INTERNATIONAL FINANCIAL MANAGEMENT

INTERNATIONAL FINANCIAL MANAGEMENT
AREA OF STUDY: SPECIALIZATION
BAC423

Year: 4
Semester: 7

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* Continuous
** Duration: 3 hours

Course Objectives
The main objective of this course is to introduce the students to fundamental concepts and theories and their application in international business and finance, modes of international business operations, theories and institutions for international trade and foreign investment, foreign exchange rate risk, risk management, and foreign financial management.
Course Contents
1. Globalization and the Multinational Firm T.H.4
Foreign exchange and political risk; Market imperfections; Goals for international financial management; Globalization of the world economy; Emerging global markets; Trade liberalization and economic integration; Multinational corporations.
2. International Monetary System T.H.5
Evolution of International Monetary System; Classical gold standard; Interwar period, Bretton Woods System; The flexible exchange rate regime; The currency exchange rate arrangements; European monetary system; Fix vs flexible exchange rate regimes.
3. Balance of Payments T.H.5
Balance of payments accounting; Balance of payments accounts; Balance of payment identity; International flow of goods; Services and capital; Factors affecting international trade flows; BOP trends in major countries.
4. The Market for Foreign Exchange T.H.6
Functions and structure of the FOREX market: The spot Market, the Forward Market, International arbitrage, Interest rate parity: Arbitrage and the law of one price: Purchasing power parity.
5. International Banking and Money Market T.H.4
International banking services: Types of international banking offices; Capital adequacy standards: International money markets.
6. International Bond and Equity Markets T.H.6
Foreign bond and euro-bonds: Types of instruments; International bond markets credit ratings: International bond market indexes; Equity financing; Market capitalization of developing and developed countries. Trading in international equities; Factors affecting international equity returns.
7. Management of Economic Exposure T.H.5
Type of economic exposures; Operating exposure and real exchange rates; Determinants of and managing operating exposure.
8. Management of Transaction and Translation Exposure T.H.4
Transaction exposure; Techniques to eliminate transaction exposure: forward market hedge, money market hedge, options market hedge; Translational methods; Management of translational exposure.
9. Foreign Direct Investments T.H.6
Theory of multinational corporations; Strategy of multinational corporations; Global trends in FDI; Why firms invest overseas? Political risk and FDI; Measuring political risk; Country risk analysis; Managing political risk.
Suggested Readings
1. Jeff Madura, International Financial Management, South-Western Publishing Company.
2. Eun Resnick, International Financial Management, Tata McGraw Hill Company Ltd., New Delhi.
3. A. C. Shapiro, Multinational Financial Management, John Wiley & Sons, New York.
4. Maurice D. Levi, International Finance 3rd Edition. McGraw Hill.
5. P. G. Apte, International Financial Management, Tata McGraw Hill Company Ltd., New Delhi.