INTERNATIONAL FINANCE

PGP II

TRIMESTER 4

Finance Major

Prof. K PARAMESWARAN

2013 14

COURSE OUTLINE COURSE OBJECTIVE:

With the fast integration of global financial markets and availability of several cross border finance options to a Corporate, it is becoming imperative for them to have a thorough knowledge about various overseas financial markets, products and the risks associated with them. In this era of liberalization, our country has already opened up foreign direct investments in many areas. Simultaneously our Corporate have freedom to enter into Joint Ventures (JV) abroad or have their own Wholly Owned Subsidiary (WOS) not only in the areas where they have core competency but also in other fields. Some of the Corporate have already moved to investor friendly foreign countries, with the assured infrastructure facilities. Likewise, some of the foreign companies are entering India looking into the growth potential theory. Besides, some of the Indian Companies are able to raise long term finance through syndicated loans or through equity route from global markets. With the introduction of WTO guidelines for trade related activities and by finalizing Foreign Trade Agreement with many countries, our share in international trade is expected to grow. When the global markets are still trying to come out of the recessionary trend, counter party risk becomes inevitable. Reducing the cost of funds and managing the political, commercial and currency risk are the major functions of the present day finance managers. This course will provide an insight of emerging trends in international trade and financial markets and the relative risks associated with such exposures. Students will be in a position to understand and appreciate the new techniques for raising finance from international markets and able to identify the appropriate risk factors associated with such exposures. At the end of the course, they will be able to develop strategies for raising finance from the global financial markets as well as managing currency exposures As a part of curriculum, we will be introducing to the students, the activities in the forex market through a simulation game by which students will have online exposure on currency movements. 2

CAREER TRACK:
This subject will provide updates on the current developments to students who may be using most of the products in finance related areas in their career.

COURSE DELIVERABLES:
At the end of the course, the student will be able to: Understand the different products available in the international market and the related Regulatory guidelines Use various techniques of raising cross border finance from global markets Identify the relevant risk factors in international exposures and develop strategies to manage such risks. Have on line experience on how foreign exchange market operates

PRESCRIBED TEXT BOOKS:

International Finance A Business Perspective International Finance & Risk Management Foreign Exchange Handbook Managing Risks & Opportunity International Finance Reserve Bank of India website P.G. Apte A.V. Rajwade

Paul Bishop Maurice Levi

PEDAGOGY:
Classroom discussions, group presentations, solving individual cases, project assignments on current topics and participation in simulation game.

EVALUATION:
Group wok / quiz Project assignments Performance in Simulation game End term test TOTAL ***** 3 20 20 20 40 100 marks

SESSION PLAN
Session Topic Reference Text book for reference: International Finance A business perspective By: P G Apte 1&2 Overview on emerging trends in International Finance Chapter1.3 and the and global financial environment concepts of balance Appendix of trade / balance of payment / countrys foreign exchange reserve - full convertibility of a currency from corporate perspective brief discussion on Regulations in international exposure. 3&4 Development of Foreign exchange Markets and dynamics Chapter 3.4 & 3.5 of exchange rate mechanism; Different Exchange Rates Chapter 2 Factors behind exchange rate movements Group work 5&6 Impact of Foreign Trade Policy on International exposure Presentations from the operational issues in Special Economic Zone (SEZ) speaker 7&8 Managing commercial risks in international trade Chapter 7.6, 7.7,7.8 & 7.9 different methods of trade settlements - classroom And assignment Additional reading Raising short term finance - export finance and import materials finance - Role of credit agencies in export promotion New techniques of raising cross border trade finance International Factoring, Forfaiting, Suppliers Credit, Buyers Credit and Line of Credit - with case study 9 & 10 Development of Euro markets - Various options for a Chapter 8.1 corporate to raise medium and long term finance from & Reserve Bank guidelines the international market - Debt / equity External (link will be provided) Commercial Borrowing, Foreign Currency Convertible Bonds and Loan syndication ADR/GDR issues 11 & 12 Procedures for outbound investments Joint ventures Link will be provided and Wholly Owned Subsidiaries abroad guidelines issued by Reserve Bank - In bound investments FII and FDI in India operational issues with case study 13 & 14 Different types of forex exposures and risk management Chapter 5.4 and Chapter 6 strategies - transaction, translation and economic exposures 15 &16 Corporate risk management Policy managing forex Chapter 6 exposures intergrated treasury operations - case study Will be provided in the and practical exercise - group work class room 17 & 18 Forex markets - Forecasting techniques technical Guest speaker - material analysis - discussions on simultion game will be provided 19 & 20 Presentations 21 - 25 Simulation game Day 1 26 30 Simulation game Day 2 ***** 4