INTERNATIONAL

FINANCE

Learning Objectives: Credits: 6
60 hours
At the end of the course, students will be able to:
• demonstrate knowledge of theories related to foreign exchange rate determination
• explain the nuances of international trade and international capital budgeting

Module 1 10 hours
International Economics
• International flow of funds, International trade theories, Exchange rate
determination, PPP, IRP, Relationship between IRP & PPP, Reasons for departure from
IRP.

Module 2 14 hours
Forex Market
• Structure-India and global, Exchange rate quotes, Spot, forward, cross, inverse, direct
quote, SWIFT - Role and significance, OTC derivatives -Swaps, Swap Options, Forward
Rate Agreements (FRAs), Caps, Floors and Collars. Currency Futures in India – MCX and
NSE.

Module 3 12 hours
Exchange Risk Management
• Defining and measurement of foreign exposure, types of exposures, variability of cash
flows, Management of Exchange Risk, hedging, choice of currency of invoicing,
internal & external hedging, netting, offsetting, currency derivatives, forwards,
futures, options, coping with operating exposure. Hedging practices followed by
Indian IT industry and other importers / exporters.

Module 4 10 hours
International Projects Management
• International Projects Appraisal, issues in cost of capital, APV, choice of discount rate,
NPV, international CAPM.

Module 5 14 hours
Working Capital Management in MNCs
• Cash management – Receivables management – payables management – working
capital financing issues – other issues in working capital management by MNC.

Text books:
1. Jeff Madura. International Corporate Finance, South Western, 10th edition, 2012
2. Alan C. Shapiro, Multinational Financial Management, Wiley India, 9th edition, 2012

Reference Book:
1. Maurice D. Levi. International Finance, Taylor & Francis Group,5th edition, 2009
2. Bruce G. Resnick, Cheol S Eun. International Financial Management, Tata McGraw -
Hill Education, 4th edition, 2007