International Finance: Institutions and Markets

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Module Title : International Finance: Institutions and Markets

  • Type of Module:

PC (Prescribed Core Module)

Χ

PS (Prescribed Stream Module)

ES (Elective Stream Module)

E (Elective Module)

  • Level of Module

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1st


  • Year of Study

1st


  • Semester

6


  • Number of credits allocated

  • Name of lecturer / lecturers : NIKOLAOS S. THOMAIDIS/ MICHAEL MICHALOPOULOS

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  • Description :

This module is a comprehensive introduction to international money/capital markets and basic techniques for analysing the presented investment opportunities. Students become acquainted with the operation and interaction of international financial markets, the role of credit institutions and regulatory authorities, the function and characteristics of financial securities as well as factors affecting the dynamics of interest and foreign exchange rates. Parallel to topics in international finance, tutees are being taught modern approaches to asset pricing and state-of-the-art methods/techniques for selecting an international portfolio.

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  • Prerequisites :
  • Acquaintance with probability theory and statistics.
  • Good grasp of MS Excel.
  • Knowledge of basic computer programming principles.

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  • Module Contents ( Syllabus) :
  • International money/capital markets : products and operation, market-players and the role of regulatory authorities, developed and emerging markets.
  • Fixed-income markets : treasury bills, bonds (pricing, duration and convexity), advanced fixed-income products (floating rate notes, index-linked bonds, callable-putable bonds, convertible bonds).
  • The term structure of interest rates : yield curve, Libor, Euribor, the expectations theory and types of yield curves, spreads between bond yields, factors affecting the time-evolution of interest rates and yield spreads, credit rating agencies.
  • Equity markets and modern portfolio theory : products and operation, risk and return, fundamental valuation of stocks, the Markowitz model, calculating the risk/return of portfolios, risk diversification and the dependence structure of stock returns, international diversification, feasible and efficient frontier.
  • Pricing of securities : capital asset pricing model (CAPM), systematic risk and stock valuation, international CAPM, single-/ multi-factor models, arbitrage pricing theory, evaluating the performance of fund managers.
  • Foreign-exchange (FX) markets : products and operation, factors affecting the time-evolution of FX rates, FX risk, strategies for managing FX risk.

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  • Recommended Reading :

Α) Principal Reference :

§ Teaching notes (in Greek)

§ Vasiliou D. and Iriotis, Ν. (2009), Investment analysis and portfolio management, Rosili (in Greek).

§ Papaioannou D. (2002), Introduction to financial markets (in Greek).

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Β) Additional References :

§ Giddy, I.H., International financial markets, Papazisis (in Greek).

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  • Teaching Methods :
  • Transparencies, lecture notes, homework exercises and tutorial (problem-solving) sessions.
  • Asking students to prepare market reports on the time-evolution of key market/economic indices.

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  • Assessment Methods :

Final paper-based examination

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  • Language of Instruction :

Greek

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  • Module Objective (preferably expressed in terms of learning outcomes and competences):
  • Understanding the operation of international money/capital markets.
  • Getting a good grasp of the function and characteristics of fixed-income, equity and FX products.
  • Learning theories and techniques for investment appraisal and portfolio management on an international level.
  • Demonstrating practical aspects of international portfolio selection through the use of real market data.
  • Performing basic calculations in portfolio theory using commercial software packages (solving optimisation problems, estimating beta coefficients, calculating the efficient frontier).

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