Course Outline International Finance & Treasury Management PGDM (2010 -2012) COURSE FACILITATOR Name of Faculty- Prof.

Pushpendra Singh email- Pushpendra.singh@iilmgsm.ac.in Contact details- 8527914913 IILM Graduate School of Management Greater Noida

Introduction
This course aims at providing a conceptual framework within which key financial decisions of the multinational firm can be analyzed. It aims at providing an insight into operations and functioning of foreign exchange markets. The course exposes the students to various strategies of hedging foreign exchange exposure. It also exposes students to dealing room concepts and intricacies connected with foreign exchange trading. The purpose of this course is to provide basic knowledge to the students about currency markets, its functions and working. It also aims at providing knowledge on international monetary system, multinational companies, hedging by importers and exporters and the risks involved in foreign exchange market. The course also aims to acquaint participants with the different types of financial innovations (derivatives, their processes, products & institutions). The focus of the course is also on analyzing various derivative instruments keeping in view the domestic as well as global scenario. Since the course is conceptual and practical in nature, the assessment methodology will also be such that it tests the understanding and the ability to apply the knowledge in real world.

Key Elements of the Course

Multinational Corporation and its Financial Environment. Market for Foreign Exchange Activities in Foreign exchange Markets (Hedging, Speculation & Arbitraging). Exchange Rate Determination. Forecasting Exchange Rate. The Derivative Market (Future, Options, Option Portfolio & Swaps) Foreign Exchange Exposure and Risk. Off Shore Financing (Sourcing Debt Internationally, Euro-Equity Market).

Objective
On successful completion of this module participants would be able to; Understand the dynamics of Financial Environment at the level of Multinational Corporation. Appreciate the role of Foreign Exchange Markets in International Finance. Understand the Valuation of Currency and Exchange Rate System. Understand the Implementation of Financial economics in Foreign exchange Exposure and Overseas Valuations. Understand the Financial Derivatives Market. Understand the International Cost of capital.

Course Facilitator
Prof. Pushpendra Singh: A Post Graduate in Management & Commerce (PGDM & M.Com) with a Doctoral Research (At the stage of completion) in the area of Financial Derivatives Trading. Has a total of more than 11 years of experience in Teaching, Research, Consultancy and Corporate Training and 2 years of corporate experience. Published one text book and two research papers.

Module Readings
Reading of related Newspaper articles and Journals is mandatory for the course. It will help students relate classroom teaching to the practical world and understand how news impacts fluctuation in currency values in the foreign exchange market and vibrancy of the derivatives market. Text Book International Financial Management, Seth A.K., 2008 reprint, Galgotia Publishing Company. Suggested Readings International Finance: Corporate Decisions in Global Markets, Thomas J. OBrien, Second Edition, Oxford University Press. Multinational Business Finance, Eiteman, Stonehill, Moffet, Alok Pandey, Tenth Edition, Pearson Education. Options, Futures and other Derivatives, 7e -John C Hull, Pearson Education. International Financial Management, Madura Jeff, Seventh Edition, Thompson South Western

Additional Readings NCFMs Currency Futures Module (available online) Newspapers & Journals Economic Times or any financial newspaper The Wall Street Journal

Websites www.nseindia.com www.bseindia.com www.moneycontrol.com www.yahoofinance.com http://www.economywatch.com

Session Plan Lectures

Topic Indian Economy and International Finance Multinational Corporation and its Financial Environment Market for Foreign Exchange Activities in Foreign Exchange Market Forecasting Exchange Rate The Derivative Market Off-Shore Financing Foreign Exchange Exposure and Risk Total No. Of Sessions No. of Sessions 1 3 3 4 3 4 5 4 27

Detailed Session Plan

Indian Economy and International Finance Growth of trade, Opening of economy, Golbalisation of firms and development needs of the economy. Multinational Corporation and its Financial Environment Importance of international finance, reasons for importance of international finance, Defining multinational corporation, Environment of multinational corporation, International finance and global economy, subject matter of international finance, Objectives of multinational financial management, Risky assets and rate of return, conflicts between parent and subsidiaries. Market for Foreign Exchange Foreign exchange market and exchange rates, Quotation at the Foreign exchange market, Relationship between the bid and ask prices of the of the currencies, Spread/cost of transaction, Forward market, Premium and discounts in the forward market, participants in the forward market, various practices of quotations, Expected rate matrix, Inverse rates and cross rates, Comparing quotations and finding arbitrage opportunities, Information content of a quotation, Structure of market and its participant, Why the market for foreign exchange exist, Forward contract and future contract, Value dates and cash flows, Settlement of transactions in the International Forex market, National and International currency, Indian Forex market its structure and exchange rate fixation. Activities in Foreign Exchange Market Introduction, Hedging, Speculation, Arbitrage, Swaps, Indian forward market. Forecasting Exchange Rate Reasons for making forecasts, Forecasting exchange rates, Technical forecasting, Fundamental forecasting, Market based forecasts, Mixed forecasting, Long term

forecasting with forward rates, Evaluation of forecast performance, Market efficiency and forecasting. The Derivative Market Introduction, currency futures, Interest rate futures, Currency option contracts, Pricing of options, Other concepts relating to options, Swaps and swap market, Financial engineering and financial engineered products. Off-Shore Financing Euro-Bond and Euro-Bond market, Euro-bond and Off shore bonds, Issuing bonds in the international bond market, Advantages of Euro-Bond market, Currency denomination of Euro-Bonds, Bond in portfolio of assets, Currency option bonds, Yield structure and information content, Euro-note market, Mobilizing equity flows, making domestic market an investment market, Indian equity and foreign and foreign equity market, Mobilizing equity capital internationally (GDR issue), Equity markets of the world, International pricing of equity, Cross listing of equity and price of equity. Foreign Exchange Exposure and Risk Introduction, Measurement of exposure, Purchase Power Parity (PPP), Interest rate parity, Purchasing power parity and exposure of operating incomes, Defining real change in exchange rate. ASSESSMENT PLAN Assessment Method Weight age (%) 1. Group Assignment /Interview 2. Class T est 2. End Term Examination TOTAL 20 20 60 100

DETAILS OF ASSESSMENT COMPONENT 1: GROUP ASSIGNMENT (20%) The group will be given an assignment related to topics of Forex market, exchange rate determination, exchange rate exposure, derivative trading and off shore financing. The groups will submit the assignment in hard copy and will make the class presentation. COMPONENT 2: Class Test (20%) It will carry all the fundamental concepts relating to the course material taught till 12 sessions. Approximate Length: One hour

Contents: Assessment requires students to actively learn and apply the concepts as they work their way to understand the discussions held the class up to 15 sessions

COMPONENT 3: END TERM EXAM (60%) A three-hour, closed book end term examination will be held at the conclusion of the course. The examination will test students' theoretical understanding through questions and their ability to apply various practical tools discussed in the class. Feedback on students' performance in the exam will be provided when answer scripts are shown to students after a month of the exam. FORMAT FOR SUBMISSION OF PROJECT Project components must be submitted according to the deadline specified in the table below, or by the instructor at the beginning of the module. The documents must be submitted to the instructor before 4 pm on the day of submission. Failure to submit without good cause (illness supported by a medical certificate or similar) will result in a zero mark. Submissions are to be made in hard copy or soft copy - as instructed by the faculty. When submitting coursework in hard-copy, you must include a cover page which specifies: The component name Your name / group member names Student ID number (s) Your section The Module title The name of the module instructor When sending documents on e-mail, you must ensure the following: Subject Line to read "component name, your name, section name" Body of the email specifying the enclosed attachments and your details (name (s), student ID number (s), section)