SVKM’s

NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

POST GRADUATE DIPLOMA IN MANAGEMENT

Program: PGDM Trimester: V

Course: International Finance (IF) Code:
Teaching Scheme: Evaluation Scheme:
Classroom Practical/ Tutorials Credit Continuous Term End Examination
Sessions Group Evaluation (TEE)
work
20 50% 50%
Course Rationale:
This course ‘International Finance’ explores the nuances of Corporate Finance in a globalized business
environment. Firms across the globe have increasingly become international in their investing and
financing decisions. Their interaction with global financial markets makes the decision making much
more risky and complex. The course covers contemporary issues in International Finance from an
Indian as well as global perspective.

Course Objectives:
The objectives of this course are to discuss the:
1. Evolution of the International Monetary System;
2. Theories of Foreign exchange;
3. Foreign exchange exposure of international firms;
4. Intricacies of Capital Budgeting, Capital Structure, and Working Capital decisions for a Multinational
business enterprise;
5. Risks attendant upon internationalization of firms and hedging instruments used to manage risks.

Learning Outcomes:
After completing this course a participant would be able to:
1. Evaluate the Global Financial Environment, viz., Balance of Payments (BoP) and the International
Monetary System;
2. Analyse the Foreign Exchange Markets and learn about theories governing them, viz., Interest Rate
Parity (IRP), Purchasing Power Parity (PPP), Nominal versus Real Exchange Rates;
3. Evaluate Foreign Exchange exposure of a firm, viz., Transaction, Translation and Operating
Exposures;
4. Build financing options of a global firm;
5. Critically apprise the types of foreign exchange Risks and their management.

Prerequisite(s):
The course requires a sound understanding of basic concepts in Corporate Finance and Financial
Accounting and working knowledge in Spreadsheets. A regular reading of financial newspapers like
Mint, The Hindu Business Line, Economic Times, Financial Express, Business Standard, Wall Street
Journal, The Economist, Financial Times, Bloomberg Markets etc., is essential to bring in contemporary
issues into the class room discussion.

Pedagogy:
A mix of pedagogy, comprising a fair mix of articles, cases, and practice problems, assignments and
group projects would be adopted to cover the course content. Conceptual inputs will be given through
short lectures. The extent & quality of learning will depend on the quality & depth of discussion in the
class, which in turn depends on the pre-class preparation and post-class revision by the participants.
Readings, Assignments and Numerical problems, whenever given, are a means of focusing on
central issues, concepts and knowledge.

Textbook:
 Multinational Business Finance, 14e, Eiteman, David K., Stonehill, Arthur I., & Moffett, Michael H.
(ESM), Pearson Education,2018

Reference Books:
 International Finance, Levi Maurice, D., Routledge, 2018;
 Multinational Financial Management, (International Student edition), 9e, Shapiro, Alan, C., John
Wiley, 2012;
 International Financial Management, 13e, Madura, Jeff, Cengage, 2018;
 India and the Global Financial Crisis: Managing Money and Finance. 1e, Reddy, Y.V., Anthem
South Asian Studies, 2010.
 The Ascent of Money: A Financial History of the World, Ferguson, Niall, Penguin, 2012.

Journals:
 Journal of International Money and Finance,
 Journal of International Financial Management and Accounting
 Global Finance Journal,
 International Journal of Accounting and Finance,
 Journal of International Economics.

Links to websites:
 http://www.worldbank.org/
 http://www.imf.org/external/index.htm
 http://www.ifc.org/wps/wcm/connect/corp_ext_content/ifc_external_corporate_site/home
 https://www.wto.org/
 https://www.eximbankindia.in/
 http://commerce.gov.in/
 https://www.rbi.org.in/
 http://www.sebi.gov.in/
 https://www.fieo.org/
 http://www.indiantradeportal.in/
 http://www.eouindia.gov.in/index.htm

Evaluation Scheme:
 Class Quizzes/ Assignments (2) 20 %
 Course Project 10 %
 Mid-Term Exam 20 %
 Term-End Exam 50 %
Total 100 %
Session Plan:
Session Topic (including Learning Outcomes Pedagogical Tool1 Textbook
subtopics) Chapters &
Readings
1-2 Introduction to Understand the Case: Textbook
International Global Financial  Nomura's Global Growth Chapter 1-2
Finance: Environment and the Picking Up Pieces of Multinational
Globalization and International Lehman, Corporations, B.
the Multinational Monetary System. # 210017-PDF-ENG Kogut,
Enterprise (MNE) Published:2009 https://www0.gsb
International HBS .columbia.edu/fac
Monetary System  The Euro and the Greek ulty/bkogut/files/
(IMS) Debt crisis, Chapter_in_Smel
p 61 [ESM] ser-
Baltes_2001.pdf
Multinational
Corporations &
the erosion of
State
Sovereignty,
Steve Kapfer,
https://pol.illinois
state.edu/downlo
ads/conferences/2
006/Kapfer2006.
pdf
3-4 Balance of Analyze the impact Class Discussion on India’s Textbook
Payments of Balance of recent trends in BOP position Chapter 3
Payments on the available at: India’s 1990-91
Foreign Exchange http://mofapp.nic.in:8080/eco Crisis: Reforms,
Market nomicsurvey/appendixPDF/ta Myths, and
b6.3A.pdf Paradoxes,
Arvind Virmani,
December 2001,
Working Paper
No. 4/ 2001-PC,
Planning
Commission of
India,
http://planningco
mmission.gov.in/
reports/wrkpaper
s/wp_cris9091.pd
f
4-5 Foreign Exchange Evaluate the nuances Class Discussion on Textbook
Markets of the Foreign Caselets/Chapter end Chapter 5
Exchange Market problems Bank for
International
Settlements,
(2016), Triennial
Central Bank
Survey of foreign
exchange and
OTC Derivatives
1
Provide the details of Pedagogical tool viz., Title & source of Case/ Nature of Simulation Exercise/
Role Play/ Lecture/Class Discussion etc.
 markets in 2016,
Basel;
https://www.bis.o
rg/publ/rpfx16.ht
m
6-7 Parity Conditions Apply Purchasing Case: Textbook
Power Parity (PPP), Mrs. Watanabe and the Chapters 6
Interest Rate Parity, Japanese Yen Carry Trade, Beefed up
Fisher effect, Mini Case, Chapter 6, p 187- Burgernomics,
Covered & 190, [ESM]. The Economist,
Uncovered Interest 30 July, 2011;
arbitrage to http://www.econo
forecasting of foreign mist.com/node/21
exchange rates 524811/print

7-8 Foreign Exchange Analyze the impact Case: Textbook

Rate of Direct & Indirect Singapore’s Exchange Rate Chapter 9
Determination Foreign Exchange Policy, Monetary Authority of
Market Intervention Singapore, February 2001,
on Exchange Rates. http://www.mas.gov.sg/~/med
ia/manual
%20migration/Monographs/ex
changePolicy.pdf.
9-10 Currency Evaluate the nature  Problems on Options, Textbook
Derivatives of various Currency Futures & Options. Chapter 7
Derivatives Products
Case:
McDonald’s, Hoover Hedges
and Cross-Currency Swaps,
Mini-Case, p 345-347, [ESM]
10-11 Interest Rate Risk Apply currency Case: Textbook
& Swaps swaps to manage The BF Goodrich -Rabo Chapter 8
Interest Rate Risk #284080-PDF-ENG,
Published 1984
Revised 1996
HBS
Case:
R.J. Reynolds International
Financing
#287-057-PDF-ENG,
Published 1987
Revised 1991
HBS
12-14 Managing Manage Foreign Case: Textbook
Exchange Rate Exchange exposure Jet Fuel Hedging Strategies: Chapters 10-12
Exposure: of a firm, viz., Options Available for
 Transaction Transaction, Airlines and a Survey of
Exposure Translation and Industry Practices, Cobbs-
Operating Exposures Wolf, Finance 467, Spring
 Translation
2004, Kellogg School of
Exposure
Managementhttp://www.kello
 Operating gg.northwestern.edu/research/
Exposure fimrc/papers/jet_fuel.pdf
Case:
Farmington Industries, Inc.:
Managing Currency Exposure
Risk,
# 104053-PDF-ENG,
 Published 2004
HBS
15-17 Financing for Evaluate the nature  Estimation of WACC for a Textbook
Multinational of financing options Multinational Company Chapters 13-14
Enterprises of a global firm; Assignment
Case:
Globalizing the Cost of
Capital at AES
#9-206-080-PDF-ENG,
Published 2003
Revised 2006
HBS

18-19 International Compare the trade Problems and case studies on Textbook
Trade Finance financing alternatives financing working capital Chapter 16
needs.

20 Evaluation of Evaluate the Foreign Class Discussion on Textbook

Foreign Direct Direct Investment Caselets/Chapter end Chapter 17
Investment (FDI) strategies problems Subramanian,
Ravi. Charu
Sachdeva,
Sebastian Morris.
(2010), FDI
Outflows from
India: An
Examination of
the Underlying
Economics,
Policies and their
Impacts (W.P.
No. 2010-03-01).
IIM Ahmadabad.
http://www.esoci
alsciences.org/Do
wnload/repecDo
wnload.aspx?
fname=Documen
t124112010540.7
671778.pdf&fcat
egory=Articles&
AId=3214&fref=
repec