PAPER MBA568 F-8 INTERNATIONAL FINANCIAL MANAGEMENT

DESCRIPTION

This course extends the principles of Finance to an international context. In an international

context, aside from asset risk, firms face the additional component of exchange rate and interest
rate risk management to its global investment and financing decisions
This course is offered in the 5th trimester to students who have chosen finance as an elective. The
course is intended to equip the students with the skills & knowledge to be involved in cross-
border investment and financing decisions as multinational firm managers, transaction advisors
(investment bankers, commercial bankers, or consultants), or investors (research analysts or
money managers). Thus, basic financial decisions now involve cross-border complexities.
Choices about raising capital, investment, risk management, acquisition activity, restructuring,
and other aspects of financial policy typically involve international considerations. When making
these choices, managers must analyze exchange rates, differences in tax rules, country risk
factors, and variation in legal regimes. This course provides the foundations for learning how
finance works in this cross-border setting and to reinforce the foundations of finance with
particular attention to issues related to international finance and economics.

LEARNING OBJECTIVES•
1. To provide students with a deep understanding of financial management
issues in a global setting.

2. To help students develop analytical tools that incorporate key international

considerations into fundamental financial decisions.

3. To provide opportunities to build the skills needed to create and capture

value across borders.

4. To provide students with a conceptual framework of how financial decisions are

undertaken in a multinational company.

5. Describe the foreign exchange markets operations and its applications to international
business and apply the necessary techniques to hedge and protect the interest of
international investors
6. Evaluate the most effective capital for financing international projects and ensure
sustainable global business expansion.

UNIT I INTRODUCTION TO INTERNATIONAL FINANCIAL MANAGEMENT

06 Hrs
Level of knowledge - Basic and conceptual
– the environment – the nature of international risk exposure – International Monetary system -
determination of exchange rates –– Balance of Payments- – Interest parity – international fisher
effect.

UNIT II FOREIGN EXCHANGE MARKET 06 Hrs

Level of knowledge – skill & application.

– functions – Participants - currency derivatives – Forwards – Swaps – Currency futures and

Options – Interest rate futures – speculation

UNIT III FOREIGN EXCHANGE RISK MANAGEMENT 06 Hrs

Level of knowledge – skill & application.

– measuring and managing accounting exposure – transaction exposure – translation exposure –

Hedging – measuring and managing economic exposure - managing operating exposure –
managing interest rate exposure

UNIT IV MANAGING MULTINATIONAL OPERATIONS 04 Hrs

Level of knowledge – skill & application.

– multinational taxation- inter-company fund flow - Multinational Working Capital

Management- Foreign Trade - Short–term Financing - Financing the global firm – global cost of
capital and financial structure – Equity and debt financing through global markets.

UNIT V FOREIGN INVESTMENTS 04 Hrs

Level of knowledge – conceptual & application.

- decision – corporate strategy – International portfolio diversification -

foreign direct investment - multinational capital budgeting – international
project appraisal - political risk and country risk analysis.

UNIT VI AN OVERVIEW OF FOREIGN TRADE AND FOREIGN EXCHANGE

04 Hrs
Level of knowledge – fundamental & application

Meaning-types-financing of foreign trade-banks and institutional finance- - -export and import-

financing and Documents- letter of credit-types-foreign exchange and foreign exchange markets-
players and dealers in foreign exchange-volume and dynamics of foreign exchange.
Management of foreign exchange instruments - money market and capital market –

Exchange rate arrangement in India- foreign trade contracts: terms and documentation-
managing of foreign exchange reserves-an outline of FEMA and foreign exchange management
in India.
(TOTAL 30 Hrs)

SKILL DEVELOPMENT
1. Lecture sessions, case studies, assignments, role plays and class presentations
2. The cases will provide opportunities to build the skills needed to create and capture value
across borders..
3. Live projects.
4. Assignments & group activities

PRESCRIBED TEXT

1. Apte P G, , International Financial Management, New Delhi: Tata McGraw Hills

Publications, 2009

REFERENCE BOOKS

2. Eietemanetal David K., Multinational Business Finance, Pearson Education.

3. Vij Madhu, International Financial Management, New Delhi: Excel Books, 2009
4. Madura Jeff, International Financial Management, South – Western – Thomson Learning.
5. Apte Prakash G., Global Business Finance, Tata McGraw – Hill.
6. Eun /Resnick, International financial management, Tata McGraw–HILL, 2nd Edition2009
7. Bharadwaj H.P., Foreign exchange handbook, Wheeler Publishing,(1994)
8. Shapiro Alan C, Multinational Financial Management, New Delhi : Wiley India Pvt Ltd,
2009
9. Sharan Vyuptakesh, International Financial Management, New Delhi: PHI Learning Pvt
Ltd Publications, 2009

EXTERNAL EXPERTS

1. Mr. K.L.Shankarnarayan Rao 2. Mr. Raghu,AGM.

Principal, South India bankers training college Canara Bank, H.O.

Bangalore. Bangalore

3. Mrs Shalini, 4. Dr. Sudhindra Bhatt,

Visiting faculty. Research guide

Jayanagar , Bangalore. Bangalore