By V.K.

Pandey
 Marketing
◦ Budgets, marketing research, marketing financial
products
 Accounting
◦ Dual accounting and finance function, preparation of
financial statements
 Management
◦ Strategic thinking, job performance and profitability
 Personal finance
◦ Budgeting, retirement planning, college planning, day-
to-day cash flow issues
 Know the basic types of financial
management decisions and the role of the
financial manager
 Know the goal of financial management
 Know the financial implications of the

different forms of business organization

 Understand the conflicts of interest that can

arise between owners and managers

• Corporate finance
• Investments
• Financial institutions
• International finance
 Real and Financial Assets
 Equity and Borrowed Fund
 Primary and Secondary Market
 Financing Decision
 Investment Decision
 Operational decision
 Dividend Decision
 Liquidity decision
 Flow of funds

Seeker of Supplier
funds of fund
Flow of financial
services
 Saving Function
 Liquidity
 Payment Function
 Risk Function
 Policy Function
 Money Market
 Call Money Market
Treasury Bills
Commercial Papers
Certificates of deposit
Money Market Mutual Funds
 Capital Market
• Primary Market
• Secondary Market
 Fund Raising
 Fund Allocation
 Profit Planning
 Profit Maximization versus Wealth
Maximization
Expected Return

Risk Premium

Risk Free Return

Risk
 International capital Market

International equity market

International Bond Market

Foreign Equity Euro Equity

Foreign Bonds Euro Bonds

ADR GDR
Yankee Bonds Euro/Dollar IDR/EDR
Samurai Bonds Euro/Yen
Bulldog Bonds Euro/ Ponds
 Euro Bonds: Issued outside the country in whose currency it is
denominated.
◦ Fixed rate Bonds: straight debt bonds are fixed interest bearing
securities which are redeemable at face value.
◦ Floating rate Notes: a bond issue with a maturity period varying from
5-7 years having varying coupon rates either pegged to another security
or refixed at periodic interval
 Foreign Bonds:
◦ Yankee Bonds: These are US dollar denominated issuers by foreign
borrowers in the US Bond Market
◦ Samurai Bonds: These are the bonds issued by non Japanese
borrowers in the domestic Japanese markets
◦ Bulldog Bonds: These are the sterling denominated foreign bonds
which are raised in the UK domestic Market
◦ Shibosai Bonds: These are the privately placed bonds issued in the
Japanese market

ADR: An American Depositary Receipt (or ADR) represents the ownership in the
shares of a foreign company trading on US financial markets. The stock of many non-
US companies trades on US exchanges through the use of ADRs. ADRs enable US
investors to buy shares in foreign companies without undertaking cross-border
transactions. ADRs carry prices in US dollars, pay dividends in US dollars, and can be
traded like the shares of US-based companies.

 GDR: A bank certificate issued in more than one country for shares in a
foreign company. The shares are held by a foreign branch of an international bank.
The shares trade as domestic shares, but are offered for sale globally through the
various bank branches
 Euro Depositary Receipt: As with other depositary receipts, the EDR is a
certificate representing ownership of the issuer's underlying shares. The EDR is
denominated and quoted in euros. EDRs make it easier for individuals to invest in
foreign companies that are not traded locally.
 IDR: A negotiable, bank-issued certificate representing ownership of stock securities
by an investor outside the country of origin.
Foreign market is the market where the financial
paper denominated in the one currency is always
traded against financial paper denominated in
some other currency
Features:
◦Telephonic market
◦Geographic location
◦Exchange Rate
 Exporter
 Importer
 Hedgers
 Speculators
 Arbitrators
The asset which derives its value from
another underlying asset
 Products/ Contract traded on the exchange
known as exchange traded derivative

 Products/ Contracts traded outside the

exchange are over the counter derivative
1. Forward
2. Future
3. Option
A forward contract is an agreement to sell
or buy an assets on a specified future date
for a specified price
The party agreeing to buy the underlying
asset is called in buy is in long position and the
party agreeing to sell the underlying assets is
called to be in short position
1. These are the exchange traded forward contracts
2. Future contracts are essentially standardized forward
contracts, which are traded on the exchanges and settled
through the clearing agency of the exchanges
3. As they are exchange traded , they catered a wide range of
market participation.
4. Here the exchange gives the counter guarantee to the
contract.hence the market participation do not get exposure
for the counter party risk.