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Ravenshaw Management Centre

Ravenshaw University

COURSE OUTLINE

Batch: 2009-11 International Finance

Term: VI Prof. (Dr) Surya Dev

Course Objective:

The importance of international finance as a discipline has evolved significantly in the last
few decades due to deregulation of financial markets and product and technological
developments. In the era of globalisation networking among nations and companies has
become a reality and transactions have become more complex.

The course is designed to familiarize students with the concepts of international finance and
international financial markets, instruments and settlement. The focus would be on the key
decision areas in international finance. A student would be familiarised with the basic
principles, policies and issues associated with the international exchange of goods, services
and the associated monetary systems. The course would also cover international financial
crisis that have rocked the world economy in the past.

Pedagogy:
Interactive class lectures, numerical problem solving, short case problem solving, and other
assigned readings. The students are expected to always come prepared to the class.

Materials
The textbook that is recommended for the course is “Multinational Financial Management by Alan C
Shapiro”. The students are free to refer any other books mentioned in the reference which ever
they find comfortable. Some articles and materials, case studies will be provided. The students have
to go through all these materials seriously. Along with these the students should browse regularly a
financial daily for the latest information. The student has to read the textbook along with the
materials provided.

Assignment and presentation:


Individual assignment will be given to the students. The students have to submit the
assignment in the stipulated deadlines. Failing which there will be deduction of one mark
lost for each late day. The assignment has to be in hard copy. Based on the assignment the
student has to give a presentation. The presentations will be scheduled in the class timings.
Any student who fails to make a presentation will be marked absent and no marks will be
awarded for the presentation. The candidate will only get the marks on his assignment.
Examination:
The examinations will be held in different formats. There will be two quizzes (10 percent of
the course grade), midterm (20 percent of the grade), assignment (20 percent), presentation
(10 percent) and end term (40 percent of the grade). There will be no makeup examination
for any candidate except for any contingencies.

Grade:
Quiz ( Two quizzes) – 10 marks
Presentation – 10 marks
Assignment – 20 marks
Mid Term ( after 10 sessions) – 20 marks
End Term – 40 marks

Indicative Session Plan

Session 1: Introduction and overview of the course


Topics to be discussed: the rise of multinational corporation, internationalisation of business and finance
External financial markets, corporate tasks and strategies, recent market developments.

Additional readings

Articles: Robert Gilpin: “ The Challenge of Global Capitalism”

Session 2: Eurocurrency markets


Topics to be discussed: Origin, and history, centres, mechanism, instruments, participants,
interest rates

Session 3: Exchange rate


Topics to be discussed: Spot rate, forward rate, cross rate, determination of exchange rate, premium,
discount, arbitrage

Session 4 and 5: Parity conditions in international finance and currency forecasting


Topics to be discussed: Law of one price, Purchasing power parity, Interest rate parity, fisher effect,
International fisher effect

Session 6: International Monetary systems


Topics to be discussed: Gold Standard, Bretton Woods system, Flexible exchange rate, Alternative
exchange rate systems, European monetary system

Session 7: International Financial Institutions


Topics to be discussed: World Bank, IMF, ADB

Session 8: Balance of payments


Topics to be discussed: Current Account, Capital Account, Reserves, BOP disequilibrium and adjustment

Session 9 and 10: Foreign Exchange risk management: Transaction exposure


Topics to be discussed: Measurement and Management
Session 11: Foreign Exchange risk management: Translation exposure and operating
exposure
Topics to be discussed: Measurement and Management

Session 12: Currency Futures and options


Topics to be discussed: Futures and options in Indian Context

Suggested readings

Articles: Singhal, Rajrishi(2008) “ Future of Currency Futures” Economic Times

Session 13: Interest rate risk


Topics to be discussed: measurement and management

Session 14: Political risk


Topics to be discussed: Measurement and management

Session 15 and 16: International financing strategies and Euromarkets


Topics to be discussed: borrowing parameters, funding options, co-financing, and resource diversification,
Instruments – Syndicated credit, Euronotes, Euro equities, Export credit, external
commercial borrowings

Session 17: International trade


Topics to be discussed: Various theories, developments in international trade front, trade barriers, regulation
of international trade

Session 18: International Investments


Topics to be discussed: Recent developments, FDI-types and guidelines

Session 19 and 20: International financial Crisis


Topics to be discussed: Making of a crisis, South East Asian Crisis, Mexican crisis and others, remedies

References:

Books
 International Financial Management by P.G.Apte
 International Financial Management by Eun and Resnick
 International Financial Management by V.Saran
 International finance by Maurice D Levi

Newspapers
Read Economic Times, Business Standard and other economic dailies for updated
information on derivatives markets.

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