This course deals with the investment environment, principles, and process of investing in securities. It also provides students opportunities to learn techniques for analyzing securities and forming portfolios. The topics covered in this course are investment environment, securities markets and transactions, risk and return, modern portfolio, investment in common stocks, bonds, mutual funds, and derivative securities and real estate.

The objective of this course is to provide students with a basic understanding of fundamental concepts and principles of investing and equip them with the tools and techniques for analyzing individual securities and portfolios. By the end of this course, the student will be familiar with the investment environment and be able to analyze securities and other investment vehicles and make correct investment decisions from the viewpoint of individual and institutional investors.

Unit 1: The Investment Environment (LH 8) 
Meaning of investment; Types of investment; Structure of investment process; Investmentvehicles: short-term vehicles, common stock, fixed income securities, mutual funds,derivative securities, other investment vehicles; Investment plan: steps in investing,considering personal taxes, investing over the life cycle, investing in different economicenvironment; Meeting liquidity needs: the role of short-term vehicles, investment suitability; Ethics in investing; The investment environment in Nepal.

Unit 2: Securities Markets (LH 12) 
Meaning of securities markets; Types of securities markets: primary and secondary markets,broker and dealer markets, alternative trading system; General market conditGlobalization of securities markets: growing importance of international markets, ways toinvest in foreign securities, risk of investing internationally; Securities markets in Nepal:introduction, trading hours and regulations; Basic types of securities transactions: longpurchase, margin trading and short selling.

Unit 3: Investment Information and Securities Transactions (LH 15) 
Introduction to online investing; Types and sources of investment information; Marketaverages and indexes: introduction, uses, types and their construction including NEPSEIndexes; Making securities transactions: role of stock broker, basic types of orders, onlinetransactions, transaction costs and investor protection; Recent developments of securitiestransactions in Nepal: online and automation, C-ASBA and DEMAT, OTC transactions, cost oftrading, taxes on capital gains and dividends, credit rating in Nepal.

Unit 4: Risk, Return and Portfolio Management (LH 25) 
Concept of return: components of return, importance of return, factors affecting the level ofreturn, historical returns; Measuring return: real, risk-free and required return, holding period  return, expected return; Meaning of risk; Sources of risk; Risk of a single asset: standarddeviation, coefficient of variation; Combining risk and return of single asset; Concept oportfolio; Measuring portfolio return and risk; Correlation and diversification; The CapitalAssets Pricing Model (CAPM): components of risk, beta, estimating return using CAPM, thesecurity market line; Traditional approach to portfolio management: Modern portfolio theory:the efficient frontier, portfolio beta, and the risk return trade-off.

Unit 5: Common Stock Fundamentals (LH 10) 
Pros and cons of stock ownership; Basic characteristics of common stock: common stock as acorporate security, buying and selling stocks, common stock values; Common stock  dividends: the dividend decision, types of dividends, dividend reinvestment plans; Alternativeinvestment strategies.

Unit 6: Common Stock Analysis and Valuation (LH 15) 
Principles of security analysis; Economic analysis; Industry analysis; Fundamental analysis:the concept, financial statements, key financial ratios, ROA-ROE interaction, common stockratios; The valuation process; Stock valuation models: the dividend valuation model, otherapproaches to stock valuations, other price relative procedures; Valuing a company; Efficientmarkets and behavioral finance: level of market efficiency, investor behavior and stock prices.

Unit 7: Fixed Income Securities (LH 10) 
Meaning and types of fixed income securities; Essential features of a bond: bond interest andprincipal, maturity date, call features, sinking fund, bond ratings; The market for debt securities; Specialty issues; Convertible securities: conversion privilege, conversion value,conversion premium, payback period, investment value. Fixed income securities market inNepal.

Unit 8: Bond Valuation ( LH 15)
The behavior of market interest rate; The term structure of interest rate and yield curve; Thebasic bond valuation model; Measures of yield and return; Duration and immunization: the concept of duration, measuring duration; Bond duration and price volatility; Uses of bondduration measures; Bond investment strategies.

Unit 9: Mutual Fund and Performance Evaluation (LH 10) 
An overview of mutual fund; Open end and closed-end fund; Exchange traded funds; Othertypes of investment companies; Types of mutual funds and services; Investing in mutual funds: investor uses of mutual funds, the selection process, investing in closed-end funds,measuring performance; Mutual funds in Nepal.

Unit 10: Managing Portfolios (LH 10) 
Constructing a portfolio: role of investor’s personal characteristics, portfolio objectives andpolicies, developing an asset allocation scheme; Evaluating the performance of individual  investments: collection of necessary data, analyzing the index of market performance,measuring the performance of investment vehicles, comparing the performance; Assessing portfolio performance :  measuring portfolio return, comparison of portfolio return with overallmarket measures – Sharpe’s measure, Treynor’s measure, Jensen’s measure; Portfolio revision.

Unit 11: Derivative Securities (LH 10) 
Concept of derivative securities; Put and call options: basic features, advantages anddisadvantages; Option markets; Stock options; Option pricing and trading: profit potentialfrom puts and calls, intrinsic value; Other types of options: stock-index option, options onexchange-traded funds, interest rate options, currency options, LEAPS; The future market:market structure, trading in future market; Trading commodities: speculating and spreading;Financial futures: the financial futures market, trading techniques; Derivative markets in Nepal.