CS_PP :: Professional Programme
Paper 3 : Financial Treasury and Forex Management
[One paper: Three Hours – 100 marks]
Level of Knowledge:
Expert knowledgeObjectives:
| (i) | To provide conceptual clarity about the management tools and techniques used in financial planning, analysis, control and decision making. |
| (ii) | To provide knowledge of derivatives, forex and treasury management to enable the candidates to tackle practical situation with ease. |
Detailed contents :
| 1. | Nature and Scope of Financial Management |
|---|---|
| Nature, significance, objectives and scope of financial management; risk-return and value of the firm; financial distress and insolvency; financial sector reforms and their impact on financial management; functions of finance executive in an organisation; financial management – recent developments. | |
| 2. | Capital Budgeting Decisions |
| Planning and control of capital expenditure; capital budgeting process; techniques of capital budgeting- discounted and non-discounted cash flow methods, choice of methods; capital rationing; risk evaluation and sensitivity analysis, simulation for risk evaluation; linear programming and capital budgeting decisions. | |
| 3. | Capital Structure Decisions |
| Meaning and significance of capital structure; capital structure vis-avis financial structure; capital structure planning and designing; optimal capital structure; determinants of capital structure; capital structure and valuation - theoretical analysis; EBIT – EPS analysis; cost of capital; factors affecting cost of capital, measurement of cost of capital, weighted average cost of capital, marginal cost of capital; risk and leverage; measures of leverage, leverage effects on shareholders returns. | |
| 4. | Sources of Finance |
| Equity, non-voting preference shares; debentures and bonds; company deposits; term loans from financial institutions and banks; international finance and syndication of loans; euro-issues and external commercial borrowings; FCCB; internal funds as a source of finance; dividend policy and retention of profits; bonus shares; deferred payment arrangements; corporate taxation and its impact on corporate financing; financing cost escalation. | |
| 5. | Dividend Policy |
| Introduction; types, determinants and constraints of dividend policy; different dividend theories — Walter’s Model, Gordon’s Model andModigliani-Miller Hypothesis of dividend irrelevance; forms of dividend; dividend policy - practical considerations and legal constraints; corporate dividend practices in India; statutory framework. | |
| 6. | Working Capital Management and Control |
| Working capital - meaning, types, determinants; assessment of working capital requirements - operating cycle concept and applications of quantitative techniques; management of working capital - cash, receivables, inventories; financing of working capital; banking norms and macro aspects of working capital management. | |
| 7. | Security Analysis and Portfolio Management |
| Security analysis - fundamental approach, technical approach and efficient capital market theory; portfolio management - meaning, objectives; portfolio theory – traditional approach; modern approach - CAPM model. | |
| 8. | Financial Services |
| Meaning, significance and scope of financial services ; types of financial services – merchant banking, leasing and hire purchase, venture capital, mutual funds, factoring and forfeiting, securitisation of debt, loan syndication, custodial and corporate advisory services, credit rating. | |
| 9. | Project Planning and Control |
| Project Planning and preparation of project report; project appraisal under normal, inflationary and deflationary conditions; project appraisal by financial institutions – lending policies and appraisal norms by financial institutions and banks; loan documentation and loan Introduction of New Syllabus of the Company Secretaryship Course Student Company Secretary 43 November 2007 syndication, project review and control; social cost and benefit analysis of project. | |
| 10. | Derivatives and Commodity Exchanges |
| Concept of derivatives; financial derivatives and commodity derivatives; types of derivatives - forward contracts, futures contracts, options; participants in futures and options market, Index based derivatives and security based derivatives; derivatives and exposure management, currency forwards, currency futures, currency options and currency swaps and interest rate risk management; derivative markets in India; commodity exchanges in India. | |
| 11. | Treasury Management |
| Meaning, objectives, significance, functions and scope of treasury management; relationship between treasury management and financial management; role and responsibilities of chief finance executive; tools of treasury management; internal treasury controls; environment for treasury management; role of information technology in treasury management; liquidity management, regulation, supervision and control of treasury operations, implications of treasury on international banking. | |
| 12. | Forex Management |
| Nature, significance and scope of forex management; foreign exchange market and its structure; foreign exchange rates and its determination; exchange rate quotes; types of exchange rates; forex trading; currency futures and options; foreign exchange risk exposures and their management; exchange rate forecasting; risk in foreign exchange business. | |
| 13. | Recent Developments in Financial, Treasury and Forex Management |
| 14. | Practical Problems and Case Studies. |
Readings
| Title | Author | Publisher |
|---|---|---|
| Financial Management – Text and Problems | M.Y.Khan & P.K.Jain | McGraw Hill Education |
| Financial Management – Theory & Practice | Prasanna Chandra | Mc Graw Hill Education |
| Financial Management | I.M.Pandey | Vikas Publishing House |
| Financial Management – Theory, Concepts and Problems | R.P.Rustagi | Galgotia Publishing |
| Financial Management – Principles & Practice | S.N.Maheshwari | Sultan Chand |
| Financial Management-An Analytical and Conceptual Approach | S.C.Kuchhal | Chaitanya Publishing |
| Financial Management & Policy | J.C.Vanhorne | Prentice Hall of India |
| Financial Management | Sabir Kumar Banerjee | S.Chand |
| Woking Capital Management | V K Bhalla | Anmol Publications |
| A manual Of Merchant Banking | J.C.Verma | Bharat Law House |
| Contemporary Financial Markets and Services | Scott L.William | West Publishing Company |
| Financial Management and Policy | V.K. Bhalla | Anmol Publications |
| Options, Futures and other Derivative Securities | John C.Hull | Prentice-Hall |
| Treasury Management in India | V.A.Avadhani | Himalaya Publishing House |
| Treasury Management | Hudson Robert | Blackwell |
| Financial Future an Options | B.Brahmaiah & P.SubbaRao | Himalaya Publishing House |
| Financial Derivatives – an Introduction to   Futures Forwards, Options and Swaps | Keith Redhead | Prentice Hall of India |
| Foreign Exchange International Finance and Risk Management | A.V.Rajwade | Academy of Business Studies |
| Foreign Exchange Management Manual | D.T.Khilanani | Snowhite |
| Foreign Exchange and Risk Management | C Jeevanandam | Sultan Chand |
| Strategic Financial Management | R P Rustagi | Sultan Chand |
References
| Title | Author | Publisher |
|---|---|---|
| Financial Decision Making – Concepts, Problems and Cases | John J.Hampton | Prentice Hall of India |
| Principles of Financial Management | Benton E. Gup | John Wiley |
| Projects Preparation, Appraisal and Implementation | Prasanna Chandra | McGraw Hill Education |
| The Theory of Financial Management | Ezra Solomon | Columbia Unviersity Press |
| Guidelines for Project Evaluation | P.Dasgupta, A.Sen & S. Marglin | New Oxford & IBH Publishing |
| International Financial Management | P.G.Apte | McGraw Hill Education |
| International Dimensions of Financial Management | Dennis J.O’Connor Albert& T.Bueso | MacMillan Publishing Company |
| Portfolio Construction, Management and Protection | Robert A. Strong | West Publishing Company |
| Contemporary Financial Management | R.Charles Moyer, James   R. McGuign & William J.Kretlow | West Publishing Company |
| Lease Financing and Hire Purchase, Â Merchant Banking, Mutual Funds, Â Factoring and Venture Capital | Kothari Vinod. | Wadhawa |
| Global Business Finance | Prakash G.Apte | McGraw Hill |
| Management of Financial Services | V K Bhalla | Anmol Publications |
Journals
| Title | Author | Publisher |
|---|---|---|
| RBI Bulletin | RBI Publication, Mumbai. | |
| RBI Annual Report (latest) | RBI Publication, Mumbai. | |
| Report on Currency and Finance (Latest) | RBI Publication, Mumbai. | |
| The World Bank Annual Report (latest) | The World Bank Headquarters, Washington, USA. | |
| Economic Survey (latest) | Government of India Publication, New Delhi. | |
| Annual Report, Govt, of India, Ministry of Finance | Government of India Publication, New Delhi. | |
| Guidelines issued by various Financial   Institutions; Appraisal of Term-loans | Report of the Working Group, Reserve Bank of India | |
| Journal of Finance | The Journal of American Finance Association, New York. | |
| Financial and Economic Dailies. |