Forex Syllabus

Annexure ‘CD – 01’
FORMAT FOR COURSE CURRICULUM
L T P/S SW/FW No. of TOTAL

PSDA CREDIT
Course Title: International Finance and Forex Management UNITS
Credit Units: 3 2 - - 2 3 3
Course Level: PG
Course Code: FIBA713
Course Objectives: The objective of this course is to

 Introduce the environment of international finance and its implications on international business.
 Analyze the nature and functioning of foreign exchange markets, determination of exchange rates and their forecasting
 Study the foreign exchange risks and to identify risk management strategies and various risk adjusted models.
 To explore the international sources of long term finance
 Integrate the global developments with competitive global environment.
Pre-requisites: The prerequisite of this course is the basic knowledge of Management & Macroeconomic Concepts.
Course Contents/Syllabus:
Weightage (%)
Module I : International Financial Environnent 25%
Descriptors/Topics
Finance function in global business scenario, WTO and International Monetary System, International Financial Markets-equity, bond,
Eurocurrency market, Currency basket, Currency convertibility –on capital account and current account, Foreign exchange reserve, Balance of
payments, balance of trade, current account deficit; bilateral and multilateral agreements relating to financial transactions, Sovereign rating,
Flow of funds internationally through FDI ,FII, FPI, ODI, LRS and PN ; Government Policies regarding FII & FDI ;Integration of global
developments with the changing business environment in India .
Module II : Foreign Exchange Markets, Foreign Exchange Rate Exposure and Risk Management 25%
Descriptors/Topics
Spot and Forward Foreign Exchange Markets, Quotations and Market Rules, direct and indirect quotes, bid and ask
quote, spot and forward quote with live data interpretation, cross rates, Speculation and Arbitrage in Foreign Exchange Markets, Transaction,
Translation and Operating Exposure, Exposure from Equity and borrowing in International Financial Markets, Hedging tools for Management
of Transaction Exposure, Currency Forwards, Currency Options, Currency Futures, Currency Swaps, Impact of technology likely to disrupt the
forex market, risk adjusted models.
Module III : Foreign Exchange Rate Determination 20%
Descriptors/Topics
Discussion on devaluation or depreciation of Rupee (domestic currency against dollar/pound sterling/Euro) ;Theories of Exchange Rate
Determination, Fundamental International Parity Conditions – Purchasing Power and Interest Rate Parity, Covered Interest Parity, Fisher
Effect and International Fischer Effect, Forecasting Exchange Rates – introduction to Technical Forecasting, Time Series Modeling,
Fundamental Forecasting. Case studies.
Module IV : International Sources of Finance for the Firm & International Financing Decision 20%
Descriptors/Topics
Bond Financing (Fixed and Floating Rate Notes),Loan Financing (Syndicates Loans), Securitized Financing (Euronote),Equity Financing (GDR
and ADR),Features of Loan Agreements: Loan Negotiations, International working capital management, Analysis of International Capital
Budgeting– estimation of cash flows, Cost of Capital of a Foreign Investment, Issues in Overseas Funding Choices. APV concept
Module V : International Accounting &Taxation and Case studies of Currency crisis 10%
Descriptors/Topics
Consolidation and harmonization of accounts, International Tax Laws, Transfer Pricing , Tax heavens, double taxation treaties; Concept pf
relief for dealing double taxation regulations; International currency crisis & role of state; FEMA,FEDAI,RBI regulations
Student Learning Outcomes:
On the successful completion of this module the student will have:

 Clarity of basic concepts and different types of financial services
 Clarity of regulatory framework for these services and
 Analyze the practical applications of these services
Pedagogy for Course Delivery: The course will be delivered mainly through lectures, industry lectures & interactions, case studies, videos and supported with
practical examples from the current business environment.
List of Professional Skill Development Activities (PSDA):

 Choose a currency and 10 different banks for a period of 30 days. Get live exchange rates –bid ask quotes, cross rates and analyze the reasons for variations and hedging and arbitrage
opportunities are available to manage the exchange rate risk
 Find out the T-bill yields in India and USA. Find out the forward rate for US dollar from any bank for one month, three months and six months. Compute the divergence of forward
rate from interest rate parity. Assign reasons for such divergence.
 Observe the actual value of the index and the price of 1-m index future on NIFTY or NSE for next 20 successive days till maturity of the futures contract. Find out the basis for each
day and plot it. Calculate the implied cost of carry and observe if the price of the contract and value of the index converge or not. If not, assign a reason after further investigation.
Assessment/ Examination Scheme:

Theory L/T (%) Lab/Practical/Studio (%)
Theory L/T (%) End Term Examination

30% 70%
Theory Assessment (L&T):

Continuous Assessment/Internal Assessment End Term Examination
30% 70%
Components (Drop down) Class Performance Group presentation CT EE
Linkage of PSDA with  Choose a  Find out the T-bill yields

Internal Assessment currency and 10 in India and USA. Find
Component, if any different banks out the forward rate for
for a period of 30 US dollar from any bank
days. Get live for one month, three
exchange rates – months and six months.
bid ask quotes, Compute the divergence
cross rates and of forward rate from
analyze the interest rate parity.
reasons for Assign reasons for such
variations and divergence.
hedging and  Observe the actual value
arbitrage of the index and the price
opportunities are of 1-m index future on
available to NIFTY or NSE for next
manage the 20 successive days till
exchange rate risk maturity of the futures
yes contract. Find out the
basis for each day and
plot it. Calculate the
implied cost of carry and
observe if the price of the
contract and value of the
index converge or not. If
not, assign a reason after
further investigation
Weightage (%) 5 10 10 70 70
Lab/ Practical/ Studio Assessment: NA
Continuous Assessment/Internal Assessment End Term Examination

(____ %) (____ %)
Components (Drop down
Weightage (%)
Text Reading:
 Levi, Maurice, International Finance, New York, McGraw Hill Inc., 1996.
 Shapiro, Allen C., Multinational Financial Management, New Delhi, Prentice Hall India Pvt. Ltd., 1995.
 Kevin, S. Fundamentals of International Financial Management, Prentice Hall of India, 2009.

 Srivastava, R. International Finance, Oxford University Press,2014
 Gupta, S.L. Financial Derivatives, Prentice Hall of India, 2005.
 Srivastava, R., Misra, A. Financial Management, Oxford University Press, 2011.
References:
 Eiteman, David K., Arthur Stonehill and Michael H. Moffett , Multinational Business Finance, Reading mass., Addision – Wesley Publishing
company,1998.
 Apte P.G., Multinational Financial Management, New Delhi, Tata McGraw Hill, 1998.
 Seth A.K., International Financial Management, New Delhi, Galgotia Publishing Company, 2000.
 Errunza, V. R., Singh, D. and Srinivasan, T.S. International Business Finance, Global Business Press, 1994.
 Seth, A.K. International Financial Management, Galgotia Publishing Company, 2000.
 Hull, J. C. Introduction to Futures and Options Markets, Prentice Hall of India, 1999.
 Kolb, R. W. Understanding Futures Markets, Prentice Hall of India, 1997.
 Rebonato, R. Interest Rate Option Models: Understanding, Analysing and Using Models for Exotic Interest Rate Options, John Wiley and Sons, 1996.
 Kohn, M. Financial Institutions and Markets, Tata McGraw Hill Publishing, 1998.
 Vij, M. International Financial Management, Excel Book, 2010.
Additional Reading:
 Articles from Journal of Finance

 Articles from International Journal -Finance India
 Business newspapers
 Yahoo finance (http://finance.yahoo.com/)
 Investopedia (www.investopedia.com)
 Google Finance (www.google.com/finance)

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What are the objectives of this course?

What are the different modules covered in this course?

Annexure ‘CD – 01’

FORMAT FOR COURSE CURRICULUM

L T P/S SW/FW No. of TOTAL

Course Objectives: The objective of this course is to

Student Learning Outcomes:

On the successful completion of this module the student will have:

List of Professional Skill Development Activities (PSDA):

Assessment/ Examination Scheme:

Theory L/T (%) End Term Examination

Theory Assessment (L&T):

Linkage of PSDA with  Choose a  Find out the T-bill yields

Continuous Assessment/Internal Assessment End Term Examination

Components (Drop down

 Kevin, S. Fundamentals of International Financial Management, Prentice Hall of India, 2009.

 Articles from Journal of Finance

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