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3rd Sem MBA - International Finance

This document outlines an international finance course. The course objectives are to introduce students to the international finance environment, foreign exchange markets, and risk management. Students will learn about determining exchange rates and how to analyze and hedge foreign exchange risk. They will also explore sources of long-term and short-term international funds. The course consists of 4 modules that cover spot and forward exchange rates, factors influencing exchange rates, foreign exchange risk management, and international sources of finance for firms. Assessment includes practical exercises such as role-playing foreign exchange brokers and analyzing hedging strategies for multinational companies.

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Srestha Chatterjee
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2K views1 page

3rd Sem MBA - International Finance

This document outlines an international finance course. The course objectives are to introduce students to the international finance environment, foreign exchange markets, and risk management. Students will learn about determining exchange rates and how to analyze and hedge foreign exchange risk. They will also explore sources of long-term and short-term international funds. The course consists of 4 modules that cover spot and forward exchange rates, factors influencing exchange rates, foreign exchange risk management, and international sources of finance for firms. Assessment includes practical exercises such as role-playing foreign exchange brokers and analyzing hedging strategies for multinational companies.

Uploaded by

Srestha Chatterjee
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Subject Code Subject Name T P

GME 105F INTERNATIONAL FINANCE 2 2

Course Objectives:
 To introduce the environment of international finance, foreign exchange quotes, Factors determining
exchange rate, forex market, Risk and risk management
 To expose the students to Global Capital Market, International Money Market & International capital
Market, concept of LIBOR, ADR, GDR, FDI, FPI, Euro Loans, Samurai Bond, Masala bond etc.

Learning Outcome:
 Students will learn the basics of foreign exchange market, participants and how it works
 Will learn to forecast exchange rates- how trade balances, interest rates, inflation rates effect currency
value
 Will learn to analysis different types of Foreign Exchange Risk and how to hedge against those (with
Derivatives)
 Will learn to explore the sources of long term as well as short term international funds (equity, Bonds,
Loans) and can help designing financial strategies. Will also have abroad understanding of Global
Liquidity and cross border fund flow and how to manage those risks.

Module I
Introduction to Foreign Exchange: Spot and Forwards Exchange Rates, Bid and Ask Rates, Cross Rate
Quotations- Foreign Exchange Market- Banks, Forex Brokers, Forex Dealers, Deal finalization & settlements.
Balance of payment- Current Account Deficit& its implication
Practical: Students as exporter and importer what rates will be applicable and Role play as Forex broker.
They have to prepare “Deal Confirmation Memo. “Case of WINPRO Computers Ltd.

Module II
Determinants of Exchange rate: Parity conditions in International Finance, Purchasing Power Parity,
and Interest rate parity, Fisher Effect, Covered Interest Parity/Arbitrage and Forecasting Exchange Rates.
Basics of Mundel Flaming Model Vs Dominant Currency Paradigm.
Practical: Case on “Arbitrage”.
Critical analysis of “Dominant Currency Paradigm” (from the real trade data of India for last 5 years.)

Module III
Foreign Exchange Risk & Management: Conceptual Overview - Nature of Exposure (Economic,
Transaction, Translation) Hedging and Speculation. Derivatives and Exposure Management - Currency
Future, Currency Options, Currency Forward, Currency Swaps, Interest Rate Swap & Risk Management
Practical: Case of an Indian Multinational Company’s forex risk and how hedging strategies are to be
decided.
Structuring a SWAP transaction for an Indian Company which wants to borrow in USD.

Module IV
International Sources of Finance for the Firm: Short Term & Long Term- Bond Financing, Loan
Financing (Syndicates Loans), Equity Financing (GDR and ADR) International Financing Decision-Issues
in Overseas Funding Choices &Economic Circumstances and Funding and Risk Management Aspects, Global
Liquidity and how technologies are changing the pace of flow of funds and how corporate should manage the
risk.
Problem: Students have to prepare a “Total Plan” to list an Indian Listed Company in NYSE by issuing
ADRs.

Suggested Readings
1. Apte P G, International Finance: A Business Perspective, Tata McGraw Hill, 2 nd Edition 2017.
2. Eun, Cheol S., Bruce G. Resnick --International Financial Management, Tata McGraw-Hill, 7 th
Edition 2017.
3. Madura, International Financial Management, Cengage Learning, 10 th Edition 2013.

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