INVESTMENTS

INVESTMENTS
AREA OF STUDY: SPECIALIZATION
BAC127

Year: 3
Semester: 6

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* Continuous
** Duration: 3 hours

Course Objective
The basic purpose of this course is to make students able to understand the principles and practice of investments in securities.
Course Contents
Unit 1: Introduction T.H.3
Real and financial assets; Investment environment: securities and financial intermediaries; Investment policy and security analysis.
Unit 2: Securities and Markets T.H.5
Order size; Time limit; Types of order; Margin accounts and short sale; Clearing procedures; Brokers commission and transactions cost.
Unit 3: Investment Companies T.H.5
Investment banking and regulations of security markets; Major type of investment companies; Investment policies; Mutual funds: investment policies, money market funds, equity funds, fixed income funds, balanced and income funds, assets allocation funds; cost of investing in mutual funds: front-end load, back-end load, operating expenses; Computation of net asset value; Market indexes: price weighted and value weighted.
Unit 4: Portfolio Selection T.H.9
Initial wealth and terminal wealth; Indifference curves; Expected return and standard deviations for portfolio; Efficient set theorem; Feasible set; Optimal portfolio; Introduction to CAPM: CML, SML.
Unit 5: Bond Analysis and Bond Portfolio Management T.H.7
Bond Attributes. The risk structure of interest rates and determinants of yield spreads. Bond market efficiency and bond pricing theorems; Duration and immunization; Active management (Horizon analysis and bond swaps).
Unit 6: Common Stock .H.7
The corporate cash dividends; Stock dividends and splits; Preemptive rights; Stock price and insider trading; Ex ante and ex post value; Capitalization of income method of valuation: the zero models, constant growth model; multiple growth models.
Unit 7: Financial Analysis T.H.6
Major financial statements; Fundamental analysis: top-down vs. bottom-up forecasting; Financial statement analysis (ratio analysis); Sources of investment information; Analyst recommendation and stock price; Technical analysis (introduction and charts).
Unit 8: Portfolio Performance Evaluation T.H.3
Measures of Return: Dollar- Weighted Returns; Time weighted returns; Annualizing returns.
Unit 9: Introduction of Nepal Stock Exchange T.H.3
Stock trading procedures; Primary issues as prevalent in Nepal; Various rules and regulations governing the stock market of Nepal.
Suggested Readings
1. Sharpe, Alexander and Bailey, Investments 5th Edition, New Delhi: Prentice Hall of India Ltd.
2. Radcliff, R. C., Investments 5th Edition, Addison-Wesley.
3. Francis, Jack Clark, Investments 5th Edition, New York: McGraw-Hill
4. Cowdell, Jane, Investments 5th Edition, New Delhi: CIB Publishing, A. I. T. B .S. Publishers & Distributors.
5. Bhalla, V. K., Investment Management 6th Edition, New Delhi: S. Chand & Company Ltd.
6. Publications of Nepal Stock Exchange and Securities Board.