International Finance Syllabus and Reference Books

INTERNATIONAL FINANCE

Unit I : Fundamentals of International Finance

• Meaning and Scope of International Finance
• Balance of payments as determinant of demand for and supply of currency Exchange rate, Determinants of/factors affecting exchange rates
• Current account deficit v/s Balance of trade and their implications on exchange rate
• Foreign Exchange Arithmetic I
• Exchange rate quotations, Direct and Indirect rates, cross currency rates, vehicle currency. % spread, calculation of cross rates
• Classification of rates in terms of settlement (cash, tom, spot and forward), Arbitrage, Speculation and Trading (Spot rate arbitrage calculation)

Unit II : Foreign Exchange Arithmetic II

• Relationship between exchange rates, interest rates, and commodity prices (through international parity conditions namely Purchasing Power Parity, and Fisher Parity)
• Use of Covered Interest Parity theory in arbitrage, borrowing and investment decisions
• Calculation of forward rates through use of forward schedules, through use of formula, annualized forward margin, calculation of swap points (calculations for cash / tom rates to be excluded)
• Exchange Rate Regimes
• Gold Standard – Features.
• Bretton Woods System – Background and Features, reasons for its failure, Smithsonian agreement, SDRs.
• Flexible exchange rate system – Features, Managed float, Central Bank intervention. Merits and Demerits of Fixed and Flexible Exchange rate systems.

Unit III : International Foreign Exchange Markets

• Characteristics
• Dealing room operations
• Euro Currency Market
• Origin and reasons for the growth of Euro currency (off shore) markets, their characteristics and components.
• A brief understanding of the Euro-currency deposit, loans, bonds and notes market.
• Concept of off shore banking as a form of globalization of the Euro currency concept, its introduction in India, tax havens
• International Equity Markets
• Concept of Depository Receipt,
• Global Depository Receipt-characteristics, mechanism of issue, participants involved American Depository Receipt – types and characteristics
• Foreign Currency Convertible Bonds and Foreign Currency Exchangeable Bonds Foreign Direct Investment and Foreign Portfolio Investment
• Participatory notes

Unit IV : Foreign Exchange Management in India

• Retail and wholesale components of the Indian foreign exchange market Capital account Convertibility
• Reserve Management
• Role of FEDAI in the Indian foreign exchange market
• Risk Management and Derivatives
• Risk versus exposure
• Transaction, Translation and Economic risks faced by Corporate entities Transaction, Position, Pre-settlement, Settlement risks faced by commercial banks Internal and external hedging
• Foreign currency derivatives as instruments of risk management i.e. Forward contracts, Swaps, Futures and Options.
• Overview of Non-deliverable forward Market (NDF market)
• International Institutions
• Contribution of Bank for International Settlements in risk management system
• European Central Bank

Recommended  books :

1. Essential International Money, Adrain Buckley, Pearson Education
2. International Finance, Adrian Buckley, Pearson Education
3. Foundations of Multinational Finance, Alan Shapiro, Wiley
4. Multinational Financial Management, Alan Shapiro, Wiley
5. A Text book of Foreign Trade and Foreign Exchange, B.K.Chaudhri O.P. Agarwal , Himalaya Pub. House
6. A brief course in Foreign Exchange Arithmetic, C.Jeevanandam, Sultan Chand & Sons
7. Foreign Exchange and Risk Management , C.Jeevanandam , Sultan Chand & Sons
8. Foreign Exchange Practice, Concepts and Control, C.Jeevanandam, Sultan Chand & Sons
9. International Finance, G. Shailaja, Unviersities Press, Hyderabad
10. International Financial Management, Geert Bekaert & Robert Hodrick , Pearson Education
11. Options, futures and other derivatives , John C. Hull, Prentice Hall, India
12. The Economics of Exchange Rates, Lucio Sarno & Mark Taylor, Cambridge University Press
13. International Financial Management, Madhu Vij, Excel Books, New Delhi
14. International Finance, Maurice D. Levi, Routledge, London
15. Fundamentals of Multinational Finance, Michael Moffet, Arthur Stonehill & David Eiteman, Pearson
16. International Financial Management, P.G. Apte, Tata McGraw Hill, New Delhi
17. Forex Revolution: An Insider’s Guide to the Real World of Foreign Exchange Trading, Peter Rosenstreich, Pearson Education
18. International Finance – A Business Perspective, Prakash G. Apte, Tata McGraw Hill, New Delhi
19. Foreign Exchange, International Finance, Risk Management, Rajwade A.V., Academy of Business Studies, New Delhi
20. Fundamentals of International Banking, Rupnarayan Bose, Macmillian India Ltd., New Delhi
21. Foreign Exchange in Practice, Steve Anthony, Palgrave McMillian
22. International Financial Economics, Thomas J. O’Brien, Oxford University Press
23. International Finance, V.A. Avadhani, Himalaya Publishing House
24. Risk in International Finance, Vikash Yadav, Routledge
25. International Financial Management, Vyuptakesh Sharan, (PHI Learning Pvt. Ltd., New Delhi)