International Finance FINAL EXAMINATION REVISION

Lecture 1 1.BOP Current Account Capital Account Change in Official Reserves

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

Lecture 3 1. Motives for Using International Financial Markets Motives for Investing in Foreign Markets Motives for Providing Credit in Foreign Markets Motives for Borrowing in Foreign Markets 2. International Financial Markets Foreign exchange market Euromarket

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

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

Lecture 6 1. Foreign Exchange Market 2. International Arbitrage Locational Arbitrage Triangular Arbitrage Covered Interest Arbitrage

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

Lecture 9 Motives for DFI Revenue-Related Motives Cost-Related Motives Host Government View of DFI Incentives to Encourage DFI Barriers to DFI

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

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

Lecture 10 Reducing Exposure to Host Government Takeovers Use a Short-Term Horizon Rely on Unique Supplies or Technology Hire Local Labor Borrow Local Funds Purchase Insurance

Lecture 11 Methods of Payment Prepayments Letters of Credit Sight Drafts and Time Drafts Consignments Open Accounts

Lecture 11 Trade Finance Methods Accounts Receivable Financing Factoring Letters of Credit Banker’s Acceptances Working Capital Financing Medium-Term Capital Goods Financing (Forfaiting) Counter-trade

IF Final Examination 120 minutes Multiple Choices: 20 Qs40 marks Problems: 04 Qs60 marks

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 Triangular arbitrage profit