Dr Liliana Varela

This course is available on the MSc in Finance (full-time), MSc in Finance (full-time) (Work Placement Pathway), MSc in Finance (part-time), MSc in Finance and Economics, MSc in Finance and Economics (Work Placement Pathway), MSc in Finance and Private Equity, MSc in Finance and Private Equity (Work Placement Pathway) and MSc in Finance and Risk. This course is not available as an outside option to students on other programmes. This course uses controlled access as part of the course selection process. For information on controlled access courses, including eligibility, application processes, deadlines, and departmental contact details, please refer to the Controlled Access Courses webpage.

All students on a programme listed above will be given a place. This course is closed to outside students and does not permit auditing students.

Please contact finance.teachingmanager@lse.ac.uk with any queries.

Co-requisites:

Either before taking this course, or in the same year as this course, students must complete:

FM436

or

FM403

or

((FM422 or FM422E) and (FM423 or FM423E))

.

Following an introduction to foreign exchange markets, the course focuses on the key elements of international financial management. It begins by examining foreign currency exposure, distinguishing between transaction and economic exposure. It then discusses financial and operational techniques for hedging currency risk, including the use of FX derivatives (forwards, futures, and options), choice of invoicing currency, and exposure netting, among others.

The course draws on case studies of multinational corporations to illustrate the measurement of currency exposure and the implementation of hedging strategies. It then turns to exchange rate determination and forecasting, presenting the main approaches used both in industry and in academic research.

Finally, the course addresses exchange rate regimes, currency crises, and current issues in the global economy. It covers major historical episodes, including the Latin American debt crisis of the 1980s, the European Monetary System crisis of 1992, and the Asian financial crisis of 1997, among others.
 

30 hours of seminars in the Winter Term.

This course is taught in an interactive format. There is no distinction between lectures and classes/seminars; there are simply “sessions” where the pedagogical approach is always interactive.

Weekly problem sets covering both theoretical methods and practical applications.

Detailed course readings, cases, and slides will be distributed at the start of the course. Illustrative texts include: International Financial Management by C. S. Eun and B. G. Resnick, McGraw-Hill Education; 8th edition (2018), International Financial Management by G. Bekaert and R. Hodrick, Cambridge University Press; 3rd edition (2017) and Maurice Obstfeld and Kenneth Rogoff, Foundations of International Macroeconomics, The MIT Press (1996).

Continuous assessment (100%).