Foreign Exchange Market and Derivatives (Sem 2, BCom Mumbai Univ)

It is with great enthusiasm and pride that we present “Foreign Exchange Market and Derivatives,” a comprehensive textbook designed for first-year students pursuing the Bachelor of Commerce (Management Studies) program under the National Education Policy (NEP) curriculum of the University of Mumbai. The introduction of this subject marks a pivotal step in equipping young learners with foundational knowledge of foreign exchange (FOREX) and derivatives—two critical pillars of modern financial markets. In an increasingly globalised economy, understanding these concepts is not only academically enriching but also practically indispensable for aspiring managers and professionals.

This book aims to simplify the complexities of FOREX and derivatives by presenting core concepts in an accessible, engaging, and structured manner. Each topic is carefully explained with real-world examples, intuitive explanations, and visual aids to ensure clarity. Students will find the material progressively challenging, fostering a deeper understanding of both the theoretical and practical dimensions of these markets. In crafting this resource, our primary goal has been to cater to the needs of learners transitioning into higher education, offering a balance between rigour and simplicity. Key features such as chapter summaries, illustrative examples, and practical exercises are included to enhance learning and retention.

Contents –

Unit – 1 : Foreign Exchange Markets – An Overview
1. Introduction to Foreign Exchange Market
A Concept of Foreign Exchange Market
B Features of Foreign Exchange Market
C Need for Foreign Exchange Market
D Participants in Foreign Exchange Market
E Functions of Foreign Exchange Market
F Structure of Foreign Exchange Market in India
G Foreign Currency Accounts
2. Foreign Exchange Regulations and Types of Exchange Rate
A Regulations for Foreign Exchange
B Balance of Payments and its Characteristics
C Components of BOP
D Capital Account Convertibility
E Current Account Convertibility
F Concept of Exchange Rate System
G Fixed Exchange Rate System
H Flexible Exchange Rate System
I Fixed vs. Flexible Exchange Rate
J Factors Affecting Foreign Exchange Rates

Unit – 2 : Derivatives Market
3. Derivatives Market
A Meaning of Derivatives
B Features of Derivatives
C Benefits of Derivatives
D Disadvantages of Derivatives
E Emerging Structure of Derivatives Markets in India
F Types of Derivatives
G Currency Derivatives
H Introduction and Significance of Index
4. Numerical Problems
A Quoting the Foreign Exchange Rates
B Direct and Indirect Quotations
C Mid Rate, Spread and Spread Percent
D Cross Currency Rates
E Forward Rate