Introduction: Money and the Financial System
● Why study financial markets, institutions and banking
● Why study money and monetary policy
● Functions of financial markets
● Types of financial markets
Understanding Interest Rates
● Measuring interest rate risk
● YTM of simple loan, fixed payment loan, coupon bond
● Supply and demand curve
● Finding the equilibrium interest rate
Foreign exchange market
● What are foreign exchange rate
● Why are exchange rates important
● Theory of purchasing power parity
Central banks
● Origins of central bank system
Variations in the functions and structure of central banks
Conduct of monetary policy: strategy and tactics
● The price stability and nominal anchor goal
● High employment and output stability
● Economic growth
Conduct of monetary policy: strategy and tactics
● Stability of financial markets
● Interest rate stability
● Stability in foreign exchange markets
● Inflation targeting
The international flow of funds
● Balance of payments
● Growth of international trade
● Factors affecting international trade flows
● International capital flows
International financial markets
● Foreign exchange market
● International money market
● International credit market
● International bond market
● International stock market
Exchange rate determination
● Measuring exchange rate movements
● Exchange rate equilibrium
● Factors that influence exchange rates
● Movements in cross exchange rates
Currency derivatives
● Forward markets
● Currency future markets
● Currency option markets
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● Currency call option
● Currency put option
International arbitrage and interest rate parity
● Locational arbitrage
● Triangular arbitrage, Covered interest arbitrage
● Interest rate parity, Variations in forward premiums
Relationship among inflation, interest rates and exchange rates
● Purchasing power parity
● International fisher effect
Managing transaction exposure
● Policies for hedging, Hedging exposure to payables,
● Hedging exposures to receivables,Limitations of hedging
International corporate governance and control
● International
● corporate governance, International corporate control
● Factors affecting target valuation, Disparity in foreign target valuation
Country risk analysis
● Country risk characteristics, Measuring country risk
● Incorporating the risk of capital budgeting, Preventing host government takeovers