Financial, Treasury and Forex management

CS: Professional Programme
Paper 3 : Financial Treasury and Forex Management
[One paper: Three Hours – 100 marks]

Level of Knowledge:

Expert knowledge

Objectives:

(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.