SEMESTER - III L T P C

A2MBT416 INTERNATIONAL FINANCE

Total Contact Hours – 45

COURSE OBJECTIVES
COBJ 1 To bring awareness and understanding of Financial System in the global scenario in
order to make decisions.
COBJ 2 To integrate foreign exchange markets to other financial markets to make the student
understand and analyzed the impact forex on investments and borrowings.
COBJ 3 To make the students differentiate domestic and multinational companies for effective
management and investment through FDI
COBJ 4 To introduce risk factors in financial decisions and make the students analyze and
evaluate for effective decision.
COBJ 5 To introduce pricing methods and tax liabilities across the globe to maximize profits.

SYLLABUS

UNIT I - INTERNATIONAL FINANCIAL SYSTEM: Evolution of international monetary

system-Economics of International Transactions-International funds flow-BOP-BOT-capital account
convertibility-International Parity Theories-International financial instruments and markets-Global
financial institutions and banking

UNIT II - FOREIGN EXCHANGE MARKETS: Foreign exchange markets structure and

participants-quotes in spot market and forward market-triangular arbitrage-nominal effective
exchange rate (NEER)-real effective exchange rate (REER)-Currency derivative-Foreign Exchange
Management Act (FEMA)-Exchange rate determination-Sterilized and unsterilized intervention-
International debt crises and currency crises

UNIT III - MULTINATIONAL CORPORATE FINANCE AND FOREIGN DIRECT

INVESTMENT (FDI):

Financial goals of an MNC-financial performance measurement -International Trade financing -

International cash management-multinational capital structure decision-cost of capital- Dividend
decisions -Offshore markets listing

FDI: Theory of comparative advantage-OLI paradigm of FDI in India-Modes of foreign investment-

FDI Vs FPI-International portfolio diversification - Rationale, barriers, home country bias, project
financing- International Capital Budgeting-evaluation of overseas investment proposal using APV
UNIT IV - INTERNATIONAL RISK MANAGEMENT: Types of risks–Currency risk, transaction
exposure, translation exposure, accounting standard for translation exposure in India, economic
exposure and assessment-Interest rate risk, country risk – Political risk, financial risk-Risk
management through hedging – natural hedges, hedges with currency derivatives, hedging
contingent exposure, hedging through invoice currency

UNIT V - INTERNATIONAL PRICING AND TAX ENVIRONMENT:

Types of taxes- taxation methods

-tax havens, offshore financial centers, re invoicing center

-Tax treaties

-Double Taxation Avoidance agreement, multilateral tax treaties

-foreign tax credit, tax neutrality tax equity, taxes and the

location of foreign operations, tax implications of dividend remittance by overseas affiliate, taxes and
organizational form

–controlled foreign corporation

-Taxation of foreign source income in India

-Transfer pricing (TP) and tax implications

NOTE: Relevant cases have to be discussed in each unit.

REFERENCE BOOKS:

1. CheolEun and Bruce Resnick, International Financial Management: McGrawHill, 6th Edition.

2. Ephraim Clark (2010), International Financial Management, Cengage Learning.

3. Eun C.S., Resnick B.G.(2010).International Financial Management:TataMcGraw Hill Education

Pvt. Ltd.,New Delhi.

4. Jeff Madura.International Corporate Finance:Thomson South Western,11th Edition.

5. Keith Pilbeam.International Finance:Macmillan,3rd Edition.

6. Milind Sathye, Larry Rose, Larissa Allen and Rae Weston.(2011).International Financial
Management:, Wiley.

7. Thomas J O’Brien, International Finance–Corporate Decisions in Global Markets: Oxford

University Press, 2nd Edition.

8. Vyuptakesh Sharan, International Financial Management IV, PHI

9. Shapiro, Multinational Financial Management, IV, PHI
WEB RESOURCES:

International Financial System: https://www.sciencedirect.com/topics/economics-econometrics-and-

finance/international-financial-system
1. NSE Currency Derivatives: https://www1.nseindia.com/live_market/dynaContent/
live_watch/curr_der_stock_watch.htm
2. International Pricing: https://journals.sagepub.com/doi/abs/10.1509/jimk.9.3.1.19928
3. Transfer Pricing and Taxation: https://www.nber.org/chapters/c7740.pdf

COURSE OUTCOMES: At the end of this course, the students will be able to
Understand the importance of financial system and markets in Indian and Global
CO1
Scenario.
Know more about multinational style of financial management with diversified risk,
CO2
return and liability parameters.
CO3 Source the updates on international pricing methods, taxes and benefits
CO4 Evaluate and analyzed domestic and global markets to make key decisions
CO5 Make decions in a simulated situation on key finance functions of and MNC.
CO6 Decide on product, subsidiary in different countries suiting pricing and taxation
CO7 Analyze, Evaluation and arrive to solutions in international financial scenario.

CO – PO MAPPING:

Course Title: INTERNATIONAL FINANCE

Course Code: A2MBT416
Course Designed by: Department of Management Studies
PO1 PO2 PO3 PO4 PO5 PO6
CO1 3 1 3 1
CO2 3 1 3 1
CO3 3 1 3 1
CO4 3 1 3 1
CO5 3 2 3 1
CO6 3 1 3 1
CO7 3 1 3 1
Overall 21 8 21 7

Course designed by Department of Management Studies

 Approved by: Meeting of Board of Studies held on 11.07.2020
Approval
Ratified by: 5th Meeting of Academic Council, 13.07.2019