International Financial System:
Evolution of International Financial System–Gold Standard, Bretton Woods Standard, Floating Exchange
Rate, EMS, Currency Board, Sterilized and Unsterilized Intervention; International Financial Markets,
Global Financial Institutions – IMF, Bank for International Settlements; International Banking-Euro Bank,
Types of Banking Offices-Correspondent Bank, Representative Office, Foreign Branch, Subsidiary Bank,
Offshore Bank; International Financial Instruments – Euro CP, Eurobonds, Foreign Bonds, Global Bonds,
Euro Equity, ADR, GDRs.
Foreign Exchange Market:
Distinctive Features and Types, Major Participants, Participants in Foreign Exchange Market, Structure
of Foreign Exchange Market in India, Exchange Rate Mechanism – Quotes in Spot Market and Forward
Market, Triangular Arbitrage; Nominal Effective Exchange Rate (NEER), Real Effective Exchange Rate
(REER); Currency Derivatives – Forwards, Futures, Forward Rate Agreement, Options, Swaps; Foreign
Exchange Management Act; BOP, BOP Trends in India; Current Account Convertibility, Capital Account
Convertibility, Tarapore Committee Report.
Exchange Rate Determination & Risk Management:
Theories of Exchange Rate Behaviour, Parity Conditions – Purchasing Power Parity, Interest Rate Parity,
International Fisher Effect, Unbiased Forward Rate Theory. International Debt Crises and Currency Crises-
Asian Currency Crisis, Greek Debt Crisis; Risk Management in Multinational Corporations – Types of
Risk – Currency Risk, Transaction Exposure, Translation Exposure, Economic Exposure and Assessment;
Interest Rate Risk, Country Risk Assessment – Political Risk, Financial Risk; Risk Management through
Hedging – Natural Hedges, Hedges with Currency Derivatives – Forward Market Hedge, Options Market
Hedge, Money Market Hedge, Hedging Exposure through Swaps, Other Financial and non Financial
Methods of Hedging.
Multinational Corporate Decisions in Global Markets:
Nature of International Finance Functions and the Scope of International Financial Management, IFM and
Domestic FM, Foreign Investment Decision-Foreign Direct Investment (FDI) – Motives, FDI Theories –
Theory of Comparative Advantage, OLI Paradigm of FDI in India, Modes of Foreign Investment, Evaluation
of Overseas Investment Proposal using NPV and APV; International Cash Management, Multinational
Capital Structure Decision, Cost of Capital, International Portfolio Diversification – Rationale, Barriers,
Home Country Bias.
International Tax Environment:
Types of Taxation–Income Tax, Withholding Tax, Value Added Tax, Tobin Tax; Tax Environment– Worldwide
Approach, Territorial Approach, Foreign Tax Credits; Tax Havens, Organisation Structure for Reducing Tax
Liabilities – Branch and Subsidiary Income, Payments to and From Foreign Affiliates, Controlled Foreign
Corporation; Netting, Offshore Financial Centres, Reinvoicing Centre, Tax Havens; Objectives of Taxation
– Tax Neutrality Tax Equity; Double Taxation Avoidance, Tax Implications of Foreign Enterprises in India;
Taxation of Foreign Source Income in India; Transfer Pricing (TP) and Tax Planning – TP Methods, TP
Rules in India.