directorate of distance education integral … · 2019-06-26 · unit – 6 mutual fund structure...

SubjectName:IndianFinancialSystem SubjectCode:MBA508 PaperCode:IFS/M

DIRECTORATEOFDISTANCEEDUCATION

INTEGRALUNIVERSITY,LUCKNOW

SubjectName:INDIANFINANCIALSYSTEM SubjectCode:MBA508 PaperCode:IFS

(W.e.f.JULY2016Session)

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UNIT ChapterName

Unit-1 FINANCIAL SYSTEM

Unit–2 MONEY MARKET

Unit–3 CAPITAL MARKET

Unit–4 FINANCIAL INSTITUTIONS

Unit–5 REGULATORY INSTITUTIONS


IndianFinancialSystem

UNIT-1 FINANCIAL SYSTEM

Introduction

Meaning of Financial System

Functions of Financial System

Role and Importance of Financial System in Economic

Development

Structure of Indian Financial System

Functions of Financial Markets:

Classification of Financial Markets:

III. Financial Instruments (Securities)

Characteristics of Financial Instruments

IV. Financial Services

Weaknesses of Indian Financial System

Review Questions

Further Readings

UNIT-2 MONEY MARKET

Introduction

Meaning of Money Market

Characteristics of Money Market

Functions of Money Market

Importance of Money Market

Characteristics of a Developed Money Market

Components / Constituents / Composition of Money

Market (Structure of Money Market)

Advantages or Importance of Treasure Bill Market

Role of RBI in the Commercial Paper Market

Money Market Instruments

Features of Commercial Bills

Advantages of Commercial Paper

Advantages of MMMFs

Disadvantage of MMMFs

Structure of the Indian Money Market

Features or Defects of the Indian Money Market

Recent Developments in the Indians Money Market

Discount and Finance House of India

Functions and Role of DFHI

Review Questions

Further Readings


UNIT-3 CAPITAL MARKET

Introduction

Meaning and Definition of Capital Market

Market Money market Capital market

Methods of Raising Fund in the Primary Market

Procedure of Public Issue

Special Features of the Indian Capital Market

Defects of the Indian Primary Market

Characteristics of Gilt-edged Securities Market

New Financial Instruments in the Capital Market

D. Secondary Market

Stock Exchange

Characteristics of a Stock Exchange

Benefits of Stock Exchange

Listing of Securities

Classification of Listed Securities

Rolling Settlement

Speculation

Factors Influencing Prices on Stock Exchange

Defects of Stock Exchanges (or Capital Market) in India

Difference between Primary and Secondary Market

NEAT

Stock Indices (indexes)

Dematerialisation (Demat Shares)

Review Questions

Further Readings

UNIT-4 FINANCIAL INSTITUTIONS

Introduction

Role of Financial Institution in the Financial System

Classification of Financial Institutions

Functions of Commercial Banks

Classification of Non-Banking Financial Institutions

Industrial Finance Corporation of India (IFCI)

Functions of IDBI

Objectives of ICICI

Investment Institutions

Classification of Indian General Insurance Industry

Objectives of Unit Trust of India

Functions of Non-Banking Financial Corporations:

Different types of Non-Banking Financial Corporations:

Review Questions


Further Readings

UNIT-5 REGULATORY INSTITUTIONS

Introduction

RESERVE BANK OF INDIA

Objectives of the Reserve Bank of India

Functions of the Reserve Bank of India

Role of Reserve Bank of India in Money market

Securities Exchange Board of India (SEBI)

The Guidelines, 2000 deals with the following areas:

Role of SEBI in Primary Market

Primary Market Reforms by the SEBI

Role of SEBI in Secondary Market

Secondary Market Reforms by the SEBI

Review Questions

Further Readings

SubjectName:ManagementofFinancialServices SubjectCode:MBA509 PaperCode:MFS/M



SubjectName:MANAGEMENTOFFINANCIALSERVICES SubjectCode:MBA509 PaperCode:MFS


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UNIT ChapterName

Unit-1 FINANCIAL SYSTEMS AND MARKETS

Unit–2NATURE AND SCOPE OF FINANCIAL SERVICES

STRUCTURE

Unit–3 INSURANCE

Unit–4 INTRODUCTION TO BANKING STRUCTURE

Unit–5 MANAGEMENT OF RISK IN FINANCIAL SERVICES

Unit–6 MUTUAL FUND STRUCTURE

Unit–7 MERCHANT BANKING

Unit–8 LEASING AND HIRE PURCHASE

Unit–9 DEBT SECURITISATION

Unit–10 HOUSING FINANCE

Unit–11 CREDIT RATING

Unit–12 CREDIT CARD

Unit–13 VENTURE CAPITAL

Unit–14 DISCOUNTING, FACTORING AND FORFEITING


ManagementFinancialServices

UNIT-01 FINANCIAL SYSTEMS AND MARKETS

Introduction

Concept of Financial System

Financial Concepts

Development of Financial System in India

Weaknesses of Indian Financial System

Review Questions

Further Readings

UNIT-02 NATURE AND SCOPE OF FINANCIAL SERVICES

STRUCTURE

Introduction

Meaning of Financial Services

Classification of Financial Services Industry

Scope of Financial Services

Causes for Financial Innovation

New Financial Products and Services

Innovative Financial Instruments

Challenges Facing the Financial Services Sector

Present Scenario

Review Questions

Further Readings

UNIT-03 INSURANCE

Introduction

Nature or Characteristics of Insurance

Functions of Insurance

Pre-requisites for the Success of Insurance

Limitations of Insurance

Scope or Classification of Insurance

Principles of Insurance

Summary

Review Questions

Further Readings


UNIT-04 INTRODUCTION TO BANKING STRUCTURE

Introduction

Meaning and Definition of a Bank

Types of Banks

Functions of Commercial Banks

Review Questions

Further Readings

UNIT-05 MANAGEMENT OF RISK IN FINANCIAL SERVICES

Introduction

Concept of risk

Types of risk

Risk Management

Review Questions

Further Readings

UNIT-06 MUTUAL FUND STRUCTURE

Concept and origin of the Mutual Fund

Types of Funds/Classification of Funds

Importance of Mutual Funds

Risks Associated with Mutual Fund

Organization of the Fund

Operation of the Fund

Facilities available to Investors

Net Asset Value

Investors Rights

General Guidelines

Mutual Funds 2000

Selection of a Fund

Commercial Banks and Mutual Funds

Mutual Funds Abroad

Mutual Funds in India

Reasons for Slow Growth

Mutual Funds for whom?

Review Questions

Further Readings


UNIT-07 MERCHANT BANKING

Introduction

Concept and Nature of Merchant Banking

Functions of Merchant Banker

Merchant Banking Regulations

Parameters of Evaluating a Merchant Banker

Features of Merchant Banking in India

Review Questions

Further Readings

UNIT-08 LEASING AND HIRE PURCHASE

Introduction

Concept and Essentials of Leasing

Classification of Leasing

Steps involved in Leasing Transaction

Advantages of Leasing

Limitation of Leasing

Legal Aspects of Leasing

Contents of a Lease Agreement

Income Tax Provisions relating to Leasing

Sales Tax Provisions pertaining to Leasing

Accounting Treatment of Lease

Structure of Leasing Industry in India

Problem of Leasing

Prospects of Leasing

Hire Purchase

Review Questions

Further Readings

UNIT-09 DEBT SECURITISATION

Introduction

Concept of Securitisation

Securitisation Vs. Factoring

Modus Operandi of Securitisation

Structure for Securitisation/Types of Securities

Securitiable Assets

Benefits of Securitisation

Securitisation and Banks

Conditions for Successful Securitisation


Securitisation Abroad

Securitisation in India

Causes for the Unpopularity of Securitisation in India

Review Questions

Further Readings

UNIT-10 HOUSING FINANCE

Introduction

National Housing Bank

Housing Finance System

New Developments

Review Questions

Further Readings

UNIT-11 CREDIT RATING

Introduction

Concept of Credit Rating

Functions of Credit Ratings

Origin of Credit Rating

Credit Rating in India

Benefits of Credit Rating

Caution to Use Credit Rating

Rating Process

Types of Rating

Credit Rating Agencies in India

Practical Problems of Credit Rating

Future of Credit Rating in India

Review Questions

Further readings

UNIT-12 CREDIT CARD

Introduction

Concept of a Credit Card

Types of Credit Card

Parties to a Credit Card

Procedure at the time of purchase at member establishments

Benefits of Credit Cards

Demerits of' credit cards

Credit card business in India

Future Prospectus

Review Questions


Further Readings

UNIT-13 VENTURE CAPITAL

Introduction

Concept of Venture Capital

Scope of Venture Capital

Steps to Provide Venture Capital

Importance of Venture Capital

Origin

Initiative in India

Methods of Venture Financing

Indian Experience

Suggestion for the growth of venture capital funds

Review Questions

Further Readings

UNIT-14 DISCOUNTING, FACTORING AND FORFEITING

Introduction

Discounting

Factoring

Modus Operandi of the Factoring

Terms and Condition in a Factoring Agreement

Functions of Factoring

Types of Factoring

Factoring Vs. Discounting

Cost and Benefits of Factoring

Benefits of Factoring

Factoring in India

Forfeiting

Factoring Vs. Forfeiting

Working of Forfeiting

Benefits of Forfeiting

Drawbacks of Forfeiting

Forfeiting in India

Review questions

Further readings

SubjectName:FINANCIALDECISIONSSubjectCode:MBA510 PaperCode:FD/M



SubjectName:FINANCIALDECISIONS SubjectCode:MBA510 PaperCode:FD


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UNIT ChapterName

Unit-1 UTILITY THEORY

Unit–2 ARBITRAGE AND PRICING: THE BASICS

Unit–3 THE PORTFOLIO PROBLEM

Unit–4 MEAN-VARIANCE PORTFOLIO ANALYSIS

Unit–5GENERALIZED RISK, PORTFOLIO SELECTION, AND ASSET

PRICING

Unit–6 PORTFOLIO SEPARATION THEOREMS

Unit–7 THE LINEAR FACTOR MODEL: ARBITRAGE PRICING THEORY

Unit–8 EQUILIBRIUM MODELS WITH COMPLETE MARKETS

Unit–9 GENERAL EQUILIBRIUM CONSIDERATIONS IN ASSET PRICING

Unit–10 INTERTEMPORAL MODELS IN FINANCE

Unit–11 AN INTRODUCTION TO THE DISTRIBUTIONS OF CONTINUOUS-

TIME FINANCE

Unit–12 THE PRICING OF OPTIONS

Unit–13 ADVANCED TOPICS IN OPTION PRICING

Unit–14 THE TERM STRUCTURE OF INTEREST RATES

Unit–15 PRICING THE CAPITAL STRUCTURE OF THE FIRM


FinancialDecision

UNIT -1 UTILITY THEORY Utility Functions and Preference Orderings

Properties of Ordinal Utility Functions

Properties of Some Commonly Used Ordinal Utility Functions

The Consumer’s Allocation Problem

Analyzing Consumer Demand

Solving a Specific Problem

Expected Utility Maximization

Cardinal and Ordinal Utility

The Independence Axiom

Utility Independence

Utility of Wealth

Risk Aversion

Some Useful Utility Functions

Comparing Risk Aversion

Higher-Order Derivatives of the Utility Function

The Boundedness Debate: Some History of Economic Though

Multiperiod Utility Functions

Review Questions

Further Readings

UNIT -2 ARBITRAGE AND PRICING: THE BASICS Introduction

Notation

Redundant Assets

Contingent Claims and Derivative Assets

Insurable States

Dominance And Arbitrage

Pricing in the Absence of Arbitrage

More on the Riskless Return

Riskless Arbitrage and the “Single Price Law Of Markets”

Possibilities and Probabilities

“Risk-Neutral” Pricing

Economies with a Continuum of States

Review Questions

Further Readings

UNIT- 3 THE PORTFOLIO PROBLEM Introduction

The Canonical Portfolio Problem

Optimal Portfolios and Pricing

Properties of Some Simple Portfolios

Stochastic Dominance

The Theory of Efficient Markets

Efficient Markets in a “Riskless” Economy

Information Aggregation and Revelation in Efficient Markets: The General Case

Simple Examples of Information Revelation in an Efficient Market

Review Questions


Further Readings

UNIT-4 MEAN-VARIANCE PORTFOLIO ANALYSIS The Standard Mean-Variance Portfolio Problem

Covariance Properties of the Minimum-Variance Portfolios

The Mean-Variance Problem with a Riskless Asset

Expected Returns Relations

Equilibrium: The Capital Asset Pricing Model

Consistency of Mean-Variance Analysis and Expected Utility Maximization

Solving A Specific Problem

The State Prices Under Mean-Variance Analysis

Portfolio Analysis Using Higher Moments

Review Questions

Further Readings

UNIT-5 GENERALIZED RISK, PORTFOLIO SELECTION, AND

ASSET PRICING Introduction

The Background

Risk: A Definition

Mean Preserving Spreads

Rothschild And Stiglitz Theorems On Risk

The Relative Riskiness of Opportunities with Different Expectations

Second-Order Stochastic Dominance

The Portfolio Problem

Optimal and Efficient Portfolios

Verifying The Efficiency of a Given Portfolio

Review Questions

Further Readings

UNIT-6 PORTFOLIO SEPARATION THEOREMS Introduction

Inefficiency of The Market Portfolio: An Example

Mutual Fund Theorems

One-Fund Separation Under Restrictions on Utility

Two-Fund Separation Under Restrictions on Utility

Market Equilibrium Under Two-Fund, Money Separation

Distributional Assumptions Permitting One-Fund Separation

Characterization of Some Separating Distributions

Two-Fund Separation with No Riskless Asset

Review Questions

Further Readings

UNIT-7 THE LINEAR FACTOR MODEL: ARBITRAGE PRICING

THEORY


Introduction

Linear Factor Models

Single-Factor, Residual-Risk-Free Models

Interpretation of the Factor Risk Premiums

Factor Models with “Unavoidable” Risk

Asymptotic Arbitrage

Risk and Risk Premiums

Review Questions

Further Readings

UNIT-8 EQUILIBRIUM MODELS WITH COMPLETE MARKETS Introduction

Notation

Valuation in Complete Markets

Portfolio Separation in Complete Markets

The Investor’s Portfolio Problem

Pareto Optimality of Complete Markets

Pareto Optimality in Incomplete Markets: Effectively Complete Markets

Portfolio Separation and Effective Completeness

Creating and Pricing State Securities with Options

Review Questions

Further Readings

UNIT-9 GENERAL EQUILIBRIUM CONSIDERATIONS IN ASSET

PRICING Introduction

Returns Distributions and Financial Contracts

Market Efficiency with Nonspeculative Assets

Price Effects of Divergent Opinions

Utility Aggregation and the “Representative” Investor

Review Questions

Further Readings

UNIT-10 INTERTEMPORAL MODELS IN FINANCE Introduction Present Values

State Description of a Multiperiod Economy

The Intertemporal Consumption Investment Problem

Intertemporally Efficient Markets

Review Questions

Further Readings

UNIT-11 AN INTRODUCTION TO THE DISTRIBUTIONS OF

CONTINUOUS-TIME FINANCE Introduction

Compact Distributions

Implications for Portfolio Selection

“Infinitely Divisible” Distributions

Wiener and Poisson Processes

Review Questions

Further Readings


UNIT-12 THE PRICING OF OPTIONS Introduction

Distribution and Preference-Free Restrictions on Option Prices

Option Pricing: The Riskless Hedge

Option Pricing By The Black-Scholes Methodology

The Option’s Price Dynamics

Comparative Statics

The Black-Scholes Put Pricing Formula

Preference-Free Pricing: The Cox-Ross-Merton Technique

Review Questions

Further Readings

UNIT-13 ADVANCED TOPICS IN OPTION PRICING Introduction

An Alternative Derivation

A Reexamination of The Hedging Derivation

Option Pricing With Dividends

Options with Payoffs at Random Times

Perpetual Options

Options with Optimal Early Exercise

Options with Path-Dependent Values

Option Claims on More Than One Asset

Option Claims on Nonprice Variables

Permitted Stochastic Processes

Arbitrage “Doubling” Strategies in Continuous Time

Review Questions

Further Readings

UNIT-14 THE TERM STRUCTURE OF INTEREST RATES Introduction

Terminology

The Expectations Hypothesis

A Simple Model of the Yield Curve

Term Structure Notation in Continuous Time

Liquidity Preference and Preferred Habitats

Determinants of the Interest Rate

Bond Pricing with Multiple State Variables

Review Questions

Further Readings

UNIT-15 PRICING THE CAPITAL STRUCTURE OF THE FIRM Introduction The Modigliani-Miller Irrelevancy Theorem

Pricing the Capital Structure: An Introduction

Warrants and Rights

Risky Discount Bonds

The Risk Structure of Interest Rates

The Weighted Average Cost of Capital


Subordinated Debt

Subordination and Absolute Priority

Secured Debt

Convertible Securities

Callable Bonds

Optimal Sequential Exercise: Externalities and Monopoly Power

Optimal Sequential Exercise: Competitive and Block Strategies

Sequential and Block Exercise: An Example

Pricing Corporate Securities with Interest Rate Risk

Contingent Contracting

Review Questions

Further Readings

SubjectName:WorkingCapitalManagement SubjectCode:MBA511 PaperCode:WCM





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Unit-1 CORPORATE FINANCE

Unit–2 WORKING CAPITAL

Unit–3WORKING CAPITAL, SEASONALITY,

AND GROWTH

Unit–4FINANCIAL ANALYSIS AND WORKING

CAPITAL

Unit–5 CASH MANAGEMENT

Unit–6 MANAGING ACCOUNT RECEIVABLES

Unit–7 MANAGING INVENTORIES

Unit–8 MANAGING ACCOUNT PAYABLES

Unit–9 SHORT-TERM DEBT

Unit–10 WORKING CAPITAL AND CORPORATE

STRATEGY

Unit–11 WORKING CAPITAL FINANCING COSTS

Unit–12 PATTERNS IN WORKING CAPITAL


WorkingCapitalManagement

UNIT-1 CORPORATE FINANCE The Basic Corporate Finance Framework

Financial Statements

The Income Statement

Return On Investment

Investors’ Expected Return—The Cost Of Capital

Review Questions

Further Readings

UNIT-2 WORKING CAPITAL Introduction

The Definition and Interpretation Of

Working Capital

A Simple Example

Determinants of Financial Needs For Operation

Cash Holdings

Determinants of Working Capital

Review Questions

Further Readings

UNIT-3 WORKING CAPITAL, SEASONALITY, AND

GROWTH Introduction

The Effects Of Seasonality On Working Capital

Financing Growth

Positive Versus Negative Working

Capital Strategies And Growth

Review Questions

Further Readings

UNIT-4 FINANCIAL ANALYSIS AND WORKING CAPITAL Introduction

Financial Ratios

Operating (Efficiency) Ratios

Financial Leverage Ratios

Comprehensive Financial Analysis

Forecasting

Market Data

Review Questions

Further Readings

UNIT-5 CASH MANAGEMENT Introduction

Transaction, Precautionary, And Speculative Motives For Holding Cash

The Transaction Motive


The Precautionary Motive

The Speculative Motive And The Option Value Of Cash

Understanding Cash Holding As A Hedging Tool

The Presence Of Financial Frictions

The Key Variables That Determine Optimal Cash Holdings

The Role Of Cash Conversion And Collection In Cash Management

Investing Idle Cash

The Emerging Market Case And Inflation

Review Questions

Further Readings

UNIT-6 MANAGING ACCOUNT RECEIVABLES Introduction

Theories of Trade Credit

A Redistribution View of Trade Receivables

Trade Receivables and Information Asymmetries

Trade Receivables and Business Relationships

Other Theories of Trade Credit

Empirical Studies on Trade Receivables

Evaluating and Managing Trade Credit Risk

Assessing Clients’ Creditworthiness

Limiting The Effects of a Client’s Default

Financing The Firm’s Investment In Trade Receivables

Factoring

Trade Receivables As Collateral For Issuing Short-Term Debt

Measuring Trade Receivables

Review Questions

Further Readings

UNIT-7 MANAGING INVENTORIES Inventory Management Techniques

Measuring Inventory

Carrying Costs and Shortage Costs

Economic Order Quantity

Inventory and Hedging

Optimal Inventory Levels

Review Questions

Further Readings

UNIT-8 MANAGING ACCOUNT PAYABLES Introduction

The Cost of Trade Credit

Measuring Trade Credit and Differences in the Use of Trade Credit

Review Questions

Further Readings


UNIT-9 SHORT-TERM DEBT Introduction

Selecting Optimal Debt Maturity

Sources of Short-Term Debt

Bank Financing

Covenants

Optimal Number of Creditors

Senior and Subordinated Debt

Review Questions

Further Readings

UNIT-10 WORKING CAPITAL AND CORPORATE STRATEGY Introduction

Strategic Planning

Financing the Expected Financial Needs for Operation

Implementation

Using Working Capital to Make Operating Decisions

Working Capital as A Strategic Weapon

Review Questions

Further Readings

UNIT-11 WORKING CAPITAL FINANCING COSTS Introduction

Long-Term Sources of Funds

Different Sources of Funds, Different Risks

The Cost of Debt

The Cost of Equity

The Weighted Average Cost of Capital

Review Questions

Further Readings

UNIT-12 PATTERNS IN WORKING CAPITAL Introduction

Differences Across Countries

Macroeconomic Conditions

Financial Distress At The Firm Level

Review Questions

Further Readings

SubjectName:Insurance SubjectCode:MBA512 PaperCode:I/M



SubjectName:INSURANCE SubjectCode:MBA512 PaperCode:I


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Unit-1 RISK AND INSURANCE

Unit–2 LEGAL PRINCIPLES

Unit-3 PRINCIPLES OF INSURANCE

Unit–4 CORE FUNCTIONS OF AN INSURANCE COMPANY

Unit–5STRUCTURE OF HONG KONG INSURANCE

INDUSTRY

Unit–6REGULATORY FRAMEWORK OF INSURANCE

INDUSTRY

Unit–7 ETHICAL AND OTHER RELATED ISSUES


INSURANCE

UNIT-1 RISK AND INSURANCE

Introduction

Classification of Risk

Risk Management

Functions and Benefits of Insurance

Review Questions

Further Readings

UNIT-2 LEGAL PRINCIPLES

Introduction

The Law of Contract

Elements or Essentials of a Contract

The Law of Agency

Duties Owed By Agent to Principal

Review Questions

Further Readings

UNIT-3 PRINCIPLES OF INSURANCE

Introduction

Utmost Good Faith

Proximate Cause

Indemnity

Abandonment

Contribution

Subrogation

Review Questions

Further Readings

UNIT-4 CORE FUNCTIONS OF AN INSURANCE COMPANY

Introduction

Product Development

Customer Servicing

Marketing and Promotion

Insurance Sales

Underwriting

Policy Administration

Claims

Reinsurance

Actuarial Support

Accounting and Investment

Training and Development

Review Questions

Further Readings

UNIT-5 STRUCTURE OF HONG KONG INSURANCE

INDUSTRY

Types of Insurance Business

Academic Classification Of Insurance

Size of Industry


Authorised Insurers

Registered or Authorised Insurance Intermediaries

Insurance Companies

Insurance Intermediaries

Market Associations/Insurance Trade

Organisations

Review Questions

Further Readings

UNIT-6 REGULATORY FRAMEWORK OF INSURANCE

INDUSTRY

Introduction

Regulation of Insurance Companies In

Hong Kong

Management of Insurance Agents

Regulation of Insurance

Intermediaries in Hong Kong

Review Questions

Further Readings

Insurance Intermediaries' Duties to Policyholders

Protection of Personal Data

Issues Regarding Equal Opportunity

Prevention of Money Laundering and Terrorist Financing

Stages of Money Laundering

Prevention of Corruption

Prevention of Insurance Fraud

Review Questions

Further Readings

UNIT- ETHICAL AND OTHER RELATED ISSUES

Insurance Intermediaries' Duties to Policyholders

Protection of Personal Data

Issues Regarding Equal Opportunity

Prevention of Money Laundering and Terrorist Financing

Stages of Money Laundering

Prevention of Corruption

Prevention of Insurance Fraud

Review Questions

Further Readings

SubjectName:SecurityAnalysisandPortfolioManagement SubjectCode:MBA513 PaperCode:SAPM/M



SubjectName:SECURITYANALYSISANDPORTFOLIOMANAGEMENT

SubjectCode:MBA513 PaperCode:SAPM


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UNIT ChapterName

Unit-1 INTRODUCTION TO SECURITY ANALYSIS

Unit–2 RISK AND RETURN CONCEPTS

Unit–3 NEW ISSUE MARKET (NIM)

Unit–4 STOCK EXCHANGES IN INDIA - OPERATIONS

Unit–5 LISTING OF SECURITIES

Unit–6 STOCK BROKERS AND OTHER INTERMEDIARIES

Unit–7 STOCK MARKET INDICES

Unit–8 INVESTMENT ALTERNATIVES

Unit–9 GOVERNMENT SECURITIES

Unit–10 VALUATION OF BONDS

Unit–11 EQUITY SHARE VALUATION

Unit–12 FUNDAMENTAL ANALYSIS – I

Unit–13 FUNDAMENTAL ANALYSIS – II

Unit–14 TECHNICAL ANALYSIS

Unit–15 EFFICIENT MARKET HYPOTHESIS

Unit–16 PORTFOLIO CONSTRUCTION

Unit–17 SECURITIES AND EXCHANGE


SecurityAnalysisandPortfolioManagement

UNIT-01 INTRODUCTION TO SECURITY ANALYSIS Introduction

Investments: Meaning, types and characteristics

Objectives of investments

Types of investors

Investment vs. speculation

Investment vs. gambling

Meaning of security analysis

Meaning of portfolio management

Financial assets

Financial markets

Review Questions

Further Readings

UNIT-02 RISK AND RETURN CONCEPTS Introduction

Introduction

Returns on Financial Assets

Risk in Holding Securities

Risk Measurement

Capital Asset Pricing Model

Security Market Line

Review Questions

Further Readings

UNIT-03 NEW ISSUE MARKET (NIM) Introduction

Relationship between the Primary and Secondary Market.

Difference between New Issue Market and Secondary Market

Functions of NIM

Participants in the NIM

Issue Mechanism

Pricing of New Issues

Allotment of Shares

Factors Considered In Selecting Public Issue

Investors Protection in the New Issue Market

Review Questions

Further Readings

UNIT-04 STOCK EXCHANGES IN INDIA - OPERATIONS Introduction

Regulation and management of stock exchanges

An introduction to select exchanges

Recognition of stock exchanges

Stock exchange members

Advantages of stock exchanges

Scrips traded on stock exchanges


Steps in stock exchange transactions

Rolling settlement

Derivative trading

Review Questions

Further Readings

UNIT-05 LISTING OF SECURITIES Introduction

Introduction

Merits of listing

Consequences of non-listing

Qualification for listing

Listing application

Listing agreement, cash-flow statement and fees

Listing of right shares

High powered committee recommendation

Delisting of securities

Chandratre Committee Report (1997)

Review Questions

Further Readings

UNIT-06 STOCK BROKERS AND OTHER INTERMEDIARIES Introduction

Stock Brokers

Sub-Broker

Fund Managers

Merchant Bankers

Credit Rating Agencies

Stock Depositories

Review Questions

Further Readings

UNIT-07 STOCK MARKET INDICES Introduction

Computation of Stock Index

Differences between the Indices

The BSE Sensitive Index

NSE-50 Index (Nifty)

Selection Criteria

CNX Nifty Junior

S & P CNX 500

Review Questions

Further Readings

UNIT-08 INVESTMENT ALTERNATIVES Introduction

Equity shares

Fixed income securities

Money market instruments


Mutual funds

Deposits

Tax sheltered saving schemes

Life insurance policies

Financial derivatives

Real estate

Precious objects

Review Questions

Further readings

UNIT-09 GOVERNMENT SECURITIES Introduction

Importance of the Government securities market

Issues, investors, and types of Government’s securities

Government security markets in the pre-1991 period

Objectives of reforms in the Government securities market

Some policy measures undertaken in the 1990s

STRIPS in the Government securities market

Retailing of Government securities

The system of Ways and Means Advances (WMA) for the centre

Primary and secondary market segments of the Government securities market

Ownership pattern of central and state govt. securities

Maturity structure of central government dated securities

Interest rates in the primary market

Government dated securities- Secondary market

Tools for managing liquidity in the Govt. security market

Infrastructure development

Review Questions

Further Readings

UNIT-10 VALUATION OF BONDS Introduction

Bond valuation-Terminology

Valuation model

Bond return

Price-yield relationship

Bond market

The term structure of interest rate (yield curve)

Riding the yield curve

Duration

Review Questions

Further Readings

UNIT-11 EQUITY SHARE VALUATION Introduction

Share Valuation

Earnings Valuation

Cash Flow Valuation

Asset Valuation


Dividend-Discount Model

Review Questions

Further Reading0073

UNIT-12 FUNDAMENTAL ANALYSIS - I Introduction

Economic Analysis

Industry Analysis

Review Questions

Further Readings

UNIT-13 FUNDAMENTAL ANALYSIS - II Introduction

Company Analysis

Review Questions

Further Readings

UNIT-14 TECHNICAL ANALYSIS Meaning of Technical Analysis

Tools of Technical Analysis

Evaluation of Technical Analysis

Review Questions

Further Readings

UNIT-15 EFFICIENT MARKET HYPOTHESIS Introduction

Random walk theory

Efficient market hypothesis (EMH)

Efficient market hypothesis and mutual fund performance

Review Questions

Further Readings

UNIT-16 PORTFOLIO CONSTRUCTION Introduction

Benefits of portfolios

Approaches in portfolio construction

Portfolio risk return

Markowitz portfolio selection

Sharpe’s single index model

Managing the portfolio Review Questions

Further Readings

UNIT-17 SECURITIES AND EXCHANGE Introduction

Need For Regulatory Environment

Securities and Exchange Board of India

Regulation in the Primary Market

Regulation in the Secondary Market


Mutual Fund/Institutional Investors Regulatory Environment

Regulation of Derivative Trading

Review Questions

Further Readings

SubjectName:INTERNATIONALFINANCIALMANAGEMENT SubjectCode:MBA514 PaperCode:IFM/M



SubjectName:INTERNATIONALFINANCIALMANAGEMENT SubjectCode:MBA514 PaperCode:IFM


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UNIT ChapterName

Unit-1MULTINATIONAL FINANCIAL MANAGEMENT: AN

OVERVIEW

Unit–2 INTERNATIONAL FLOW OF FUNDS

Unit–3 INTERNATIONAL FINANCIAL MARKETS

Unit–4 EXCHANGE RATE DETERMINATION

Unit–5 CURRENCY DERIVATIVES

Unit–6 GOVERNMENT INFLUENCE ON EXCHANGE RATES

Unit–7 INTERNATIONAL ARBITRAGE AND INTEREST RATE

PARITY

Unit–8 RELATIONSHIPS AMONG INFLATION, INTEREST

RATES, AND EXCHANGE RATES

Unit–9 FORECASTING EXCHANGE RATES

Unit–10 MEASURING EXPOSURE TO EXCHANGE RATE

FLUCTUATIONS

Unit–11 MANAGING TRANSACTION EXPOSURE

Unit–12

MANAGING ECONOMIC EXPOSURE AND

TRANSLATION EXPOSURE

Unit–13 DIRECT FOREIGN INVESTMENT

Unit–14 MULTINATIONAL CAPITAL BUDGETING

Unit–15 INTERNATIONAL ACQUISITIONS


Unit–16 COUNTRY RISK ANALYSIS

Unit–17 MULTINATIONAL COST OF CAPITAL AND CAPITAL

STRUCTURE

Unit–18 LONG-TERM FINANCING

Unit–19 FINANCING INTERNATIONAL TRADE

Unit–20 SHORT-TERM FINANCING

Unit–21 INTERNATIONAL CASH MANAGEMENT


InternationalFinancialManagement

UNIT-01 MULTINATIONAL FINANCIAL MANAGEMENT: AN

OVERVIEW Managing the MNC

Facing Agency Problems

Management Structure of an MNC

Theory of Comparative Advantage

Imperfect Markets Theory

Product Cycle Theory

International Trade

Licensing

Franchising

Joint Ventures

Acquisitions of Existing Operations

Establishing New Foreign Subsidiaries

Valuation Model for an MNC

Domestic Model

Valuing International Cash Flows

Review Questions

Further Readings

UNIT-02 INTERNATIONAL FLOW OF FUNDS Balance of Payments

Current Account

Capital and Financial Accounts

International Trade Flows

Distribution of U.S. Exports and Imports

International Trade Issues

Trade Friction

Governance

Impact of Exchange Rates

Interaction of Factors

International Capital Flows

Distribution of DFI by U.S. Firms

Factors Affecting DFI

Impact of International Capital Flows

International Monetary Fund

World Bank

World Trade Organization

International Financial Corporation

Review Questions

Further Readings

UNIT-03 INTERNATIONAL FINANCIAL MARKETS Foreign Exchange Market

Foreign Exchange Transactions

Use of the Dollar in the Spot Market.


Attributes of Banks That Provide Foreign Exchange.

Foreign Exchange Quotations

Interpreting Foreign Exchange Quotations

Forward, Futures, and Options Markets

International Money Market

International Credit Market

Syndicated Loans

International Bond Market

Eurobond Market

Development of Other Bond Markets

Issuance of Foreign Stock in the United States

Investing in Foreign Stock Markets

How Stock Market Characteristics Vary among

How Financial Markets Facilitate MNC Functions

Review Questions

Further Readings

UNIT-04 EXCHANGE RATE DETERMINATION Introduction

Exchange Rate Equilibrium

Demand for a Currency

Supply of a Currency for Sale

Impact of Liquidity.

Factors That Influence Exchange Rates

Relative Income Levels

Interaction of Factors

Review Questions

Further Readings

UNIT-05 CURRENCY DERIVATIVES How MNCs Use Forward Contracts

Non-Deliverable Forward Contracts

Currency Futures Market

Contract Specifications

Trading Futures

Pricing Currency Futures

Currency Call Options

Currency Put Options

Factors Affecting Currency Put Option Premiums

Hedging with Currency Put Options

Contingency Graphs for Currency Options

Conditional Currency Options

Review Questions

Further Readings

UNIT-06 GOVERNMENT INFLUENCE ON EXCHANGE

RATES Exchange Rate Systems


Fixed Exchange Rate System

Freely Floating Exchange Rate System

Managed Float Exchange Rate System

Pegged Exchange Rate System

Creation of the European Monetary System (EMS)

Demise of the European Monetary System.

Currency Boards Used to Peg Currency Values.

Dollarization

Membership

Government Intervention

Indirect Intervention

Government Adjustment of Interest Rates.

Review Questions

Further Readings

UNIT-07 INTERNATIONAL ARBITRAGE AND INTEREST

RATE PARITY International Arbitrage

Consideration of Spreads.

Comparison of Arbitrage Effects

Interest Rate Parity (IRP)

Derivation of Interest Rate Parity

Determining the Forward Premium

Graphic Analysis of Interest Rate Parity

How to Test Whether Interest Rate Parity Exists

Interpretation of Interest Rate Parity

Considerations When Assessing Interest Rate Parity

Forward Premiums across Maturity Markets

Review Questions

Further Readings

UNIT-08 RELATIONSHIPS AMONG INFLATION, INTEREST

RATES, AND EXCHANGE RATES Purchasing Power Parity (PPP)

Rationale behind Purchasing Power Parity Theory

Derivation of Purchasing Power Parity

Purchasing Power Disparity

Testing the Purchasing Power Parity Theory

Purchasing Power Parity in the Long Run

International Fisher Effect (IFE)

Tests of the International Fisher Effect

Comparison of the IRP, PPP, and IFE Theories

Review Questions

Further Readings

UNIT-09 FORECASTING EXCHANGE RATES Introduction


Forecasting Techniques

Fundamental Forecasting

Market-Based Forecasting

Mixed Forecasting

Forecasting Services

Reliance on Forecasting Services

Forecast Error

Graphic Evaluation of Forecast Performance

Comparison of Forecasting Methods

Forecasting under Market Efficiency

Using Interval Forecasts

Review Questions

Further Readings

UNIT-10 MEASURING EXPOSURE TO EXCHANGE RATE

FLUCTUATIONS Introduction

Currency Diversification Argument

Types of Exposure

Transaction Exposure

Measuring the Potential Impact of the Currency Exposure

Economic Exposure

Economic Exposure to Local Currency Appreciation

Economic Exposure to Local Currency Depreciation

Measuring Economic Exposure

Translation Exposure

Determinants of Translation Exposure

Examples of Translation Exposure

Review Questions

Further Readings

UNIT-11 MANAGING TRANSACTION EXPOSURE Adjusting the Invoice Policy to Manage Exposure

Hedging Exposure to Payables

Forward or Futures Hedge on Payables

Money Market Hedge on Payables

Call Option Hedge

Hedging Exposure to Receivables

Put Option Hedge

Optimal Hedge versus No Hedge

Long-Term Forward Contract

Parallel Loan

Review Questions

Further Readings


UNIT-12 MANAGING ECONOMIC EXPOSURE AND

TRANSLATION EXPOSURE Economic Exposure

How Restructuring Can Reduce Economic Exposure

Issues Involved in the Restructuring Decision

Assessment of Economic Exposure

Assessment of Each Unit’s Exposure

Identifying the Source of the Unit’s Exposure

Possible Strategies to Hedge Economic Exposure

Limitations of Savor’s Optimal Hedging Strategy

Hedging Exposure to Fixed Assets

Review Questions

Further Readings

UNIT-13 DIRECT FOREIGN INVESTMENT Motives for Direct Foreign Investment

Cost-Related Motives

Comparing Benefits of DFI over Time

Benefits of International Diversification

Diversification among Countries

Decisions Subsequent to DFI

Government-Imposed Conditions to Engage in DFI

Review Questions

Further Readings

UNIT-14 MULTINATIONAL CAPITAL BUDGETING Restricted Remittances

Exchange Rate Movements

Input for Multinational Capital Budgeting

Multinational Capital Budgeting Example

Factors to Consider in Multinational

Capital Budgeting

Exchange Rate Fluctuations

Inflation

Financing Arrangement

Blocked Funds

Sensitivity Analysis

Review Questions

Further Readings

UNIT-15 INTERNATIONAL ACQUISITIONS Trends in International Acquisitions

Model for Valuing a Foreign Target

Market Assessment of International Acquisitions

Assessing Potential Acquisitions after the Asian Crisis

Assessing Potential Acquisitions in Europe


Factors That Affect the Expected Cash Flows of the Foreign Target

Estimating the Target’s Value

International Acquisitions of Privatized Businesses

International Alliances

Review Questions

Further Readings

UNIT-16 COUNTRY RISK ANALYSIS Political Risk Factors

Attitude of Consumers in the Host Country

Actions of Host Government

Financial Risk Factors

Types of Country Risk Assessment

Micro-assessment of Country Risk

Techniques to Assess Country Risk

How Country Risk Affects Financial Decisions

Reducing Exposure to Host Government Takeovers

Use a Short-Term Horizon

Use Project Finance

Review Questions

Further Readings

UNIT-17 MULTINATIONAL COST OF CAPITAL AND

CAPITAL STRUCTURE Background on Cost of Capital

Comparing the Costs of Equity and Debt

Cost of Capital for MNCs

Cost-of-Equity Comparison Using the CAPM

Implications of the CAPM for an MNC’s Risk

Costs of Capital across Countries

Country Differences in the Cost of Debt

Combining the Costs of Debt and Equity

Influence of Corporate Characteristics

Influence of Country Characteristics

Local versus Global Target Capital Structure

Review Questions

Further Readings

UNIT-18 LONG-TERM FINANCING Sources of Debt

Measuring the Cost of Financing

Use of Exchange Rate Probabilities

Use of Simulation

Reducing Exchange Rate Risk

Parallel Loans

Interest Rate Risk from Debt Financing

The Debt Maturity Decision


The Fixed versus Floating Rate Decision

Review Questions

Further Readings

UNIT-19 FINANCING INTERNATIONAL TRADE Payment Methods for International Trade

Prepayment

Consignment

Trade Finance Methods

Factoring

Banker’s Acceptance

Working Capital Financing

Countertrade

Private Export Funding Corporation (PEFCO)

Review Questions

Further Readings

UNIT-20 SHORT-TERM FINANCING Internal Financing by MNCs

Why MNCs Consider Foreign Financing

Foreign Financing to Reduce Costs

Criteria Considered for Foreign Financing

Interest Rate Parity

The Forward Rate as a Forecast

Exchange Rate Forecasts

Actual Results from Foreign Financing

Financing with a Portfolio of Currencies

Portfolio Diversification Effects

Repeated Financing with a Currency Portfolio

Review Questions

Further Readings

UNIT-21 INTERNATIONAL CASH MANAGEMENT Multinational Management of Working Capital

Subsidiary Expenses

Subsidiary Revenue

Subsidiary Liquidity Management

Centralized Cash Management

Techniques to Optimize Cash Flows

Accelerating Cash Inflows

Minimizing Currency Conversion Costs

Managing Blocked Funds

Complications in Optimizing Cash Flow

Investing Excess Cash

Centralized Cash Management

Determining the Effective Yield

Use of Exchange Rate Forecasts


Dynamic Hedging

Review Questions

Further Readings

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