Course

Unit 1

International Business and its Modes – Nature of International Financial Functions – Scopeof International Financial Management – IFM and Domestic Financial Management – Fast Strides in International Financial Functions. International flow of funds – Structure of Balance of Payments – Equilibrium, Disequilibrium and Adjustment – Approaches to Adjustment – Capital Account – Convertibility.

Unit 2

Developments in International Monetary System – Specie Commodity Standard – Gold Standard – Bretton Woods System of Exchange Rates – Exchange rate regime since 1973 – International Liquidity. Exchange Rate Mechanism – Exchange rate quotations – Nominal, Real and Effective exchange rates – Determination of exchange rate in the spot market – Factors influencing exchange rate – Theories of exchange rate behaviour.

Unit 3

Foreign Exchange Market – distinctive features – major participants – spot market – forward market – Market for currency futures – the market for currency options. Forecasting Exchange Rates – Need for forecasts – Techniques of forecasting – Concept, Nature and Measurement of Foreign Exchange Exposure – Management of Foreign Exchange Exposure.

Unit 4

International Investment Decision: FDI – Theories of FDI – Costs and Benefits of FDI – Strategy for FDI – Evaluation and Management of Political Risk – International Portfolio Investment – Modes – Problems – Concept of Optimal Portfolio.

Unit 5

International Financial Market – Channels for flow of funds – selection of sources and forms of fund. International Banking – process of Internationalization – Financial Intermediation Function – Direction and purposes of lending – Lending Risk – Intermediation in the Foreign Exchange Market. International Financial Instruments: International equities – International Bonds – ADR, GDR and Gold Bullion market instruments – Financial Swaps.

Course Objective:

To provide a detailed outlook on the concepts of international financial management.

Course Outcomes:

The students will be able to:

CO1: Familiarise with international business and its modes

CO2: Understand the exchange rate mechanism

CO3: Understand the foreign exchange market

CO4: Understand the International Portfolio Management and Foreign Direct Investments

CO5: Understand the concepts of international financial markets and instruments

Textbooks:

1. Vyuptakesh Sharan – International Financial Management – PHI
2. Francis Cherunilam – International Business – PHI

References:

1. Madhu Vij – International Financial Management – Excel Books
2. G. Apte – International Financial Management – McGraw Hill
3. Seth – International Financial Management – Galgotia