Financial Markets and Services

bbasemester 6

The course deals with fundamental aspect of financial market and services. Particularly, this coursecovers the financial system, financial market regulation and financial services, financial markets,commercial banks and others lending institutions, insurance companies and pension funds,investment banks and mutual funds and security firms and other institutions.

Chapter Wise Notes Question Banks Syllabus Chapter Wise Questions

Financial Markets and Services

Subject Code: FIN 208

Course Title: Financial Markets and Services

Course No: FIN 208

Nature of Course: Theory & Practical

Full Marks: 100

Pass Marks: 50

Credit Hours: 3

Course Description

Course Objective

The purpose of this course is to provide the students with in-depth understanding of the structure,principles and functions of financial markets and services. Upon completion of this course, thestudents will have necessary theoretical background of financial markets and how they work globallyas well as in the contextof Nepal. Furthermore, fund management, lending, insurance andinvestment.

Course Contents

Unit 1: The Introduction of Financial System (4 LHs)
Meaning of financial system, Function of financial system, Components of financial system,and financial markets and its types, financial intermediaries and classification, financial assets and roles of financial system in economy.

Unit 2: Financial market Regulations and Financial Services. (5 LHs)
Financial Market regulations; Financial market regulations; Central bank and its functions,conduct of monetary policy, financial services; Meaning, scope and types of financialservices, Characteristics of financial services, Causes for financial innovations, financialservices and promotion of industries, financial service industries in Nepal.

Unit 3: Money Market (6 LHs)
Meaning of Money Market; Purposes of money market; Participants in money market; MoneyMarket Instruments: Treasury bills, commercial paper, central bank funds, negotiable certificate of deposits, repurchase agreement, and banker's acceptances; Yield concepts ondiscount papers: discount yield, bond equivalent yield, effective annual rate, holding period
return, and holding period yield; Yield concepts on other money market instruments; Money market in Nepal.

Unit 4: Capital Market (8 LHs)
Meaning of capital market; Functions of capital market; participants in capital market; Capitalmarket securities: Treasury notes and bonds, municipal bonds, corporate bonds, mortgagedbacked securities, and common stock; Yield on capital markets securities; Internationalaspects of capital markets; and Issues in capital markets in Nepal

Unit 5: Commercial Banks and Other Lending Institutions (8 LHs)
Concept of commercial bank; Financial statements and off-balance sheet assets and liabilities;Financial statement analysis using a return on equity framework; Regulation of commercialbanks; Types of regulations: liquidity regulation, capital adequacy regulation in reference toBasel Accord, Saving and loan associations; Saving banks; Credit unions; Overview ofdevelopment banks, finance companies, micro-credit development banks, and co-operatives,Classification of financial institutions in Nepal.

Unit 6: Insurance Companies and Pension Funds (7 LHs)
Concept of insurance companies; Types of insurance companies; Life insurance: types, thefair value of an annuity policy, and asset and liability structure; Property-casualty insurance
companies: types, asset and liability structure, and profitability; Overview of insuranceindustry in Nepal; Regulation and supervision mechanism of insurance businesses inNepal. Concept of pension funds; Types of pension plans; Retirement benefits under defined benefitplan and defined contribution plan; and Pension fund management practices in Nepal

Unit 7: Investment Banking and Mutual Funds (6 LHs)
Meaning and roles of investment banks, Securitization of assets, Merger and acquisition,investment banking activities in Nepal; Concept of mutual funds; Types of mutual funds;
Mutual fun expenses; Net asset value and return on mutual funds; Mutual fund practices inNepal.

Unit 8: Securities Firms and Other Institutions (4 LHs)
Concept of merchant banks, functions of merchant banks, merchant bank activities in Nepal;Concept of brokerage and dealer services, and practices in Nepal; Concept of rating agencies,rating agency services in Nepal, Functions of CDS and Clearing Limited; Overview ofEmployee Provident Fund and Citizen Unit Trust

Text Books

Fabozzi, F. J., & Jones, F. J. Foundations of Global Financial Markets and Institutions.
Massachusetts, USA: MIT Press.
Saunders, A. & Marcia, M. C. Financial markets and institutions. New Delhi: McGraw-Hill
Education (India) Pvt. Ltd.
Gordon, E., & Natarajan, K. Financial markets and services. Mumbai: Himalaya Publishing House.
Banks and Financial Institutions Act (BAFIA), NRB
NRB Directives
Publications of Security Board of Nepal.
Publications of Insurance Board.
Circular and Guidelines related to security market of Nepal.