FINC 460: International Finance

FINC 460 at the University of Maryland Global Campus is a three-credit analysis of financial management issues for the multinational enterprise. UMGC lists FINC 340 as the prerequisite and allows credit for only one of BMGT 446 or FINC 460.

The aim is to use financial and economic strategies in quantitative decision making. Topics include the organization and functions of the foreign exchange market and international capital markets, financing foreign trade, and identifying, analyzing and evaluating globalization strategies of the multinational enterprise.

The course is hard because it mixes calculation with strategy. Exchange rate problems need careful arithmetic, while globalization questions need reasoned judgment.

What FINC 460 Covers

Key Concepts with Worked Examples

Cross Rates and Triangular Reasoning

If two currencies are quoted against a third, you can derive the rate between them. Check that the result is consistent with direct quotes.

Purchasing Power Parity

The expected change in an exchange rate relates to the inflation gap. Higher inflation at home than abroad suggests the home currency will weaken.

Entering a Foreign Market

Options include exporting, licensing, partnerships and wholly owned subsidiaries, each with a different mix of control, cost and risk. Match the mode to the firm's goals and the market's conditions.

Typical Assignments and How to Approach Them

UMGC's public page lists no assessments. These are typical works in an international finance course; follow your syllabus.

Choosing a Market-Entry Mode

Globalization cases ask which route into a foreign market suits a firm. This table summarizes typical trade-offs.

Pick one mode for the firm in your case and give three reasons, followed by one condition under which you would choose differently.

A Second Example: Hedging an Import Payment

A US importer must pay 2 million euros in six months. Spot is 1.10 dollars per euro, so the cost today would be $2.2 million. If the euro strengthens to 1.18, the cost becomes $2.36 million, a $160,000 increase.

A forward purchase fixes the cost. Whether to use it depends on the firm's margins, its tolerance for a bad outcome and the forward rate offered. Notice that the direction of exposure is the reverse of an exporter's, because the importer loses when the foreign currency rises.

Where the Marks Usually Come From

International finance questions are often marked on method as well as the final figure. Showing the quote direction, the formula and each conversion step lets a grader award credit even when a slip occurs later.

For strategy questions, give a reason for each choice that is specific to the country and the firm, and mention at least one risk you cannot remove. General statements that would fit any market earn little.

Where Students Get Stuck

• Inverting rates. Mixed-up quote directions cause wrong answers.
• Theory taken as fact. Parity relationships are tendencies, not guarantees.
• Dated data. Always date and source figures.
• One-sided analysis. Discuss risks as well as opportunities.

Study Tips for FINC 460

• Write the quote direction beside every rate.
• Practice three or four conversions daily until they are fast.
• Build a table of entry modes with control, cost and risk.
• Follow one company's expansion abroad as a running example.

How We Help with FINC 460

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