Complete Syllabus of Financial Markets and Institutions | FIN 685 | MBS 4th semester

Credits: 3

Lecture Hours: 48

Course Objective:

The course aims to provide the students overall understanding on the financial markets and institutions in general and on money and capital markets, money and capital market instruments, central bank, monetary policy, commercial banking industry and other financial institutions, and contemporary issues of financial markets and institutions in particular. The course also aims to familiarize students with current issues on financial institutions and financial markets and enables them to critically analyze these issues.

Course Description:

This course provides an overview of the financial markets and institutions with a special emphasis on financial markets, central bank, monetary policy and interest rates, capital markets, money markets and capital and money market instruments, commercial banking industry, mutual funds and other lending institutions, insurance company, pension funds, investment banks, securities brokers, and dealers.

Course Details:

Unit 1: Introduction LH 5

Functions of financial markets; Structure of financial markets; Internationalization of financial

markets; Functions of financial intermediaries; Types of financial intermediaries; and

Regulation of financial system.

Unit 2: The Central Banking and the Conduct of Monetary Policy LH 8

Role of the central bank in the economic development; Monetary tools: open market

operations, the discount rate, and reserve requirements; Goals of monetary policy: the price

stability goal and the nominal anchor, and other goals; Tactics: choosing the policy

instruments; and Monetary policy and tools in Nepal.

Unit 3: The Money Markets LH 5

Purpose of money markets; Participants of money markets; Money markets instruments:

Treasury bills, federal funds, repurchase agreement, negotiable certificate of deposit,

commercial paper; Comparing money market securities; and international aspects of money

markets.

Unit 4: Capital Markets LH 5

Purpose of the capital market; Capital market participants; Capital market trading; Bonds –

types, treasury notes and bonds, treasury STRIPS, agency bonds; Municipal bonds; Corporate bonds – characteristics, types; Financial guarantees for bonds; Current yield calculation;

Investing in bonds; he Stock market: investing in stock, selling of stocks and review of stock

valuation model.

Unit 5: Commercial Bank LH 9

Balance sheet; General principles of bank management; Off-balance sheet activities;

Measuring bank performance; Regulation of commercial banks including NRB directives with

reference to Basel II and III; CAMELS as off-site and on-site supervisory tools; and Prompt

corrective action.

Unit 6: The Mutual Fund and Other Lending Industries LH 7

Mutual funds: structure of mutual funds; Investment objective classes; Fee structure of

investment funds; Hedge funds; Conflict of interest in mutual fund industry; and Mutual fund

industry in Nepal; Saving association and credit unions: mutual saving banks, saving and loan

associations, and credit unions; Financial statements of saving and loan industry – balance

sheet and income statement; and Saving and loan industry in Nepal.

Unit 7: Insurance Companies and Pension Funds LH 5

Insurance companies: fundamentals of insurance, types of insurance – life insurance, health

insurance, property and casualty insurance; Regulatory body of insurance industry in Nepal;

and Pension funds: types of pensions, private and public pension plans, practices of pension in Nepalese context.

Unit 8: Investment Banks, Security Brokers and Dealers, and Venture Capital Firms LH 4

Functions of investment bank: underwriting stocks and bonds, equity sales, merger and

acquisitions; Securities brokers and dealers; Regulation of securities firms; Venture capital

firms; and regulation and regulatory body in Nepal.

BASIC READINGS:

1. Mishkin, F. S. & Eakins, S. G. (2013). Financial markets and Institutions. New Delhi: Dorling

Kindersley.

2. Saunders, A. & Marcia M. C. (2007). Financial markets and institutions. New Delhi: McGraw-Hill Education (India) Pvt. Ltd.

REFERENCES:

1. Madura, J. (2012). Financial markets and institutions. New Delhi: Cengage Learning (India)

Private Limited.

2. Rose, P. S. & Marquis, M. H. (2006). Money and capital markets: Financial institutions and instruments in a global marketplace. New York: McGraw-Hill Irwin.