IFTM Course Outline

8/3/2019 IFTM Course Outline

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Course Outline

International Finance&

Treasury Management

PGDM

(2010 -2012)

COURSE FACILITATOR

Name of Faculty- Prof. Pushpendra Singhemail- [email protected]

Contact details- 8527914913IILM Graduate School of Management

Greater Noida


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Introduction

This course aims at providing a conceptual framework within which key financialdecisions 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 exchangetrading.

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 oninternational 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 financialinnovations (derivatives, their processes, products & institutions). The focus of the

course is also on analyzing various derivative instruments keeping in view thedomestic as well as global scenario.

Since the course is conceptual and practical in nature, the assessment methodologywill also be such that it tests the understanding and the ability to apply theknowledge 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 exchangeExposure and Overseas Valuations.

Understand the Financial Derivatives Market.

Understand the International Cost of capital.


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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 inTeaching, 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 understandhow 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.comwww.bseindia.com

www.moneycontrol.comwww.yahoofinance.com

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


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Session Plan Lectures

Topic No. of Sessions

Indian Economy and International Finance 1

Multinational Corporation and its Financial Environment 3

Market for Foreign Exchange 3

Activities in Foreign Exchange Market 4

Forecasting Exchange Rate 3

The Derivative Market 4

Off-Shore Financing 5

Foreign Exchange Exposure and Risk 4

Total No. Of Sessions 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 exchangemarket, Relationship between the bid and ask prices of the of the currencies,

Spread/cost of transaction, Forward market, Premium and discounts in the forwardmarket, participants in the forward market, various practices of quotations, Expected

rate matrix, Inverse rates and cross rates, Comparing quotations and findingarbitrage opportunities, Information content of a quotation, Structure of market and

its participant, Why the market for foreign exchange exist, Forward contract andfuture 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


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forecasting with forward rates, Evaluation of forecast performance, Market efficiencyand 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, Currencydenomination 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), Equitymarkets 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 rateparity, Purchasing power parity and exposure of operating incomes, Defining real

change in exchange rate.

ASSESSMENT PLAN

Assessment Method Weight age (%)

1. Group Assignment /Interview 202. Class Test 20

2. End Term Examination 60

TOTAL 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. Thegroups 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 12sessions.

Approximate Length: One hour


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Contents:

Assessment requires students to actively learn and apply the concepts as theywork 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 throughquestions 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 shownto 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 withoutgood 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)

Documents

IFTM Course Outline