Subject INTERNATIONAL FINANCIAL MANAGEMENT

Subject Code 20MBAFM401

Credits 3:0:0:0 CIE Marks 50

Total no. of Lecture Hours 39 SEE Marks 50
Course Objectives:

1. To provide an understanding the international financial environment, markets and instruments

2. To explain the foreign exchange rate determination, including the foreign exchange and derivatives
markets.
3. To describe foreign exchange exposure measurement and management.
4. To provide an understanding of the financial management aspects of the MNC.
5. To explain the functioning of world financial markets and institutions.

Course Outcomes: At the end of the course, students will be able to:
1. Understand the role of foreign exchange market in international financial management and the key
determinants of exchange rate. Unit 2
2. Gain knowledge about the foreign exchange exposure and management. Unit 4
3. Explain the functioning of world financial markets and institutions. Unit 1
4. Gain knowledge about foreign exchange risk management unit 3
5. Demonstrate the significance of financial management in the global context. Unit 1
UNIT I: (08 Hours)
International financial Environment- The Importance, rewards & risk of international finance- Goals of MNC-
International Business methods – Exposure to international risk- International Monetary system- Multilateral
financial institution International Monetary system:-
International Financial Markets and Instruments: - Foreign Portfolio Investment. International Bond &
Equity market. GDR, ADR, International Financial Instruments: Foreign Bonds & Eurobonds, Global Bonds.
Floating rate Notes, Zero coupon Bonds, International Money Markets, Forward Rate Agreements International
Flow of Funds: (Theory)

UNIT II: (09 Hours)

Foreign Exchange Market: Function and Structure of the Forex markets, Foreign exchange market participants,
Determination of Exchange rates in Spot markets. Exchange rates determinations in Forward markets. Exchange
rate behaviour-, Swift Mechanism. Balance of Payments (BoP), Fundamentals of BoP, Accounting components
of BOP, Factors affecting International Trade and capital flows, Equilibrium & Disequilibrium. Trade deficits.
Capital account convertibility (problems on BOP) (Theory and problems)
UNIT III: (09 Hours)
International Parity Relationships & Forecasting Foreign Exchange rate: - Measuring exchange rate
movements-Exchange rate equilibrium – Factors affecting foreign exchange rate- Forecasting foreign exchange
rates .Interest Rate Parity, Purchasing Power Parity & International Fisher effect. Covered Interest Arbitrage
Cross Rates- Arbitrage profit in foreign exchange markets
International Capital Budgeting: Concept, Evaluation of a project, Factors affecting, Risk Evaluation, Impact
on Value, Adjusted Present Value Method

UNIT IV: (09 Hours)

Foreign exchange risk Management: Foreign Exchange exposure: - Management of Transaction exposure-
Management of Translation exposure- Management of Economic exposure - Management of Interest rate
exposure.
Hedging against foreign exchange exposure – Forward Market- Futures Market- Options Market- Hedging
through currency of invoicing- Hedging through mixed currency invoicing –Country Risk analysis. (Theory and
problems)

UNIT V (04 Hours)

Case Analysis: Compulsory question for 20 marks. Review and recap of case studies and problems discussed
from unit I to unit IV.
TEXT BOOKS:
1. International Financial Management – Madhu Vij, Excel Books, 2010.
2. International financial Management – B. Janakiram, S.P Srinivasan, 3/e, 2015, Dreamtech press
REFERENCE BOOKS:
1. Multinational Financial Management–Alan C. Shapiro, 10/e, Wiley India Pvt. Ltd., 2011.
2. International Financial Management – Siddaiah T, 1/e, Pearson, 2011.
3. International Finance – Imad Moosa, 3/e, Tata McGraw Hill, 2011.
4. International Financial Management – Apte P. G, 6/e, TMH, 2011.
5. International Financial Management - Jeff Madura, Cengage Learning 2008

Mapping Course Outcomes with Program Outcomes:

Course Program Outcomes PSO

Outcomes
PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8 PSO-1 PSO-2
CO1 1 2
CO2 3 2
CO3 1 1
CO4 2 2 2
CO5 2 1
Assessment Pattern Based on Bloom’s Taxonomy:
Sl. Seminar
Bloom’s
No Test 1 Test 2 Test 3 Assignment /Surprise SEE
Category
Quiz
1 Remember 10 10 10 50
2 Understand 20 20 20 50
3 Apply 20 20 20 10 30
4 Analyze 20 20 20 10 30
5 Evaluate 20 20 20 20
6 Create
Total 90 90 90 20 180

Course Mapping
Course PO1 PO2 PO3 PO4 PO5 PO6 PO7 PO8

INTERNATIO X
NAL
FINANCIAL X X X X X
MANAGEMEN
T