Block I - Overview of International Finance and Financial Markets
Unit 1 Introduction to International Finance
Introduction, Meaning, Importance, Nature and characteristics of International Business, Globalization and India's financial sector reforms. Scope of International Finance, WTO and its impact; Role of World Bank, IMF, SDR. Trade settlement methods, Export Finance, Balance of payments(determination of current account, capital account & ORA)-International Trade
flows-International, Capital Flows-Agencies that facilitate International flows – Equilibrium, disequilibrium & adjustment of Balance of payment & Trade deficits, , Introduction to NASDAC.
Unit II - The foreign exchange market
Introduction, Meaning, Definition of exchange rate, International Equity and Bond Market Structure of Foreign Exchange Market, Types of Transactions, Exchange Rate quotations and arbitrage, Interrelationship between Exchange and Interest Rate, Government influence on exchange rate
Unit III - Exchange Rate Mechanism and Foreign Exchange exposure
Introduction, Foreign exchange trading-Cash & Spot exchange markets-foreign exchange rates & quotation- forward markets-Exchange rate Behaviour - Cross Rates-Foreign exchange market participants- Role of participants of Forex market, arbitrage profit in foreign exchange markets, Swift Mechanism, Exchange Rate determination- Mathematical models, Impact of Euro currency, and US Dollar, Emerging importance of Indian rupee.
Unit IV - Risk management and forecasting foreign Exchange rate
Introduction, meaning, Definition of Risk, and measurement, Exchange rate risk, Interest rate risk and political risk; Techniques of covering risks- Internal and External, Hedging tools and techniques- internal and external. FEMA, Measuring exchange rate movements- Exchange rate equilibrium – Factors effecting foreign exchange rate forecasting exchange rates; Management of Transaction exposure, Translation exposure, Economic exposure, political Exposure,
Block II - The Exchange Rate Theory and International Monetary System
Unit 1 Purchasing power parity
Introduction, Meaning, Purchasing power parity and floating exchange-rate experience, the purchasing power parity, the empirical evidence on the PPP, Explaining the poor performance of the PPP theory, The Balassa-Samuelson model.
Unit II - Monetary Models
Introduction, Meaning, The basic background to the monetary models of exchange-rate determination, The common characteristic and significant differences between the models, The flexible-price monetary model, The sticky-price monetary model, The real interest-rate differential model, Implications of the monetary views of exchange rate determination.
Unit III - Concept of Risk Premium
Introduction, The concept of risk premium and different types of risk, a simple version of the model and use this to examine the differing effects of OMOs, FXOs and SFXOs, Consider some of the dynamic features of the portfolio balance model. The efficiency of the foreign exchange market, exchange-rate movements, the fixed and floating exchange rates, the rationale behind discretionary intervention in the foreign exchange market
Unit IV - The Balance of payments
Introduction, Meaning, concept of surplus and deficit in balance of payment, the relationship between the current account and the national income account, the effects of changes in government expenditure and export on national income and the current account. The absorption approach to the balance of payments, The similarities and differences between the two models. Book References
1. Jeff Madura. International Financial Management
. Cengage Learning, 2010.
2. A.V. Rajwade. International Finance
. Academy Of Business Studies, 2006.
3. P.G. Apte. International Finance Management
. McGraw Hill, 2010.
4. John Holland. International Finance Management.
Oxford, Blackwell Publication, 1997.
5. Shapiro. International Finance
. Wiley India Pvt Ltd, 2008.