INTERNATIONAL FINANCE
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Unit I : Fundamentals of International Finance
- Meaning and Scope of International Finance
- Balance of payments as determinant of demand for and supply of currency Exchange rate, Determinants of/factors affecting exchange rates
- Current account deficit v/s Balance of trade and their implications on exchange rate
- Foreign Exchange Arithmetic I
- Exchange rate quotations, Direct and Indirect rates, cross currency rates, vehicle currency. % spread, calculation of cross rates
- Classification of rates in terms of settlement (cash, tom, spot and forward), Arbitrage, Speculation and Trading (Spot rate arbitrage calculation)
Unit II : Foreign Exchange Arithmetic II
- Relationship between exchange rates, interest rates, and commodity prices (through international parity conditions namely Purchasing Power Parity, and Fisher Parity)
- Use of Covered Interest Parity theory in arbitrage, borrowing and investment decisions
- Calculation of forward rates through use of forward schedules, through use of formula, annualized forward margin, calculation of swap points (calculations for cash / tom rates to be excluded)
- Exchange Rate Regimes
- Gold Standard – Features.
- Bretton Woods System – Background and Features, reasons for its failure, Smithsonian agreement, SDRs.
- Flexible exchange rate system – Features, Managed float, Central Bank intervention. Merits and Demerits of Fixed and Flexible Exchange rate systems.
Unit III : International Foreign Exchange Markets
- Characteristics
- Dealing room operations
- Euro Currency Market
- Origin and reasons for the growth of Euro currency (off shore) markets, their characteristics and components.
- A brief understanding of the Euro-currency deposit, loans, bonds and notes market.
- Concept of off shore banking as a form of globalization of the Euro currency concept, its introduction in India, tax havens
- International Equity Markets
- Concept of Depository Receipt,
- Global Depository Receipt-characteristics, mechanism of issue, participants involved American Depository Receipt – types and characteristics
- Foreign Currency Convertible Bonds and Foreign Currency Exchangeable Bonds Foreign Direct Investment and Foreign Portfolio Investment
- Participatory notes
Unit IV : Foreign Exchange Management in India
- Retail and wholesale components of the Indian foreign exchange market Capital account Convertibility
- Reserve Management
- Role of FEDAI in the Indian foreign exchange market
- Risk Management and Derivatives
- Risk versus exposure
- Transaction, Translation and Economic risks faced by Corporate entities Transaction, Position, Pre-settlement, Settlement risks faced by commercial banks Internal and external hedging
- Foreign currency derivatives as instruments of risk management i.e. Forward contracts, Swaps, Futures and Options.
- Overview of Non-deliverable forward Market (NDF market)
- International Institutions
- Contribution of Bank for International Settlements in risk management system
- European Central Bank
Recommended books :
- Essential International Money, Adrain Buckley, Pearson Education
- International Finance, Adrian Buckley, Pearson Education
- Foundations of Multinational Finance, Alan Shapiro, Wiley
- Multinational Financial Management, Alan Shapiro, Wiley
- A Text book of Foreign Trade and Foreign Exchange, B.K.Chaudhri O.P. Agarwal , Himalaya Pub. House
- A brief course in Foreign Exchange Arithmetic, C.Jeevanandam, Sultan Chand & Sons
- Foreign Exchange and Risk Management , C.Jeevanandam , Sultan Chand & Sons
- Foreign Exchange Practice, Concepts and Control, C.Jeevanandam, Sultan Chand & Sons
- International Finance, G. Shailaja, Unviersities Press, Hyderabad
- International Financial Management, Geert Bekaert & Robert Hodrick , Pearson Education
- Options, futures and other derivatives , John C. Hull, Prentice Hall, India
- The Economics of Exchange Rates, Lucio Sarno & Mark Taylor, Cambridge University Press
- International Financial Management, Madhu Vij, Excel Books, New Delhi
- International Finance, Maurice D. Levi, Routledge, London
- Fundamentals of Multinational Finance, Michael Moffet, Arthur Stonehill & David Eiteman, Pearson
- International Financial Management, P.G. Apte, Tata McGraw Hill, New Delhi
- Forex Revolution: An Insider’s Guide to the Real World of Foreign Exchange Trading, Peter Rosenstreich, Pearson Education
- International Finance – A Business Perspective, Prakash G. Apte, Tata McGraw Hill, New Delhi
- Foreign Exchange, International Finance, Risk Management, Rajwade A.V., Academy of Business Studies, New Delhi
- Fundamentals of International Banking, Rupnarayan Bose, Macmillian India Ltd., New Delhi
- Foreign Exchange in Practice, Steve Anthony, Palgrave McMillian
- International Financial Economics, Thomas J. O’Brien, Oxford University Press
- International Finance, V.A. Avadhani, Himalaya Publishing House
- Risk in International Finance, Vikash Yadav, Routledge
- International Financial Management, Vyuptakesh Sharan, (PHI Learning Pvt. Ltd., New Delhi)
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