FIN 640: International Financial Management

FIN 640 at the University of Maryland Global Campus is a three-credit graduate study of financial management issues in international organizations. UMGC lists FIN 610 as the prerequisite.

The catalog covers the environment of international financial management, foreign exchange market risk management, international working capital management and foreign investment analysis. It also considers the financing of foreign operations, international banking and the role of finance in maintaining global competitiveness.

The challenge is that every familiar tool, such as discounting or forecasting, picks up a currency and a country risk. Students who handle exchange rates cleanly and explain why a decision changes across borders tend to do best.

What FIN 640 Covers

Key Concepts with Worked Examples

Exchange Rate Exposure

A firm with receivables in a foreign currency gains or loses when the rate moves. A forward contract fixes the rate in advance and removes the uncertainty, at the price of giving up any favorable move.

Interest Rate Parity

Forward exchange rates are linked to the interest rate gap between two currencies. The currency with the higher interest rate generally trades at a forward discount, which removes the chance of riskless profit from borrowing in one and investing in the other.

Foreign Investment Analysis

Evaluating a project abroad adds questions to the standard NPV approach: which currency are the cash flows measured in, what are the political and transfer risks, and how much cash can actually return to the parent? State these assumptions plainly in your answer.

Typical Assignments and How to Approach Them

UMGC does not publish assessments on its course page. These are the usual kinds of work in an international finance course; follow your syllabus.

Hedge or Not: A Decision Frame

Exchange rate cases often ask whether a firm should hedge. Work through the same questions each time.

Finish with a recommendation that names the tool, the amount and the reason, and say what would change your mind.

A Second Example: Covered Interest Parity

Suppose the dollar interest rate is 4 percent a year and the euro rate is 2 percent. Spot is 1.10 dollars per euro. Covered interest parity gives a one-year forward of 1.10 x 1.04 / 1.02, about 1.1216 dollars per euro.

The euro, with the lower interest rate, trades at a forward premium. Borrowing in euros and investing in dollars would look attractive until the forward cost of switching back is included, which is why the profit disappears. Quote direction matters: here every rate is dollars per euro.

Where Students Get Stuck

• Quote direction. Dollars per euro and euros per dollar are reciprocals; mixing them reverses the answer.
• Hedging as profit. A hedge reduces uncertainty; it is not expected to make money.
• Stale data. Use dated, cited rates and country data in any analysis.
• Ignoring local rules. Taxes, controls and transfer restrictions change the cash available to the parent.

Study Tips for FIN 640

• Write the quote convention beside every rate you use.
• Practice one forward hedge and one unhedged case with the same numbers.
• Keep a glossary: spot, forward, exposure, parity, transfer risk.
• Read current financial news for a country you may be asked about, and cite it.

How We Help with FIN 640

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