Module I : Financial Markets :
At the end of the Financial market module the students should:
· Be able to understand the Financial Intermediation process and inter relationship between financial intermediation and financial markets
· Be able to understand the regulatory and policy framework within which intermediaries, Markets and Participants evolve and operate
· Be able to understand the complexities arising from globalization and innovative financial Products
· Be able to understand the Policy and Regulatory Changes in the financial system for emerging economies like India.
· Be able to understand the issues about financial market instruments and to some extent certain aspects associated with pricing of these instruments.
The focus of this module will be to view the financial systems from regulatory and policy perspective in both in Indian and International context so that the students can get a broader perspective in Financial Institution and Market.
Module II : Investments :
At the end of the investment module the students should
· Be able to : demonstrate knowledge of the theory underpinning risk and return both for individual securities and portfolios
· Be able to : demonstrate knowledge of the basics of the capital asset pricing and market models, and bond management principles and theory
· Be able to understand the functioning of options and futures and basic principles of risk management.
· Be able to develop the ability to independently reason out investment issues and thus be better prepared when making real world investment decisions
3. Pedagogy
Module I : Financial markets :
The module will be delivered through lectures as per the session wise schedule detailed in a later section in this note. To enhance the learning experience, the sessions will embed discussions on contemporary issues such as :
· Comparative studies of financial markets and intermediaries in the developed and emerging economies
· Issues and Challenges in Financial Markets
· Regulatory structure across markets and attendant pros and cons
· Bank crashes and meltdown of financial markets : causes and lessons , debate on policy and regulatory context of recent US finanancial meltdown.
These discussions will be based on course material, cases and articles of topical interest from Indian and International business newspapers.
Module II: Investments: Interactive class lectures, numerical problem solving, case analysis (cases could be minicases or long cases depending on the requirement) , and other assigned readings. Assignments will be given to students on a regular basis after class sessions, and students would be expected to come prepared with the assignments in the next class.
4. Required Materials, Text Book , Reference Book and other required readings :
Module I : Financial Markets
a) PPT slides: Slides of each sessions will be mailed / uploaded in AIS to the students
b) Reference Books :
§ Financial Markets and Institutions : A modern Perspective by Saunders and Cornett (TMH)
§ Financial Institutions and Markets by F S Mishkin, and S G Eakins (Addision)
§ Financial Markets and Institutions by Jeff Madura ( Thompson)
§ Financial Institutions and Markets, by L. M. Bhole (TMH)
§ Indian Financial System - M.Y.Khan (TMH)
§ Indian Financial Markets by Ajay Shah, Susan Thomas and Michael Gorham- ( Elsevier)
c) Other References:
· Report on Trend and Progress of Banking in India
( Latest Issue)
· Report on Currency and Finance- Reserve Bank of India
· Annual Report- Reserve Bank of India
d) Financial Website :
· Business Standard : www.business-standard.com
· The Live Mint : www.livemint.com
· www.bis.org: The Bank for International Settlements (BIS) is an international o rganisation which fosters international monetary and financial cooperation and serves as a bank for central banks.
· www.rbi.org.in/Scripts/financialmarketswatch.:Reserve bank of India..Financial Market Watch
· http://www.fimmda.org/ : Fixed Income Money Market and Derivatives Association of India
· http://www.ccilindia.com/OMHome.aspx : Clearing Corporation of India Ltd.
· www.amfiindia.com : Association of Mutual Funds in India
Module II : Investments :
a) Text :
Investments by Bodie, Kane, Markus and Mohanty, ( Latest subcontinent edition) published by Tata Mcgraw Hill
b) Reference Book:
- Investments by Alexander, Sharpe , Bailey ( PHI, Latest Edition)
- Modern Investment Theory by Haugen ( PGI, latest edition).
c) Reading Materials as and when made available in the class.
d) Calculator : You will typically need a calculator that can handle exponents (i.e., that has a “yx”-type key).
4.) Tentative Session Plan:
| Module I : Financial Markets |
SessionTopics Covered |
1-2· Categories of Financial Institutions · Saving and Investment in the National Income Accounts
· The Market For Loan able Funds & Equilibrium Rate of Interest, Fisher effect, Term Structure of Interest Rate & Yield curve
· Asymmetry of Information, Moral Hazard and Adverse Selection
· The Nature and role of Financial Institutions
· Types and classification of Financial Markets |
2-10Financial markets · Money Market
· Bond Market
· G-Sec Market
· Equity Market
· Mutual funds |
11-14· International Financial market · Global Markets- Domestic & Offshore
· Market Infrastructure
· Market Practices- Rate Quotation & Value dates
· Exchange Arithmetic
· International Bond Market & Innovations
· ADR,GDR,FLOATERS etc.
· FII & FDI
· |
| Module II : Investments :
|
SessionTopics Covered |
1,2,3 Building blocks :
· The Investment Environment
· Buying and Selling Securities
· Efficient markets, Investment Value and Market price
· Taxes and Inflation
|
4,5,6,7Modern Investment Theory · The portfolio selection problem
· Portfolio analysis
· Risk free lending and borrowing
· The capital asset Pricing model
· Factor models
· APT |
7-8-9-10Issues in Investment in Equity Securities and Fixed Income Securities · Security analysis ( Fundamental and technical)
· Bond Prices and Yields ( recap)
· The term structure of Interest rates ( recap)
· Managing Bond Portfolios |
11-12· Options Futures and Other derivatives
|
13-14Applied Portfolio Management
· Portfolio Performance Evaluation
· International Diversification
· Hedge Funds
· Active versus Passive Portfolio management |
5. Evaluation Pattern including both modules:
Components | Weights (%) |
| Quiz ( 10% on Module I and 10% on Module II ) | 20% |
| Mid Term (On entire Module I ) | 30% |
| End Term ( On Entire Module I) | 40% |
| Class Participation ( 5% on Module I and 5% on Module II) | 10% |
6. Class Participation (CP):
Class-participation is an integral component of the learning process. This could be comprised of attendance, response and overall positive demeanor in class. Your active participation in class is necessary, both for you and for your classmates. Your participation score will reflect the faculty’s assessment of your attendance, your contributions to class discussions, and your overall positive demeanor during class.
7. Code of Ethics
For individual quizzes/End term, it is unethical to seek any direct help from others, whether or not you finally make use of the help. Discussions among individuals either in class-room or in the examination hall are completely forbidden. Those who will be identified disturbing in the class will be asked to leave the class immediately. The Case Study should be totally in the group/individual’s own style and language, and should reflect group/individual understanding. Any form of copying from one another or from any outside source is forbidden. Any unfair means while writing the term Paper will be easily identified, and the respective group will be penalized in terms of lower score. No one is allowed to come to the class after the scheduled start time.
8. Feedback
The faculties would also request you to give continuous feedback for improvement of the course. You may form a “focus group” (consisting of 6-7 students from the class with diverse backgrounds including the CR) that continuously interacts with the other students and informs about their problems, if any, with the course.