Preface to the Sixth Edition

The fifth edition of this book was published in 2009. Since then the pace of
globalization of the Indian economy has further accelerated. Also, Indian
financial markets are being brought on par with global financial markets
with the introduction of new financial instruments and trading platforms.
Liberalization of the capital account is also progressing at a fairly rapid pace.
Ongoing WTO negotiations are leading to a more and more open economy.
Since the publication of the fifth edition, some significant developments
have taken place in Indian financial markets. Liberalization of the capital
account, and introduction of exchange traded currency futures are some of
the important policy initiatives which have widened the scope of pro-active
approach to managing currency risks and other aspects related to
international finance. More recently, the government has opened up the
Indian capital market to foreign companies to raise capital via the Indian
Depository Receipts mechanism. Also, exchanges will soon start trading
currency options. These exchange traded derivative products are accessible
to all categories of investors and do not require any underlying exposure.
FDI regulations are also continually being liberalized. In the last year or so,
a number of large Indian firms have become MNCs with significant
acquisitions abroad.
Credit derivatives such as credit default swaps have also been introduced.
The net result of all these changes is going to be widening and deepening of
financial markets including plain vanilla derivatives and complicated
structured products.
In the light of these changes, I felt certain key chapters of the book, dealing
with global monetary system and global financial markets, and chapters
dealing with global and Indian foreign exchange markets needed extensive
revision. The chapters on currency futures and options also needed to be
updated to include recent regulatory changes.
The latest edition continues to discuss case studies which illustrate
substantive practical applications of concepts and techniques discussed in
the chapters. The cases have been organized chapter-wise and can be used

both to generate in-class discussions as well as to test the students

understanding of the key concepts and theories covered in the text.
Thus the main motivation for the revision is to incorporate the significant
changes that have taken place in the global financial architecture, the
regulatory structures at home as also the new products that have appeared on
the Indian scene. All these are having and will continue to have significant
impact on corporate finance and finance managers must quickly equip
themselves with a thorough understanding of these changes.
P.G. APTE