MODULE TITLE: INTERNATIONAL FINANCE

MODULE CODE: ACU 08103

1. Number of Credits: 12
2. Course Assessment
Continuous assessment 40%
Final examination 60%
3. Sub enabling Outcome and Related Tasks
A. Demonstrate knowledge of International finance and banking in
business operations
(a) Explain international finance
(b) Explain importance of international finance
(c) Identify indicators for internationalization finance
(d) Explain reasons to study international finance
(e) Explain roles of international financial manager
(f) Explain reasons and need for international banking
(g) Describe organization set up of international banking
(h) Explain international banking operations, activities and banking operations
in Tanzania
B. Demonstrate knowledge of international momentary system in the economy
(a) Explain evolution of modern international monetary system and exchange
rate regimes (fixed exchange rate system, flexible exchange rates system,
other exchange rate system)
(b) Explain different policy tools for international monetary system and
exchange rate regimes
(c) Compare fixed and flexible exchange rate regime
(d) Explain central bank intervention in exchange rate
(e) Explain Tanzania exchange rate policy and practice.
C. Use foreign exchange market to trade overseas currencies
(a) Explain foreign exchange market
(b) Identify characteristics of foreign exchange market
(c) Identify key players in foreign exchange market
(d) Explain spot market (direct and indirect spot quotations, ask-bid spread,
cross exchange rate quotations and triangular arbitrage)
(e) Explain forward market (forward rate quotations, forward
premium/discount, forward cross exchange rates, swap and outright
quotation rates)
(f) Calculate triangular arbitrage profit
D. Apply international parity relationship and exchange rate forecasting to make
financial decision

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(a) Explain international parity concepts (purchasing power parity, fisher effect,
international fisher effect, interest rate parity and forward rates)
(b) Determine commodity and interest rate arbitrage opportunities by using
Purchasing Power Parity and Interest Rate Party
(c) Evaluate the need for exchange rate forecasting
(d) Evaluate the implication of balance of payments on exchange rate
determination
(e) Explain Foreign Exchange market efficiency
(f) Explain concept of market efficiency and levels of market efficiency
(g) Determine exchange rate in efficiency market
(h) Forecast exchange rate in efficiency market
E. Use financial derivative markets to hedge foreign exchange risk
(a) Describe derivative market and instruments
(b) Explain currency future, currency swap, and currency option
(c) Identify risks associated to options contracts, futures contract and swap
contract
(d) Explain interest rate future, interest rate swaps and interest rate option
(e) Compute currency and interest rates futures
(f) Compute currency and interest rates options
(g) Compute currency and interest rates swap
(h) Develop hedging strategies by using futures, options and swap contracts
F. Demonstrate knowledge of block chain technology in international business
(a) Define Block chain
(b) Explain Crypto currency
(c) Differentiate Block chain, crypto currency and Bit coin
G. Demonstrate knowledge of foreign direct investment in business environment
(a) Explain foreign direct investment
(b) Explain motives for foreign direct investment
(c) Identify modes of foreign direct Investment
(d) Explain foreign direct investment in developing countries
(e) Identify risk associated with foreign direct investment
(f) Explain advantages and disadvantages of foreign direct
(g) Explain measures to mitigate risk associated with foreign direct investment
H. Use foreign exchange risk management strategies to measure investment
(a) Explain foreign exchange risk
(b) Explain types of currency risk (translation, economic and transaction
exposure)
(c) Explain how financial instruments such as hedging and derivative
products may be used to manage risks and the nature of such products
(d) Identify alternative approaches to managing interest rate exposure

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(e) Manage currency rate exposure (transaction, economic and translation
exposure)
I. Apply international capital budgeting skills to make investment decisions
(a) Explain international capital budgeting
(b) Differentiate domestic capital from capital budgeting, parent perspective
from subsidiaries perspectives, centralised from decentralised
(c) Calculate net present value in international capital budgeting
(d) Adjust cash flow and discounting factors in international capital budgeting
J. Use portfolio and diversification theories to make investment decisions
(a) Explain domestic portfolio theory and capital assets pricing model (CAPM)
(b) Differentiate international portfolio diversification from domestic portfolio
diversification
(c) Explain benefits of international portfolio diversification
(d) Identify types of international risks (political, social and economic risks)
(e) Measure risk and return associated with international portfolio investment
(f) Measure returns and risk associated with investing in securities in different
markets and denominated in various currencies
(g) Evaluate the International Capital Assets Pricing Model (ICAPM) and its
application in evaluating internationally allocated investments
(h) Evaluate barriers to international diversification

4. References:
A. Required References:
1) ACCA, (2007), Text, Strategic Financial Management, Part 3 paper 3.7 ACCA
Kaplan Publishing.
2) Pike, R. and Neale, B. (2005), Corporate Finance Investment, 5th Edition,
Financial Times Prentice Hall.
3) Buckley, A. (2004), Multinational Finance, 5th Edition, Financial Times
Prentice Hall, London.
4) V.K. Khalla S. and Shiva Ramu (2004), International Business, 8th Revised
Edition, Anmol Publications PVT Ltd.
5) Mutaitina, O. R. (2003), International Trade Finance, Bankers Workbook
Series, the Tanzania Institute of Bankers.
B. Recommended References:
1) Prasanna, Chandra (2005), Investment Analysis and Portfolio Management,
2nd Edition, TATA McGraw Hill.
2) The United Republic of Tanzania (2004), Public Finance Act and
Regulations, Government Printer, Dar-es-Salaam.
3) Eun, C. S. and Resnick, B. G. (2004), International Financial Management,
3rd Edition, Irwin.

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