JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD

Course Objective

To give an understanding about MNC Financial Management, Balance of

Payments and Forex markets.

Learning Outcomes

Students will be able to understand a) International Financial Management b)

Balance of Payments c) Foreign Exchange Markets d) Asset and liability Management.

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UNIT - I: Introduction

An overview, Importance, nature and scope of International Financial

Management, Domestic FM Vs. IFM, International Business Methods, Recent changes and challenges in International Financial Management.

UNIT - II: International Flow of Funds

Balance of Payments (BOP), Fundamentals of BOP,

Accounting components of BOP, Factors affecting International Trade flows, Agencies that facilitate International flows. Indian BOP Trends. International Monetary System: Evolution, Gold Standard, Bretton Woods’s system, the flexible exchange rate regime, evaluation of floating rates, the current exchange rate arrangements, the Economic and Monetary Union (EMU).

UNIT - III: Foreign Exchange Market

Function and Structure of the Forex markets, major

participants, types of transactions and settlements dates, Foreign exchange quotations. Process of arbitrage, speculation in the forward market. Currency Futures and Options Markets, Overview of the other markets – Euro currency market, Euro credit market, Euro bond market, International Stock market.

UNIT - IV: (a) Exchange Rates

Measuring exchange rate movements, Factors influencing exchange

rates. Government influence on exchange rates – exchange rate systems. Managing Foreign exchange Risk. International arbitrage and interest rate parity.

• (b) Relationship between inflation, interest rates and exchange rates – Purchasing Power Parity – International Fisher Effect – Fisher Effect- Interest Rate parity, Expectations theory

UNIT - V: Asset–liability Management

Foreign Direct Investment, International Capital Budgeting,

International Capital structure and cost of capital. International Portfolio Management.

International Financing: Equity, Bond financing, parallel loans - International Cash management, accounts receivable management, inventory management. Payment methods of international trade, trade finance methods, Export – Import bank of India, recent amendments in EXIM policy, regulations and guidelines.

Suggested Readings:

• Jeff Madura, International Corporate Management, Cengage, 2012.
• Alan C. Shapiro, Multinational Financial Management, John Wiley, 2012
• S. Eun Choel and Risnick Bruce: International Financial Management, TMH, 2012
• Sharan.V, International Financial Management 5e, PHI, 2012
• P.G. Apte, International Financial Management, TMH 2012.
• Madhu Vij: International Financial Management, Excel, 2012.