Study Guide - International Finance

International finance study guide is designed to introduce the workings of the foreign exchange markets, the impact of economic policy on exchange rates and the nature of foreign exchange risk. This study guide discusses the determination of exchange rates, monetary policy, and the international links between exchange rates, inflation rates and interest rates. Moreover, the balance of payments is studied and its impact on exchange rates and country risk is considered. Finally, it examines various concepts of exchange risk and analyzes hedging with forward contracts and foreign currency options and discusses the need to manage foreign exchange risk in a continually operating international business. The study guide offers examples, both numerical and institutional, that demonstrate the use of financial analysis and reasoning in solving international financial problems. Through this, I intend to demystify and simplify international finance by demonstrating the key international finance theory; exchange rate movements and the equilibrium exchange rate; evaluating how to use foreign exchange derivatives to manage foreign exchange exposures and government intervention.