SEMESTER III

INTERNATIONAL FINANCE
SUBJECT CORE: FULL CREDIT 100 Marks
1. International Trade and Theories of International Trade:

 The importance and significance of international finance.

 An Overview of leading economies in the world. Importance of Capital
Flows - Balance of Payments – Trade
 Introduction to Theories of International Trade Theory of Absolute
Advantage Theory of Comparative Advantage - Hecksher – Ohlin Model
Posner Model Vernon Model.
 Trade Barriers.
 Trade Blocks: GATT, WTO

2. International Monetary System:

 The Gold Standard

 The Bretton Woods System
 Fixed Vs Floating Exchange Rate
 Current Exchange Rate Mechanism
 The European Monetary System

3. International Financial Instruments:

 Eurocurrency Transactions
 International Financial Instruments Debt Instruments Equity Instruments –
GDRs and ADRs. Quasi Instruments

4. International Financial Markets:

 Market Structure and nature

 Various Types of Quotes
 Different Types of Transactions and their settlement.
 Current and Capital Account Convertibility
 SWIFT Mechanism
5. Computation and Forecasting of Foreign Exchange Rates:

 Purchasing Power Parity Theory

 Interest Rate Parity Theory
 Fisher Effect

6. Foreign Exchange Risk & Its Management:

 Various types of Risk

 Various Techniques of Risk Management
 Forwards
 Futures & Swaps

7. Instruments and Mechanism for Financing International Trade

 Various ways of settlement of International Dues

 NOSTRO , VOSTRO , sale and purchase of currencies
 Export Finance (forfeiting and forfaiting) & Import finance
 Role of EXIM Bank
 Role of ECGC ,ECB, BRICS , PIX , BRICS Bank,
 Globalization

Reference Books:

 International Financial Markets and India – Second Edition – Machiraju H.R. – New Age
Internatioanl Publishers.
 International Finance – Fifth Edition – Apte P.G.
 International Finance – C. Jeevnandam
 International Finance – Sharan
 International Finance – Avadhan