Ansal Institute of Technology, Gurgaon

Session: Summer-II, 2011 Course Title: International Finance Course Code: AMGT 540 Credits: 3 Faculty: Rakesh Kumar Sharma
Course Objective: This course aims at giving a broad understanding of what International Finance is and the factors that can affect the performance of a firm doing business internationally and what the firm can do to manage its exposure to risk factors that are inherent in the global financial environment. Course Description: Introduction to international finance, exchange rate determination, balance of payment, foreign exchange market, currency futures and options, foreign exchange risk management, foreign trade financing, multinational working capital, foreign investment analysis. Prerequisites: Basic understanding of Financial Management. Basic knowledge of international trade and finance. Skills Acquired: Understand the effect that exchange rates have on the profitability of a firm that does business internationally. Compare different methods to shielding exchange rate exposure. Understand the main determinants of exchange rates. Describe international financial markets. Evaluate cash flows under different exchange rates and choose the best investment alternative given the appropriate cost of capital

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An overview of International Finance History of International Identify the forms of Lecturing, Quiz Financial System, Euro- international trade, and discussion currency Market, Euro describe the international markets, new financial financial system and instruments in international euro-markets, describe markets, Balance of the BoP, current account payments and international deficit and parity economic linkages relations Foreign Exchange Markets The spot market, forward Explain various theories Lecturing, market, interest rate parity of exchange rate Assignment theory, determination of determination and solve exchange rate, government the problems related to influence on exchange rate. that, apply the above to Practical problems related to the practical situations exchange rate Currency Futures and Options Markets Futures contracts, currency Explain futures and Lecturing, Quiz options, put-call option options, Distinguish and Case study interest rate parity, practical between various hedging discussion problems on derivatives alternatives, evaluate various alternatives Foreign Exchange Risk Management Managing accounting risk, Classify and Explain Lecturing, managing economic risk various risk associated Assignment and with international finance Quiz Parity conditions in International Finance and Currency Forecasting Purchasing power parity, the Explain the PPP and Lecturing, Quiz fisher effect, relationship Fisher effect in and discussion among inflation, interest rate International Finance, and exchange rates, inflation Solve practical problems risk and its impact on related to currency Financial Markets, currency forecasting forecasting Multinational Capital Budgeting Issues in foreign investment Evaluate the investment Lecturing, Case analysis, foreign project proposals, calculate the Study and appraisal, cost of capital for cost of capital and solve assignment foreign investments, growth the problems related to options and project international capital evaluation, country risk budgeting, describe analysis, direct foreign country risk analysis and investment FDI

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Financing foreign trade Payment terms in international trade, financing techniques in international trade, government sources of export financing and credit insurance, short tem financing options Current asset management International cash management, accounts receivable management, inventory management Text Book:

5 Identify and explain the Lecturing, sources of international Assignment and trade finance and discussion evaluate the alternatives

Explain working capital Lecturing, Quiz 5 management tools and and Case Study techniques

Multinational Financial Management, Alan C. Shapiro, 4th ed., PHI.

Reference Books: Theory and Practice of International Financial Management, Reid W. Click, Joshuja D. Coval, PHI. Multinational Finance, Kirt C. Butler, 2nd ed., South-Western College Publishing. International Financial Management, Madhu Vij, 2nd ed., Excel Books. Buckley, Adrian, Multinational Finance, 3rd ed. Englewood Cliffs, Prentice Hall Inc., 1996. Bhalla, V. K. and Singh, Dilbag. International Financial Centers. New Delhi, Anmol, 1997 Kim, Suk and Kim, Seung. Global Corporate Finance: Text and Cases. 2nd ed. Miami, Florida, 1993

Assessment: S. No. 1 2 3 4 5. 6. Event/Activity Mid Term Final Attendance & class participation Quizzes/Class tests Presentation & Assignment Case Study/Term paper/Role play Total Weightage (%) 20 30 10 15 10 15 100