Faculty of Management Studies, University of Delhi

MBAFT- 6104: ACCOUNTING FOR MANAGERS

Course Objectives:

The basic purpose of this course is to develop a strategic and policy perspective with respect
to the principles of accounting and utilisation of accounting information for general purpose
decision making in an organisation. The emphasis is on core ideas and techniques with
reinforced understanding using practical examples.
Course Learning Outcomes:

1. Understanding how accounting decisions affect real company practices.

2. Understand the concepts of Deprecation, Inventory valuation and the methods employed
by Indian Companies.
3. Strengthening the foundations of the analytical approach to Managerial decision-making.
4. Understanding consumer behavior.
5. Understanding the production problem and how managers make input purchase
decisions.
6. Understanding the various market structure and how supply is determined in each.
7. Understanding the external environment, common information problems faced/created
by managers.
Contents:

Unit I: Accounting Theory: Concept, Importance, Scope, Generally Accepted Principles of

Accounting, Indian Accounting Standards, IFRS, Harmonization of Accounting Standards,
Preparation of Financial Statements, Corporate Balance Sheet – Terms, Contents, Format
and Analysis.

Unit II: Depreciation Accounting and Inventory Valuation: Meaning and Techniques of
Depreciation, Methods employed by Indian Companies, Inventory Valuation, Methods,
Policies of Indian Companies.

Unit III: Presentation and Disclosure of Accounting Information: Presentation of Financial

Position. Financial Statements of Companies.Analysis of Accounting Information:
Financial Statement Analysis. Interpretation of Accounting information,

Unit IV: Cash Flow Statement, Preparing a statement of Cash Flows.

Unit V: Responsibility Accounting and Divisional Performance Measurement, Transfer

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Faculty of Management Studies, University of Delhi

Pricing: Definition, Objectives and Methods of Transfer Pricing, Recent developments in

the field of Accounting.
Suggested Readings:
1. Anthony, R.N., Hawkins, F.D.,& Merchant, K.A. (2013).Accounting: Text and
Cases(13th ed.).Tata McGraw Hill.
2. Needles B.E., Powers, M.,&Crosson, S.V. (2013). Principles of Financial
Accounting(12th ed.). South-Western College/West.
3. Hilton, R.W.,&Platt, D.E. (2017).Managerial Accounting (10th ed.). Tata McGraw Hill.

4. Narayanaswamy, R. (2017).Financial Accounting: A Managerial Perspective(6th ed.).

Prentice Hall of India.
5. Horngren, T.C., Datar, S.M., & Rajan, M.V. (2017). Horngren's Cost Accounting: A
Managerial Emphasis (16th ed.). Pearson.
6. Horngren, T.C., Sundem, G.L., Schatzberg, J., &Burgstahler, D. (2014).Introduction to
Management Accounting (16th ed.).Pearson.
7. Spiceland, D., Thomas, W.M., &Herrmann, D. (2018).Financial Accounting (5th ed.).
McGraw-Hill.
8. Vij, M. (2013).Management Accounting (1st ed.). Excel Books, 2013.
9. Horngren, T.C., Datar, S.M., &Rajan, M.V. (2014). Cost Accounting, Student Value Edition
(15th ed.). Pearson.
10. Arora, R.K. (2018).Financial Accounting: Fundamentals, Analysis and Reporting(2nd
ed.).Wiley.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I. Understanding how Concept of How to read and understand the
accounting decisions Accounting, balance sheet for a few companies
affect real company Accounting Equation across different sectors. Latest Annual
practices. and Balance sheet Report of companies, web sites of
familiarity. companies.

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Faculty of Management Studies, University of Delhi

II. Understand the Techniques of Solving problems and mini cases in

concepts of Depreciation and the class, real-life case studies of
Deprecation and Inventory valuation. companies.
Inventory valuation
and the methods
employed by Indian
Companies.
III. To understand the Calculate and Active learning and application with
techniques and understand the the help of small group exercises and
significance of significance of mini-cases. In-class problem-solving.
Financial Statement Liquidity ratios, Class presentation and analysis of
Analysis to evaluate Leverage ratios, ratios of Companies across different
financial performance. Profitability ration sectors. Project work, selected web
and Activity ratios. sites of companies.
IV. To prepare, analyze Direct and Indirect Preparing a statement of cash flows
and interpret a method for Cash using both direct and indirect method,
statement of Cash Flow preparation. Practical exercises.
Flow.
V. To apply the concepts Divisional Interactive learning through mini-
of responsibility performance cases, Critical thinking exercises,
accounting and measurement, Class presentations, Problem based
transfer pricing for Evaluation of learning, Class discussions to
cost control and responsibility centres, encourage critical thinking and
performance Objective and evaluation, Project work.
evaluation. methods of transfer
pricing used by
companies

MBAFT-6204: CORPORATE FINANCE

Course Objectives:

The course is designed to provide an understanding of the essential elements of financial

management and the financial environment in which the business firm operates. The paper will
examine the objective of shareholder wealth maximization which encompasses much of
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Faculty of Management Studies, University of Delhi

modern corporate finance and its implication for decision making in the present context.
Course Learning Outcomes:

1. Understanding the evolution and growth of the finance function. The objective of the
firm – Shareholder wealth maximization.
2. Make Strategic Investment decisions with the help of NPV, IRR and PI techniques.
Calculating and interpreting the cost of capital for companies.
3. Financing options available to firms, Tradeoff between debt and equity, Criteria for
deciding the optimal financing mix.
4. How do managers decide how much to reinvest and how much to return to owners as
dividends?
5. Understand the concept of working capital and the working capital policies to manage
cash and account receivable for a company.
Contents:

Unit 1: Financial Management – An Overview: Evolution of Finance, The Basic Goal:

Creating Shareholder Value, Agency Issues, Business Ethics and Social Responsibility,
Time Value of Money concept.
Unit 2: Investment Decisions - Capital Budgeting Decisions, Techniques - Payback period,
NPV, IRR, Profitability Index, Estimation of Cash Flows, NPV v/s IRR, Risk analysis in
Capital Budgeting - Sensitivity Analysis, Certainty Equivalent Approach. Cost of Capital -
Meaning and Concept, Calculation of WACC, The CAPM Approach, Adjusting Cost of
Capital for Risk, International Dimensions in Cost of Capital
Unit 3: Financing Decisions - Capital Structure, Theories and Value of the firm - Net
Income Approach, Net Operating Income Approach, Traditional Approach, Modigliani
Miller Model, Determining the optimal Capital Structure, Checklist for Capital Structure
Decisions, Costs of Bankruptcy and Financial Distress. EBIT-EPS Analysis - Concept of
Leverage, Types of Leverage: Operating Leverage, Financial Leverage, Combined
Leverage.

Unit 4: Dividend Decisions- Factors determining Dividend Policy, Theories of Dividend-

Gordon Model, Walter Model, MM Hypothesis, Forms of Dividend- Cash Dividend, Bonus
Shares, Stock Split, Stock Repurchase, Dividend Policies in practice.

Unit 5: Working Capital Management -Working Capital Policies, Risk-Return trade-off,

Cash management, Receivables management.
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Faculty of Management Studies, University of Delhi

Suggested Readings:

1. Brealey, R.A., Myers, S.C., Allen, F.,& Mohanty, P. (2014). Principles of Corporate
Finance(11th ed.). Tata McGraw Hill.
2. Brigham, E.F., &Daves, P.R. (2016). Intermediate Financial Management (12th ed.).
South Western.
3. Brigham, E.&Houston, J. (2014). Fundamentals of Financial Management (14th ed.).
Thomson.
4. Keown, A.J., Martin, J.D., Petty, J.W.,&Scott, Jr. (2017).Foundations of Finance(9th
ed.). Pearson Prentice Hall.
5. Megginson, W.L., Smart, S.B.,&Gitman, L.J. (2009).Corporate Finance (2nd ed.)
Thomson.
6. Chandra, P. (2015).Financial Management (9th ed.). McGraw Hill.
7. Ross, S.A., Westerfield, R.W., Jaffe, J., & Jordan, B.D. (2016): Fundamentals of
Corporate Finance (11th ed.). Tata McGraw Hill.
8. Wachowicz, V. (2009): Fundamentals of Financial Management (13th ed.). Pearson
Education.
9. Watson, D.,&Head, A. (2016). Corporate Finance- Principles and Practice(7th ed.).
Pearson Education.
10. Brigham, E.F.,&Ehrhardt, M.C. (2015). Financial Management: Theory & Practice(15th
ed.). Engage Learning.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Learning Assessment Tasks
No. Outcomes Activity
I. Understanding the The objective of the firm – Concept questions and Quiz
evolution and growth of Shareholder wealth
finance function maximization
II. Make Strategic Calculating after-tax cash Problem-based learning,
Investment decisions flows for proposals and Numerical questions, Critical
with the help of applying the various Thinking exercise, Case Lets
Payback, NPV, IRR, techniques like Payback, and Case studies, Quiz,
MIRR, PI and EVA NPV, IRR, MIRR, PI, EVA selected websites.
techniques. Calculating for selecting projects.
and Interpreting the Decisions under capital

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Faculty of Management Studies, University of Delhi

cost of capital for rationing, calculating the

companies. marginal weighted average
cost of capital.
III. Financing options Understanding the theories Real life understanding of
available to firms, of capital structure, capital structure of companies,
Tradeoffs between Designing the capital Practical exercises, Student
debt and equity, structure for companies, presentations, Class
Criteria for deciding EBIT/EPS understanding, discussions to encourage
the optimal financing Types of Leverage. students to participate and

mix. think, annual report of

companies, selected web sites.
IV. How do managers Factors determining Getting information on
decide how much to dividend decisions of dividend policy of companies
reinvest and how much companies, Theories and across sectors, how companies
to return to owners as forms of dividends decide the trade-off on
dividends? dividend policy, Critical
thinking exercises, Small
group activities, Project work
V. Understand the Working capital policies of Problem solving and concept
concept of working companies, cash questions, class room
capital and the working management models, exercises, Case lets and project
capital policies to different accounts receivable work
manage cash and policies of companies
account receivable.

MBAFT-6205: MANAGEMENT ACCOUNTING

Course Objectives:

To gain knowledge of use of costing data for decision-making and control, and
emerging modern cost management concepts. This course will focus on providing skills
in contemporary Management Accounting methodologies and issues. The teaching
environment will cover lectures, case discussions and discussion of project
assignments.

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Faculty of Management Studies, University of Delhi

Course Learning Outcomes:

1. Strengthening the foundations of the analytical approach to Managerial decision-making

2. Understanding cost behavior
3. Understanding how managers make a variety of decisions
4. Understanding the relevance of budgeting and computing variances to undertake
performance evaluation
5. Understanding Activity Based Cost Management vs. Traditional Cost Management
Contents:

Unit I: Cost concepts in Accounting: Evolution of Management Accounting &

Current Issues, Overview of Management Accounting, Classification of costs,
Methods of costing, Reconciliation and Integration between Financial and Cost
Accounts; Material Cost and Control, Labour Cost and Control, Overhead Cost and

Control, Job Batch and Contract Costing, Process Costing, By-Products and Joint
Product Cost.

Unit II: Cost concepts in Decision Making: Cost concepts in decision-making;

Relevant cost, Differential cost, Incremental cost and Opportunity cost, Objectives
of a Costing System, Marginal Costing, Distinction between Marginal Costing and
Absorption Costing, Break-Even Analysis, Cost-Volume-Profit Analysis, Various
decision-making problems, Standard Costing and Variance Analysis, Budgetary
Control & Performance measurement: Flexible Budgets; Performance Budgets,
Zero-based Budgets.

Unit III: Cost Management: Activity-based approaches to management and cost

analysis, Analysis of common costs in manufacturing and service industry,
Techniques for profit improvement, cost reduction, and value analysis, Throughput
accounting, Target costing, cost ascertainment and pricing of products and services,
Life cycle costing, Impact of just in time, Backflush costing.

Unit IV: Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Balanced Scorecard: Quality and Time
Unit V: Inventory Management, Just-in-Time, and Simplified Costing Methods; Capital
Budgeting and Cost Analysis

Unit VI: Performance Measurement, Compensation, and Multinational Considerations

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Faculty of Management Studies, University of Delhi

Suggested Readings:

1. Kaplan, R.&Atkinson, A. A. Advanced Management Accounting (3rd

ed.).Pearson India.

2. Atkinson, A. A., Kaplan, R. S., Matsumura, E. M., & Young, S. M.

(2007). Management Accounting (5th ed.). New Jersey: Pearson Prentice
Hall.

3. CIMA (2015). CIMA ManagementAccounting: CIMA Publishing Kaplan Publishing

4. Horngren, T. C., Datar, S. M., Rajan, M. V. (2015). Cost Accounting: A Managerial

Emphasis (15thed.). Pearson

5. Horngren, T. C., Sundem, G. L., Stratton, W. O., Schatzberg, J., &Burgstahler. D.

(2014). Introduction to Management Accounting (16th ed.). Pearson.

6. Khan, M. Y., & Jain, P. K. (2017). Management Accounting (7thed.). McGraw Hill.

7. Pandey, I. M. (2007). Management Accounting (3rd ed.). New Delhi.

8. Vij, M. (2009). Management Accounting. New Delhi: MacMillan India. The list of
cases and specific references including recent articles will be announced in the class at
the time of launching of the course.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I. Cost concepts in Lectures, discussion Short quiz consisting of
Accounting and Case Studies numerical problems. In
class problem solving; case
studies
II. Cost concepts in Decision Lectures, discussion Solving decision making
Making and Case Studies problems; case studies
III. Cost Management Lectures, discussion Solving cost management
and Case Studies problems; case studies

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Faculty of Management Studies, University of Delhi

IV. Strategy, Balanced Lectures, discussion Short notes/reports; case

Scorecard, and Strategic and Case Studies studies
Profitability Analysis
Balanced Scorecard:
Quality and Time
V. Inventory Management, Just- Lectures, discussion Problem solving & quizzes;
in-Time, and Simplified and Case Studies case studies
Costing Methods; Capital
Budgeting and Cost Analysis
VI. Performance Measurement, Lectures, discussion Short notes/reports; case
Compensation, and and Case Studies studies
Multinational Considerations

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Faculty of Management Studies, University of Delhi

MBAFT-7401: QUANTITATIVE ANALYSIS OF FINANCIAL DECISIONS

Course Objectives:

This course develops concepts and techniques that are applied to financial modeling and
financial decisions such as: working capital management, capital budgeting, capital structure,
dividend policy, cost of capital and mergers and acquisitions. It stresses the application of
theory and techniques and extensive use of case studies.
Learning Outcome:

It is expected that after this course the Students should build spreadsheet financial models for
complex Financial Decisions in the area of Investment Banking, Equity Research, Business
valuation, Project Finance, Portfolio Construction, Investment Banking, Market and Credit
Risk Analysis and make sound Financial Decisions. On the basis of their Financial models,
they will submit a report on the overview of different sectors such as IT, Oil & Gas, Telecom,
Retail etc.
Contents:

Unit I: Techniques of Financial Data Analysis and Forecasting, Multiple Regression models
for financial data, Exponential Smoothing and ARIMA models for analysis and forecasting of
financial data, ARCH, GARCH and EGARH models for estimating asset price volatility and
volatility forecasting. (Using MS-Excel, @Risk and Eviews).

Unit II: Risk analysis in Capital Budgeting, Advanced Financial Functions, Simulation
Functions, sensitivity and scenario analysis tools available in MS-Excel, @Risk and Eviews.
Simulating and Forecasting cash flows, WACC, growth rate, Finding probability P(NPV <0).
NPV for dependent cash flows, Decision tree.

Unit III: Equity Research and Portfolio, Measuring the systematic and non-systematic risk of
assets using regression and Simulation, spreadsheet models for construction of portfolio of
equity, options and futures. Portfolio performance, Equity and Bond Valuation

Unit IV: Financial Statement Modelling, Spreadsheet for construction of Balance Sheet,
Income and Cash flow Statements using forecasting and simulation techniques.

Unit V: Capital Structure Decisions, Theories of capital structure – Relevance of Debt capital
in the capital structure, EBIT-EPS analysis, Corporate Debt Capacity Management Decisions,
Cost-volume-profit analysis under conditions of uncertainty.

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Faculty of Management Studies, University of Delhi

Unit VI: Working Capital Decision, Estimation and Projection of working capital Decisions,
Estimation of Working capital requirements, Valuation of in Inventories Inventory Strategies
techniques of Inventory Management, Variables of credit policy credit granting decisions

Unit VII: Valuation Decisions, Valuation models using valuation toolset-Comparable

Companies Analysis, discounted cash flow analysis, precedent transaction analysis, Valuation
using Black-Sholes- Merton option pricing model. leasing vs borrowing Decisions

Unit VIII: Business Failure and Reorganization, Application of Multiple Discriminant

Analysis; Decision Tree Analysis,

Unit IX: Merger and Acquisition models, Merger consequences Analysis, Buy-side M&A,
sell-side, M&A, Target Valuation, Synergy valuation, Adjusted Present value valuation for
changing capital structure after merger, LBO Analysis.

Unit X: Financial Risk Models, Spreadsheets for Measuring Market risk, Value at Risk
(VaR) calculation using Historical and Monte-Carlo simulation. Stress-testing, Back-
testing. Altman Z score model, calculation of probability of default using equity prices.
Suggested Readings:

1. Benninga, S. (1997). Financial Modeling. MIT Press.

2. Koop, G. (2006). Analysis of Financial Data. John Wiley.

3. Damodaran, A. (2012). Investment Valuation: John Wiley.

4. Brooks, C. (2008). Introductory Econometrics for Finance. Cambridge.

5. Lee, A.C, Lee, J.C & Lee, C.F. (2008). Financial Analysis, Planning &
Forecasting. World Scientific.

6. Fabozzi, F.J, Focardi, S.M &Kolm, P.N. (2006). Financial Modeling of the Equity
Market. John Wiley.

7. Ho, T.S.Y & Lee, S.B. (2004). The Oxford Guide to Financial Modeling. Oxford.

8. Bhalla, V.K. (2008). Investment Management. New Delhi: Sultan Chand.

9. Pindyck, R.S &Rubinfeld, D.L. (2016). Econometric Models and Econometric

Forecasts. McGraw-Hill.

10. Gujarati, D. (2017). Basic Econometrics. Tata Mcgraw-Hill.

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Faculty of Management Studies, University of Delhi

11. Brooks, C. (2008). Introductory Econometrics for Finance. Cambridge.

12. Clark, J.J, Hindelang, T.J & Pritchard, R.E. (1979). Capital Budgeting: Planning and
Control of Capital Expenditures. Prentice-Hall.

13. Levy, H &Sarnat, M. (1995). Capital Investment and Financial Decisions. Prentice
Hall.

14. Hampton, J.J. (2003). Financial Decision Making. Prentice Hall.

15. Wooldridge, J.M. (2006). Introductory econometrics. Thomson South-Western.

Facilitating the achievement of Course Learning Outcomes

Unit Course Learning Outcomes Teaching and Assessment Tasks

No. Learning
Activity
I. Multiple Regression models for Lectures, Cases Hands on Bloomberg
financial data, Exponential Smoothing and Practical in terminal. Analyzing
and ARIMA models for analysis and Finance Lab Financial data using
forecasting of financial data, ARCH,
GARCH and EGARH models for
estimating asset price volatility and MS-Excel, @Risk and
volatility forecasting Eviews).
II. Explain the fundamental concepts, Lectures, Cases Students participation
principles Risk analysis in Capital and Practical in in the class room
Budgeting and its applications. Finance Lab discussions and a term
paper. using MS-
Excel, @Risk and
Eviews
III. Help students appreciate the nuances Lectures, Cases Individual attempt for
of Equity Research. Models for and Practical in solving the case studies
construction of portfolio of equity, Finance Lab by retrieving Data from
options and futures. Portfolio Bloomberg Terminal
performance, Equity and Bond
Valuation

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Faculty of Management Studies, University of Delhi

IV Providing hands-on dexterity to the Lectures, Cases Hands-on quiz and

students with regard to Spread sheet and Practical in Practical Assignment
for construction of Balance Sheet, Finance Lab on fundamentals
Income and Cash flow Statements learned by the students.
using forecasting and simulation
Data from Bloomberg
techniques.
Terminal
VI Understanding of Theories of capital Lecture and Hands-on quiz and
structure and Capital Structure Discussions assignment in the class
Decisions on fundamentals
learned by the students
VII Explain the concept of Valuation Lecture and Analyzing Financial
models Discussions data on Business
Cases and Valuation using
Practical in Bloomberg Terminal
Finance Lab
VIII Explain the concept of Financial Lecture and Analyzing financial
Engineering, construction of Various Discussions and data on Business
Investment Position and Option Cases and valuation using
Trading Strategies Practical in Bloomberg Terminal
Finance Lab
IX Understanding the basic concept of Lecture and Hands-on quiz and
Business Failure and Reorganization Discussions and Practical Assignment
Cases on fundamentals
learned by the students
X Explain the concept of Merger and Lecture, Using Bloomberg
Acquisition models Discussion, Terminal to analyses
Cases and financial data on

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Faculty of Management Studies, University of Delhi

Practical in Merger and

Finance Lab Acquisition.
XII Explain the concept of Financial Risk Lecture, Calculating Market
Models Discussion, risk and Credit Risk
Cases and using Financial data
Practical in available on
Finance Lab Bloomberg Terminal
MBAFT-7402: SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
Course Objectives:

The basic purpose of this course is to develop a strategic and policy perspective by developing
a robust understanding of the principles of Financial Investment decisions of an investor with
respect to the various avenues of investment and their management strategies.
Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

1. Evaluate the investment environment for Indian investor for various avenues of
investment
2. Formulate strategies for investment in equities, bonds and other instruments
3. Construct, revise and evaluate portfolios of different securities
Course Contents:

Unit I: Introduction to Financial Investments

Concept of Investment. Investment Process. Avenues of Investments. Investment

Environment. Approaches to make Investment. Investment Philosophies and Wisdom.

Unit II: Equity Investment

Economy-Industry-Company Analysis. Valuation & Equity Pricing. Active and Passive

strategies of equity investment. Technical Analysis. Market Efficiency & Anomalies.

Unit III: Fixed Income and Other Investment Alternatives

Pricing, yields and risks of investments in Fixed Income Securities. Active and Passive
strategies of fixed income investments. Real Estate, Commodities, Derivatives and other
Alternative Investments. Strategies for investments in various Investment alternatives.

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Faculty of Management Studies, University of Delhi

Unit IV: Modern Portfolio Theories

Investor Preferences. Portfolio Formulation. Portfolio Optimisation. Leveraged

Portfolios and Separation Theorem. Simple Portfolio Formulation using Index model.

Unit V: Asset Pricing

Standard Capital Asset Pricing Model. Extensions of Capital Asset Pricing Model.
Arbitrage Pricing Theory. Active Portfolio Management.

Unit VI: Evaluation of Investment Performances

Measures of Portfolio Performance. Return Decomposition and Attribution. Portfolio

Revision. Performance Evaluation of Public investment funds.
Suggested Readings:

1. Bodie, Z., Kane, A. & Marcus, A. J. (2017). Investments. New York: McGraw-Hill
Education.
2. Chandra, P. (2017). Investment Analysis and Portfolio Management. Delhi: McGraw-
Hill Education.
3. Elton, E. J., Gruber, M. J., Brown, S. J. & Goetzmann, W. N. (2014). Modern Portfolio
Theory and Investment Analysis. USA: John Wiley & Sons.
4. Fischer, D. E. & Jordan, R. J. (1995). Security Analysis and Portfolio Management. New
Delhi: Pearson Education.
5. Holden, C. W. (2014). Excel Modeling in Investments. England: Pearson Education.
6. Ranganathan, M. & Madhumathi, R. (2012). Investment Analysis and Portfolio
Management. Delhi: Pearson Education.
7. Reilly, F. K., Brown, K. C. & Leeds, S. J. (2018). Investment Analysis & Portfolio
Management. Delhi: Cengage Learning.
8. Sehgal, S. (2005). Asset Pricing in Indian Stock Market. Delhi: New Century
Publications.
Teaching Plan:

Keeping in view of the number of weeks available in a particular semester, detailed course
instructions will be shared by the faculty at the time of launching the course.
Facilitating the achievement of Course Learning Outcomes

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Faculty of Management Studies, University of Delhi

Unit Course Learning Teaching and Assessment Tasks

No. Outcomes Learning Activity
I Understanding the Lecturing, Short quiz and in-class problem
Investment Process and discussion and solving.
Approaches to Investment. Brainstorming
II Analysing the Equity Lecturing & Short quiz consisting of numerical
investment scenario Discussion, problems. In-class problem
Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models and
modelling Simulations.
III Analysing the Investment Lecturing & Short quiz consisting of numerical
scenario of other investment Discussion, problems. In-class problem
avenues Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
IV Analysing the problem of Lecturing & Short quiz consisting of numerical
portfolio formulation and Discussion, problems. In-class problem
optimisation Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
V Analysing the equilibrium Lecturing & Short quiz consisting of numerical
price of the capital asset Discussion, problems. In-class problem
market Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
VI Analysing the performance Lecturing Short quiz consisting of numerical
of the portfolios and making &Discussion, problems. In-class problem
revision Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
MBAFT-7403: FINANCIAL ANALYTICS
Course Objectives:

Many problems in quantitative finance involve the study of financial data. Such data most often
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Faculty of Management Studies, University of Delhi

comes in the form of ‘time series’, which is a sequence of random variables that are ordered
through time. The objective of this course is to provide knowledge of advanced quantitative and
simulation tools to analyse financial data available on the performance of company, industry and
economy, for forecasting future financial performance and to present suitable valuations. It is
expected that after this course the students should be able to build spreadsheet financial models
using software packages such as Microsoft Excel, EViews and @Risk for the analysis of business
management problems in the area of Equity Research, Portfolio Construction, Investment
Banking, Business Valuation, Project Finance, Market and Credit Risk Analysis and make sound
Financial Decisions
Learning Outcome:

This course introduces a set of modern analytical tools to solve practical problems in finance
and bridge the gap between finance theories and practice by building operational models,
Students should build spreadsheet financial models for complex Financial Decisions in the
area of Investment Banking, Equity Research, Business valuation, Project Finance and
Financial Risk Management. On the basis of their Financial models, they will submit a report
on the overview of different sectors such as IT, Oil & Gas, Telecom, Retail etc.
Contents:

Unit I: Introduction of Software @ Risk and EViews, Introduction to financial data Analysis
Using EViews and @Risk, Simulation, Decision making, Uncertainty

Unit II: Techniques of Financial Data Analysis and Forecasting-I, Types of Data, Cross-
section Data, Panel Data, Time series analysis, Exponential Smoothing, Classical Linear
Regression Model

Unit III: Techniques of Financial Data Analysis and Forecasting-II, ACF, PACF,
correlogram, Stationary and Nonstationary Timeseries, Test of Stationarity, Auto Regressive,
Moving Average, ARMA models of Stationary Time Series

Unit IV: Techniques of Financial Data Analysis and Forecasting-III, ARIMA (p, d, q)
models for analysis and forecasting of financial data

Unit V: Techniques of Financial Data Analysis and Forecasting-IV, Diagnostic checking, Q

and LB Statistic, Box Jenkins Methodology for ARIMA models. Practical Applications using
financial data, Evaluation of Forecasts, Root Mean Square Error, Thiel Statistics

Unit VI: Multiple Regression models for financial data, Multiple Regression models for
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Faculty of Management Studies, University of Delhi

financial data, Cointegration, Vector Auto regression, Vector Error Correction Model, Logit
and Probit models

Unit VII: Modelling asset return volatility, ARCH, GARCH and EGARH models for
estimating asset price volatility and volatility forecasting. (Using MS-Excel, @Risk and
EViews).

Unit VIII: Equity Research and Portfolio Models-I, Measuring systematic and non-
systematic risk of assets using regression and Simulation, spread sheet models for the
construction of a portfolio of equity, Portfolio performance

Unit IX: Equity Research and Portfolio Models-II, Equity and Bond Valuation. Valuation
using Black-Sholes- Merton option pricing model

Unit X: Financial Risk Models-I, Spread sheets for Measuring Market risk, Value at Risk
(VaR)

Unit XI: Financial Risk Models-II, Calculation of Market risk using Historical and Monte-
Carlo simulation

Unit XII: Financial Risk Models-III, Stress-testing, Back-testing. Altman Z score model,
calculation of the probability of default using equity prices, Discriminant Analysis
Suggested Readings:

1. Brooks Chris, (2002). Introductory Econometrics for Finance, Cambridge Brooks,

C. Introductory Econometrics for Finance.Cambridge.

2. Cambell, J.Y, Andrew, W. L.O & Mackinlay, A.C. (1996). The Econometrics of
Financial Markets. Princeton, NJ: Princeton University Press.

3. Cochrane, J.H. (2005). Asset Pricing. (Revised Ed ed.). Princeton, NJ: Princeton
University Press.

4. Murphy, K.P. (2012). Machine Learning, A Probabilistic Perspective.MIT Press.

5. Tsay, R.S. (2010). Analysis of Financial Time Series. (3rded.). New York, NY: John
Wiley.

6. Enders, W. (2013). Applied Econometric Time Series.John Wiley.

7. Koop, G. (2006). Analysis of Financial Data.John Wiley.

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Faculty of Management Studies, University of Delhi

8. Damodaran, A. (2008). Investment Valuation.John Wiley.

9. Albright, S.C, Zappe, C.J & Winston, W.L. (1980). Data analysis, Optimization, and
Simulation modelling. South-Western: Cengage Learning.

10. Dowd, K. (2005). Measuring Market Risk. John Wiley.

11. Hull, J.C. (2015). Risk Management and Financial Institution.John Wiley.

12. Fabozzi, F.J. (2015). Quantitative Financial risk Management.John Wiley.

13. Elton, E.J, Gruber, M.J & Brown, S.J. (2014). Modern Portfolio Theory and Investment
Analysis.John Wiley.

Facilitating the achievement of Course Learning Outcomes

Unit Course Learning Outcomes Teaching and Assessment Tasks

No. Learning Activity
I-II Introduction to financial Lectures, Cases Hands on Bloomberg terminal.
data Analysis Using and Practical in Analyzing Financial data using
EViews and @Risk, Finance Lab MS-Excel, @Risk and
Simulation, Decision Eviews).
making, Uncertainty
III-IV Explain the fundamental Lectures, Cases Students participation in the
concepts and techniques of and Practical in class room discussions and a
Financial Data Analysis Finance Lab term paper. using MS-Excel,
and Forecasting-I and @Risk and Eviews
Forecasting -II
V-X Help students appreciate Lectures, Cases Individual attempt for solving
the nuances of Techniques and Practical in the case studies by retrieving
of Financial Data Analysis Finance Lab Data from Bloomberg
and Forecasting-III Terminal
XI- Providing hands-on Lectures, Cases Hands-on quiz and Practical
XII dexterity to the students and Practical in Assignment on fundamentals
with regard to Multiple Finance Lab learned by the students.
Regression models for
Data from Bloomberg
financial data.
Terminal

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Faculty of Management Studies, University of Delhi

XIII- Understanding of ARCH, Lecture and Hands-on quiz and assignment

XIV GARCH and EGARH Discussions in the class on fundamentals
models for estimating asset learned by the students. Data
price volatility and from Bloomberg Terminal,
volatility forecasting Using MS-Excel, @Risk and
EViews
XV - Explain the concept of Lecture and Analyzing Financial data on
XVIII Equity Research Discussions Cases Business Valuation using
and Portfolio Models-I and Practical in Bloomberg Terminal
Finance Lab
XIX - Explain the concept of Lecture and Analyzing financial data on
XXIV Financial Risk Models Discussions and Business valuation using
Cases and Bloomberg Terminal
Practical in
Finance Lab
MBAFT-7404: INTERNATIONAL FINANCIAL MANAGEMENT
Course Objectives:

The course has been designed to acquaint the students with the conceptual framework of the
key decision areas in multinational business finance. The objective of the course is to provide
an overview of the financial environment in which multinational firms operate.
Course Learning Outcomes:

1. A comprehensive understanding of Globalization and its importance for the

Multinational Financial Manager. Conceptual understanding of the International
Monetary System.
2. Functions and how Foreign Exchange Markets work, Theories of Foreign Exchange Rate
Movements and International Parity Conditions.
3. Understanding the Foreign Exchange Risks faced by MNCs.
4. Determine the Cost of Capital and Capital Structure for a Multinational Firm, Problems
and Issues in Foreign Investment Analysis, Calculating NPV, IRR and APV for Foreign
Investment Decisions
5. Understanding the Management of Cash for a Multinational Firm, Techniques of Country
Risk Assessment.

20
Faculty of Management Studies, University of Delhi

6. Significance of the Euro currency Market for Financial Market Intermediation, Raising
Funds in International Markets, Structuring a Swap Deal- Interest Rate Swaps and
Currency Swaps.
Contents:

Unit I: Multinational Business Finance: An overview, Agency Problem, Objectives of the

Firm and Risk Management, International Financial Management and Domestic Financial
Management, Motivations for International Finance. International Monetary System- The
Gold Standard, The Bretton Woods System, The Flexible Exchange, Alternative Exchange
Rate Systems, The European Monetary System, International Financial Institutions.

Unit II: The Foreign Exchange markets – Functions of the Foreign Exchange Market, The
Foreign Exchange Rates- Direct and Indirect Quotations, Spot Market and Forward Market,
Bid- Ask Spread, Interest Arbitrage- Covered Interest Arbitrage and Interest Parity Theory,
Practical Examples, Theories of Foreign Exchange Rate Movement and International Parity
Conditions- Purchasing Power Parity, International Fisher Effect.

Unit III: Management of Foreign Exchange Risk- Translation Exposure, Comparison of

Four Translation Methods, Transaction Exposure- Measurement and Management of
Transaction Exposure, Economic Exposure- Transaction Exposure Versus Economic
Exposure.
Unit IV: Financial Management of the Multinational Firm- Cost of Capital and Capital
Structure of the Multinational Firm, Cost of Capital for MNCs v/s Domestic firms,
International experiences on Cost of Capital, Multinational Capital Budgeting: Problems and
issues in Foreign Investment Analysis, Techniques of Multinational Capital Budgeting- NPV,
IRR, APV.
Unit V: Multinational Cash management- Centralized perspective of Cash Flow Analysis,
Techniques to Optimize Cash Flow- Leading and Lagging, Netting, Matching. Country Risk
Analysis- Nature of Country Risk Assessment, Techniques to assess Country Risk, Raters of
Country Risk.
Unit VI: Managing Foreign Operations- Eurocurrency markets- Eurocurrency Interest
Rates, Domestic Issues v/s Euro Issues, International Bonds Markets, External Commercial
Borrowings, Performance of Indian Euro Issues, GDRs and ADRs; Growth of the Swap
market, Interest Rate and Currency Swaps- Forms, Interest Rate Swaps: Examples from Indian
and Global scenario.
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Faculty of Management Studies, University of Delhi

Suggested Readings:
1. Buckley, A. (2009). Multinational Finance. (5thed.). Pearson Education.
2. Shapiro, A.C. (2013). Multinational Financial Management. (10thed.). John, Inc.
3. Brigham, E.F.,&Daves, P.R. (2016). Intermediate Financial
Management. (12thed.).South-Western.
4. Resnick, B. G., & Eun, C. S. (2014). International Financial Management. (7thed.).
McGraw Hill International.
5. Hull, J.C.,&Basu, S. (2018). Options futures and other derivatives. (10thed.). Prentice
Hall of India.
6. Madura, J. (2018). International Financial Management. (13thed.). Cengage Learning
India Pvt Ltd.
7. Butler, K.C. (2012). Multinational Finance: Evaluating Opportunities, Costs, Risks of
Operations. (5thed.). Thomson South-Western.
8. Kim, S & Kim, S.H. (2006). Global Corporate Finance: Text & Cases. (6th
ed.).Blackwell Publications.
9. Levi, M.D. (2018). International Finance. (6th ed.). Routledge Publications
10. Vij, M. (2018). International Financial Management (3rd ed.). Excel Books
Facilitating the achievement of Course Learning Outcomes

Unit Course Learning Outcomes Teaching and Learning Assessment Tasks

No. Activity
I A comprehensive Objective of MNC, Reading the annual report
understanding of Motivation for of MNCs, Project work.
globalization and its International business,
importance for the Exchange rate systems,
multinational financial International Financial
manager. Conceptual Institutions and their
understanding of the significance.
International monetary
system.

22
Faculty of Management Studies, University of Delhi

II Functions and how foreign CIA and Parity Practical questions. Case
exchange markets work. conditions, Calculation of studies, Group learning
Theories of foreign exchange Arbitrage possibilities. exercise.
rate movements and
International parity
conditions.
III Understanding the Foreign Translation, Transaction Project work and
exchange risks faced by and Economic exposure. Questionnaire assignment
MNCs. to understand the risks
faced by MNCs,
Numerical Problems and
exercises, Problem based
learning and scenario
analysis, learning from
selected web sites.
IV Determine the cost of capital Problems and issues in Case studies on
and capital structure for a foreign investment multinational capital
multinational firm, analysis budgeting, Small group
Calculating NPV, IRR and presentations. Scenario
APV for foreign investment analysis, project work
decisions
V Understanding the Techniques to optimize Student presentations,
Management of cash for a cash flow movements- Case lets and problem-
multinational firm, Netting, matching, based learning.
Techniques of country risk Leading and lagging,
assessment. Indicators to assess
country risk and country
credit worthiness.

23
Faculty of Management Studies, University of Delhi

VI Significance of the ADRs and GDRs, How Practical exercises on

Eurocurrency market for swaps work, Structuring a swaps and scenario
financial market swap deal - interest rate analysis, Examples from
intermediation, Raising funds swaps and currency Indian and global
in international markets, swaps. scenario, Referring
Swaps –interest rate and selected web sites.
currency swaps
MBAFT-7405: MERCHANT BANKING AND FINANCIAL SERVICES
Course Objectives:

The objective of the course is to understand role of Financial Services in business organizations
and to give an insight into the strategic, regulatory, operating and managerial issues concerning
select financial services. In addition, the course will examine the present status and
developments that are taking place in the financial services sector and developing an integrated
knowledge of the functional areas of financial services industry in the real-world situation.
Course Learning Outcomes:

1. Understanding the financial system, markets and the risk management systems. A global
perspective of financial services.
2. Role of merchant bankers in corporate advisory services, Understanding different kinds
of issues, functions and management of depository in India, stock exchange and stock
trading in India.
3. Role and importance of domestic and international credit rating agencies, types of credit
cards and debit cards, concept of term sheet.
4. Understanding bank ratios across time, Techniques used by banks for ALM analysis,
risk management and Basel rules.
5. Mutual fund valuation, Development of insurance in India, review and challenges in
private equity and hedge funds, Securitization process, structuring a securitization deal.
6. Financial evaluation of lease financing, Mechanism of factoring and forfaiting, Creating
synergy, Determine the swap ratio.
Contents:

Unit I: Financial Systems, Markets and Services: An Overview: Indian and Global
Perspective- Managing New Challenges, Regulatory Perspectives, Future Challenges for
Indian Banks, Improving Risk Management Systems.
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Faculty of Management Studies, University of Delhi

Unit II: Merchant Banking and Issue Management: Meaning, Different Kinds of Issues,
Book Building, Green Shoe Option, Depository System, Stock Exchange.

Unit III: Credit Rating Agencies: Importance, Issues, Difference in Credit Ratings, Rating
Methodology and Benchmarks, Are Indian Credit Ratings Credible? International Credit
Rating Agencies, Consumer Finance, Venture Capital, Factoring and Forfaiting.

Unit IV: Analyzing Bank’s Financial Statements, Asset Liability Management in Banks
and Financial Institutions: ALM Process, Techniques – Gap, Duration, Simulation, Value
at Risk, Book value of equity and market value of equity perspective, ALM and Interest rate
Swaps, Bank Capital: Risk, Regulation and Capital Adequacy, Risk Management in Banks-
Credit Risk Management, Operational Risk Management, Market Risk Management,
Corporate Treasury Management, Liquidity Risk Management, Governance Risk and
Compliance.

Unit V: Mutual Funds and Insurance Services: Banc Assurance, Reinsurance. Private
Equity and Hedge Funds, Securitization: Structuring a Securitization Deal, Securitization
Process, Risks and Limitations of Securitization.

Unit VI: Leasing and Hire purchase, Factoring and Forfaiting, Mergers and Acquisitions.
Suggested Readings:

1. Paul, H. (2014). Fundamentals of Risk Management. (3rded.).Kogan Page Publishers.

2. MacDonald, S.S.,& Koch, T.W. (2015). Bank Management. (8th ed.): Cengage Learning.
3. Madura, J. (2018).Financial Markets and Institutions. (12th ed.). Thomson Business
Information.
4. Mishkin, F.S. & Eakins, E. (2018).Financial Markets & Institutions (9th ed.). Pearson
Education.
5. Rose, P.,& Hudgins, S.C. (2012).Bank Management and Financial Services (9th ed.).
McGraw-Hill Education.
6. Saunders, A. & Cornett, M. (2018).Financial Institutions Management (9th ed.).
McGraw-Hill Publishing Company.
7. Saunders, A. & Cornett, M. (2007) Management of Financial Markets and Institutions
(6th ed.). Tata McGraw Hill.
8. Vij, M.,& Dhawan, S. (2018).Merchant Banking and Financial Services (2nd ed.). India:
McGraw Hill Education (India) Private Limited.

25
 Faculty of Management Studies, University of Delhi

9. Vij, M. (2018).International Financial Management (3rd ed.). Excel Books.

10. Shanmugham, R. (2017).Financial Services (2nd ed.). Wiley.

Facilitating the achievement of Course Learning Outcomes

Unit Course Learning Teaching and Learning Assessment Tasks
No Outcomes Activity

I Overview of Financial Understanding the financial Review questions, Group

services system, markets and the risk learning exercise.
management systems. A global
perspective of financial services.
II Understanding Role of merchant bankers in Quiz, Group learning
merchant bankers, corporate advisory services, exercise, web site of
issue management, Different kinds of issues, SEBI, Case studies. Class
depository services functions and management of presentations.
and functioning of depository in India, Stock
stock exchange in exchange and stock trading in
India India.
III Importance of credit Role and importance of domestic Critical thinking and
rating agencies, credit and international credit rating group learning exercises,
cards and debit cards, agencies, types of credit cards selected web sites, small
venture capital and debit cards, concept of term group presentations,
funding. sheet. Project work.
IV Understanding Understanding bank ratios Practical exercises and
financial statement of across time, Techniques used by questions, annual report of
a bank, ALM and risk banks for ALM analysis, risk banks to understand
management management and Basel rules. ratios, case studies.
V Understanding the Mutual fund valuation, Review questions, quiz,
growth of Mutual development of insurance in case studies, and web
funds and Insurance in India, review and challenges in sites.
India, private equity private equity and hedge funds,
and hedge funds, Securitization process,
growth of structuring a securitization deal.
Securitization in India.
26
Faculty of Management Studies, University of Delhi

VI Understanding lease Financial evaluation of lease Practical questions. Class

financing, factoring financing, Mechanism of presentation, Mini cases.
and forfaiting. factoring and forfaiting, Creating
Mergers and synergy, Determine the swap
acquisitions in India. ratio.
MBAFT-7406: MANAGEMENT CONTROL SYSTEM
Course Objectives:

The course is designed to allow the student to gain knowledge, insights and analytical skills
related to how the finance managers go about designing, implementing and using planning and
control systems to implement corporate strategies.
Course Learning Outcomes:

1. Strengthening the foundations of the analytical approach to Management Control System

2. Understanding the conceptual framework of management control
3. Understanding the techniques of management control process and Variation in
managerial control system
4. Understanding Strategic Cost Control.
5. Understanding the inter-firm strategies and behaviour
Contents:

Unit I: Conceptual framework of management control: Nature of Management Control

Systems, Understanding Strategies, Behaviour in Organizations, Responsibility Centers,
Revenue and Expense Centers, Profit Centers, Responsibility Accounting, Inter-divisional
Transfer Pricing, Measurement of Divisional Performance including Performance
Evaluation - Qualitative and Quantitative, Investment Centre and Measuring and
Controlling Assets Employed
Unit II: Techniques of management control process: Strategic Planning, Steps in management
control process Budget Preparation, Planning and Procedures, Budgetary Control, Analysis of
Variance, Performance Budgeting, Accounting Aspects of Control including Internal Audit
and Control and Value for Money, Analysis and Reporting, Variance Reporting, Analyzing
Financial Performance Reports, Performance Measurement, Management Compensation,
Behavioural aspects of management control such as motivation and morale, Goal Congruency,
Participative and Responsive Management.

Unit III: Variation in managerial control system: Controls for Differentiated Strategies,
27
Faculty of Management Studies, University of Delhi

Service Organizations, Multinational Organizations and Management Control of Projects

Unit IV: Strategic Cost Control: Pricing decision including pricing strategies, Pareto Analysis,
Just-in-time Approach, Material Requirement Planning, Enterprise Resource Planning, Total
Quality Management, Balance Score Card, Bench

Unit V: Marking, Theory of Constraint, Uniform Costing and Inter-firm comparison,

Profitability analysis - Product wise / segment-wise / customer wise.
Suggested Readings:
1. Allen, B.R., Brownlee, E.R., Haskins, M.E. & Lynch, L.J. (2004). Cases in
management accounting and control system (4th ed.). Pearson.
2. Anthony, R. N., &Govindrajan, V. (2007). Management control
systems (12th ed.). New Delhi: Tata McGraw-Hill.
3. Cooper, R., & Kaplan, R. S. (1991). The Design of cost management
systems (1st ed.).
4. Kaplan, R. S., & Norton, D. P. (2008). Execution premium: Linking strategy to
operations for competitive advantage. USA: Harvard Business School Press.
5. Shank, J. K. (2005). Cases in cost management: A strategic emphasis (3rd ed.).
USA: Cengage Learning.
6. Shank, J. K., & Govindarajan, V. (2008). Strategic cost management: The new
tool for competitive advantage. New York: Free Press.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I. Strengthening the Lectures, discussion and Short quiz. In-class
foundations of the Case Studies problem solving; case
analytical approach to studies
Management Control
System
II. Understanding conceptual Lectures, discussion and Case studies
framework of management Case Studies
control

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Faculty of Management Studies, University of Delhi

III. Understanding the Lectures, discussion and Case studies

techniques of management Case Studies
control process and
Variation in managerial
control system
IV. Understanding Strategic Lectures, discussion and Solving strategic cost
Cost Control Case Studies control problems; case
studies
V. Understanding the inter- Lectures, discussion and Problem solving & quizzes;
firm strategies and Case Studies case studies
behaviour
MBAFT-7407: CORPORATE TAXATION
Course Objectives:

The aim of this course is to familiarize the student with latest provisions of the Indian
Corporate tax laws and related judicial pronouncements having implications for various
aspects of corporate planning with a view to derive legitimate tax benefits permissible
under the law. The knowledge acquired may find a useful application in taking different
financial/managerial decisions after taking into consideration the impact of corporate tax
laws.
Course Learning Outcomes:

1. Strengthening the foundations of the analytical approach to Indian tax laws

2. Understanding preparation of return of income manually as well as through software
3. Understanding corporate tax planning in diverse managerial situations
4. Understanding computation of taxable income and tax liability of companies.
5. Understanding the implications of tax benefits and incentives for corporate decisions in
various situations

6. Understanding International Taxation

Contents:

Unit I: Income Tax Law: Basic concepts relating to income, gross total income, total income,
maximum marginal rate of tax, residential status, scope of total income on the basis of
residential status Computation of income under different heads Salaries Profits and gains of
business or profession Capital gains Total income and tax computation - and set-off and carry
29
Faculty of Management Studies, University of Delhi

forward of losses Deductions from gross total income.

Unit II: Preparation of return of income manually as well as through software Advance payment
of tax, Tax deduction at source, e-TDS return/return of TDS and assessment.

Unit III: Corporate Tax Planning: Meaning of tax planning and management, tax evasion and
tax avoidance; Nature, scope and justification of corporate tax planning and management.

Unit IV: Computation of taxable income and tax liability of companies: Concept and application
of Minimum Alternate Tax; Carry forward and set off of losses in the case of certain companies;
Tax on distributed profits of domestic companies and on income distributed to unitholders.

Unit V: Implications of Tax benefits and incentives for corporate decisions in respect of setting
up a new business, location of business and nature of business. Tax planning with reference to
financial management decisions; Capital structure decisions; Dividend Policy; Bonus Share;
Investments and Capital Gains. Tax planning with reference to specific management decisions
- Make or buy; own or lease; repair or replace Tax planning with reference to employees’
remuneration; Tax planning with reference to the distribution of assets at the time of
liquidation. Tax Planning in respect of amalgamation or demerger of companies; Slump sale;
conversion of a firm into a company.

Unit VI: International Taxation; Foreign collaborations and incidence of taxation on domestic
companies; provisions for relief in respect of double taxation; important Double Taxation
Avoidance Agreements with different countries like USA, UK, Mauritius, Singapore, etc. The
problems of international double taxation – The assignment rules: source versus residence –
methods to alleviate international tax duplication: Tax credit relief; Double tax treaties: OECD
Models; International tax avoidance and evasion; transfer pricing; Tax havens – Anti-
avoidance measures.
Suggested Readings:
1. Ahuja, G., & Gupta, R. (2015). Simplified Approach to Corporate Tax Planning
and Management. Delhi: Bharat Law House.
2. Mehrotra, H. C. & Goyal, S. P. (2018). Direct Taxes including Planning &
Management. Agra: Sahitya Bhawan.
3. Kanga, P., & Vyas, D. (2013). The Law and practice of income tax (10th ed.).
Lexis Nexis.
4. Musgrave, R., & Musgrave, P. (2004). Public finance in theory and practice
(5thed.). New York: McGraw Hill.
30
Faculty of Management Studies, University of Delhi

5. Pagare, D. (2009). Direct tax planning and management. New Delhi: Sultan
Chand & Sons.
6. Singhania, V. K. (2018). Direct taxes: Law and practice. New Delhi: Taxmann.
7. Singhania, V. K., & Singhania. M. (2018). Direct taxes planning and
management. Delhi: Taxmann Publications.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I. Strengthening the Lectures, Short quiz consisting of numerical
foundations of the analytical discussion and problems. In class problem
approach to Indian tax laws Case Studies solving; case studies
II. Understanding preparation Lectures, Preparing Income Tax Returns;
of return of income discussion and case studies
manually as well as through Case Studies
software
III. Understanding corporate tax Lectures, Solving corporate tax planning
planning in diverse discussion and problems; case studies
managerial situations Case Studies
IV. Understanding computation Lectures, Short notes/reports; case studies
of taxable income and tax discussion and
liability of companies Case Studies
V. Understanding implications Lectures, Short quiz consisting of numerical
of tax benefits and incentives discussion and problems. In class problem
for corporate decisions in Case Studies solving; case studies
various situations

VI. Understanding International Lectures, Short quiz consisting of numerical

Taxation discussion and problems. In class problem
Case Studies solving; case studies
MBAFT-7408: FINANCIAL DERIVATIVES
Course Objective:

This course sets up a study in the field of investments and Risk Management related to
derivative securities. The course will acquaint students with derivative securities, markets,
pricing, hedging and trading strategies of derivative instruments, and uses of these instruments
31
Faculty of Management Studies, University of Delhi

with risk management., it is necessary to stress the fundamentals and to

Learning Outcome:

The student will acquire the necessary skills to value and to employ options, futures, and related
financial contracts and study some important applications. In order to provide useful treatment
of these topics in an environment that is changing rather rapidly, students should individually
select various futures or options and watch the behaviour of these futures and options to see how
futures, options and other Derivatives might help mitigate the risks of investors.
Contents:

Unit 1: Introduction to financial markets: Introduction to Derivatives, their uses, applications,

markets, trades, common terms, Forwards and Futures, options, bonds, swaps and other
derivative instruments

Unit 2: Determination of forward and futures prices: Pricing of futures and forwards on
investment assets, commodities, currencies and interest rate, basis risk, cost of carry, arbitrage,
convergence,

Unit 3: Hedging strategies using futures: Short hedge and long hedge and using futures,
Optimal Hedge Ratio, cross hedging of portfolio and commodities using futures

Unit 4: Introduction to Options: European options, American options, forward-spot parity, put-
call parity, exercising American calls early, exercising American puts early

Unit 5: Basic Option Pricing: The binomial option-pricing model.

Unit 6: Asset price random walks

Unit 7: Valuation of derivatives in Continuous Time: Introduction to Black-Scholes pricing,

volatility, Extensions of Black and Scholes formula, options on stock indices, currency and
futures. Sensitivity analysis (the “greeks”) and hedging of options, Delta, gamma and vega
hedging using options and futures. variables, implied volatility

Unit 8: Financial Engineering: Construction of options strategies in various market situations

and their pay off; Betting on a large price decrease, betting on a small price increase. Exotic
options: Compound, binary, barrier and Asian options, options involving several assets.

Unit 9: Swaps Transactions: Interest rate swaps, currency swaps, commodity swaps and equity
swaps; Pricing and valuation of swaps. Credit default swaps, valuation of credit default swaps.

32
Faculty of Management Studies, University of Delhi

Unit 10: Value at risk: Normal linear VaR, Historical simulation, value at risk for option
Portfolios, Quadratic model, Monte Carlo simulation, stress testing and backtesting
Unit 11: Credit risk: Bond prices and the probability of default, Historical default experience,
reducing exposure to Credit risk, Credit default swaps, total return swaps, credit spread options,
Collateralized debt obligation

Suggested Readings:

1. Hull, J.C. (2014).Options Futures and other Derivatives. 9th edition,

Prentice Hall of India.

2. Neftci, S.N. (2000). An Introduction to the Mathematics of Financial

Derivatives.Academic Press.
3. Bhalla, V.K. (2012). Investment Management. New Delhi: Sultan Chand.
4. Wimott, P. (2012). Quantitative Finance. Wiley & Sons.
5. Jarrow, R. & Stuart, T. (1995). Derivative Securities. South Western.
6. Chance, D.M.,& Brooks, R. (2008). Derivatives and Risk Management Basics.
Cengage Learning India.
7. Pliska, S. (1997). Introduction to Mathematical Finance. Wiley-Blackwell
Publishing.
8. www.ncdex.com for details on commodity derivatives in India
9. www.nse-india.com for stock-based derivatives
10. http://www.theponytail.net/DOL/DOL.htm for derivatives-based notes
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Outcomes Teaching and Assessment Tasks
No. Learning Activity
I. Introduction to Derivatives, their Lectures, Cases Hands on Bloomberg
uses, applications, markets, trades, and Practical in terminal. Analyzing
common terms, Forwards and Finance Lab trading data on Futures
Futures, options, bonds, swaps and and options in Indian
other derivative instruments and Derivatives market
discussions on Indian Derivatives
Market

33
Faculty of Management Studies, University of Delhi

II. Explain the fundamental concepts, Lectures, Cases Students participation in

principles and determination of and Practical in the class room
forward and futures prices and its Finance Lab discussions and a term
applications. paper
III. Help students appreciate the nuances Lectures, Cases Individual attempt for
of. Hedging strategies using futures and Practical in solving the case studies
Finance Lab by retrieving Data from
Bloomberg Terminal
IV Providing hands-on dexterity to the Lectures, Cases Hands-on quiz and
& students with regard to European and Practical in Practical Assignment on
V options, American options, forward- Finance Lab fundamentals learned by
spot parity, put-call parity and Basic the students
Option Pricing
VI Understanding the basics of Asset Lecture and Hands-on quiz and
price random walks Discussions assignment in the class
on fundamentals learned
by the students

VII Explain the Valuation of derivatives Lecture and Analyzing trading data
in Continuous Time Discussions on options contract and
Cases and contract valuation using
Practical in Bloomberg Terminal
Finance Lab
VIII Explain the concept of Financial Lecture and Analyzing trading data
Engineering, construction of Various Discussions and on options contract and
Investment Position and Option Cases and contract valuation using
Trading Strategies Practical in Bloomberg Terminal
Finance Lab
IX Understanding the basic concept of Lecture and Hands-on quiz and
Swaps Transactions Discussions and Practical Assignment on
Cases fundamentals learned by
the students

34
Faculty of Management Studies, University of Delhi

X Explain the concept of Value at Risk Lecture, Calculating Value at

Discussion, Risk using trading data
Cases and on Future and options
Practical in contract using
Finance Lab Bloomberg Terminal
XII Explain the concept of Credit Risk Lecture, Calculating Credit Risk
Discussion, using Financial data
Cases and available on Bloomberg
Practical in Terminal
Finance Lab
MBAFT-7409: PROJECT PLANNING, ANALYSIS AND MANAGEMENT
Course Objectives:

The aim is to provide a suitable framework for gaining insight into the process of preparation,
appraisal, monitoring and control of a project. The role project management techniques and
how to mobilize finance for domestic and international projects shall be highlighted.
Course Learning Outcomes:

1. Strengthening the foundations of the analytical approach to Project Planning &

Management
2. Understanding project preparation

3. Understanding the history, approaches, framework and processes of projects

4. Understanding the project appraisal techniques
5. Understanding the project financing and implementation
Contents:

Unit I: Project Preparation: Meaning and importance of Project; Types of project; Project
life cycle; Project planning & implementation; Management action; Investment returns;
Corporate strategy; Objectives of Project Planning, monitoring and control of investment
projects. identification of investment opportunities; Pre-feasibility Studies; Project
Preparation: Technical feasibility, estimation of costs, demand analysis and commercial
viability, risk analysis, collaboration arrangements; Planning Overview Strategy and
Resource Allocation Generation and Screening of Project Ideas; financial planning;
Estimation of fund requirements, sources of funds; Loan syndication for the projects. Tax
considerations in project preparation and the legal aspects. Project management tools,
35
Faculty of Management Studies, University of Delhi

process, plans and project planning tips; Balanced scorecard, design project management;
Project Management Templates

Unit II: History of project management; Project management approaches: Traditional

Approach, Critical Chain Project Management, Extreme Project Management, Event Chain
Methodology; Process-based management; Project development stages; Project control
systems; Project Management Framework; International Project Management Standards;
Project Planning Strategies and Tools; Project Management Frameworks; Project Phases
and Milestones; Project Goals; Project Processes.

Unit III: Project Appraisal: Business criterion of growth, liquidity and profitability, social
cost benefit analysis in public and private sectors, investment criterion and choice of
techniques: Estimation of shadow prices and social discount rate. Financial evaluation:
Project rating index; Time Value of Money; Investment Criteria; Project Cash Flows; Cost
of Capital; Project Risk Analysis; Project Rate of Return; Special Decisions Situations.
Mathematically modeling for multiple projects: Mathematical techniques for project
evaluation; Network technique for project management; Multiple projects and constraints
Project Appraisal for financial institution; Preparation of project report.
Unit IV: Project Financing and Implementation: Judgmental, Behavioural, Strategic and
organisational Considerations; Financing of Project: Raising finance in domestic market and
international market; Infrastructure financing; Tax planning while financing for projects;
Implementation. Project Management: NetworkTechniques for Project Management;
Project Review and Administrative aspects. Contemporary issues in project appraisal:
Project evaluation in non-profit sector; mergers and acquisitions; Project management
principles by project management institute USA; Project management software.

Suggested Readings:

1. Shenhar, A. J.,&Dvir, D. (2007). Reinventing Project Management: The Diamond

Approach to Successful Growth and Innovation. Harvard Business School
Publishing
2. Chandra, P. (2014). Projects: Planning analysis, selection, financing,
implementation and review (8thed.). McGraw Hill.
3. Clifford, F. G., & Larson, E. W. (2018). Project management the managerial
process. (7th ed.).McGraw-Hill.
4. Clifford, F. G., & Larson, E. W. Project management the managerial process with

36
Faculty of Management Studies, University of Delhi

MS Project (6th ed.). McGraw-Hill.

5. Mantel, S. J., Meredith, J. R., Shafer, S. M., & Sutton, M. M. (2011). Project
management (4th ed.). John Wiley & Sons.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Outcomes Teaching and Learning Assessment Tasks
No. Activity
I. Strengthening the foundations Lectures, discussion and Short quiz. In class
of the analytical approach to Case Studies problem solving; case
Project Planning & studies
Management
II. Understanding project Lectures, discussion and Solving problems; case
preparation Case Studies studies
III. Understanding the history, Lectures, discussion and Solving different
approaches, framework and Case Studies dimensions of project
processes of projects related problems; case
studies
IV. Understanding the project Lectures, discussion and Problem solving &
appraisal techniques Case Studies quizzes; case studies
V. Understanding the project Lectures, discussion and Short notes/reports; case
financing and implementation Case Studies studies
MBAFT-7410: FINANCIAL RISK MANAGEMENT
Course Objectives:

The basic purpose of this course is to acquaint the participants with the principles and practices of
financial risk management to deal with financial risks faced by large institutions.
Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

1. Analyse the nature and sources of various risk exposure of the institutions
2. Formulate strategies to deal with Market Risks, Credit Risks and other Risks faced by
the institutions

3. Evaluate the integrated risk environment of the organisation.

Course Contents:

37
Faculty of Management Studies, University of Delhi

Unit I: Introduction to Financial Risk

Value Creation and Risk Management. Types of risks faced by modern organisations.
Nature, sources and measures of financial risks.

Unit II: Management of Market Risks

Concept of Market Risk. Sources of market risks. Measures of market risk. Value at Risk.
RiskMetrics Approach. Historic Simulations. Monte Carlo Simulations. Portfolio Risk
Measure. Portfolio Risk Budgeting. Stress Testing and Back Testing. Capital Charges.

Unit III: Management of Credit Risks

Concept of Credit Risk. Individual Loan Risks. Measurement of Credit Risk. Default Risk
Models. Loan Portfolio and Concentration Risk. Credit Ratings. Credit Derivatives. Capital
Charges.

Unit IV: Management of Other Institutional Risks

Other types of financial risks faced by the institutions. Measures and handling of Off-
Balance-sheet risks, foreign exchange risks, sovereign risk, liquidity risk, technology and
other operational risks. Risk hedging and management. Capital charges.
Unit V: Enterprise Risk Management

Concept of Enterprise Risk Management (ERM). Principal terms in Enterprise Risk

Management. Integrated Approach to Risk Management. Framework for risk management
and control. Risk frameworks under regulatory environments.
Suggested Readings:

1. Bhalla, V. K. (2012). Investment Management. Delhi: S. Chand.

2. Christoffersen, P. F. (2016). Elements of Financial Risk Management. London:

Academic Press.
3. Crouhy, M., Galai, D.,& Mark, R. (2014). The Essentials of Risk Management. USA:
McGraw-Hill Education.
4. Hull, J. C. (2018). Risk Management and Financial Institutions. New Jersey: John Wiley
& Sons.
5. Jorion, P. (2011). Financial Risk Manager Handbook. New Jersey: John Wiley & Sons.
6. Professional Risk Managers’ International Association. (2015). PRM Handbook Volume

38
Faculty of Management Studies, University of Delhi

III: Book 1-3. USA: PRMIA Publications.

7. Resti, A.,&Sironi, A. (2007). Risk Management and Shareholders’ Value in Banking.
England: John Wiley & Sons.
8. Saunders, A.,& Cornett, M. M. (2017). Financial Institutions Management. New York:
McGraw-Hill Education.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I Understanding the nature Lecturing, Short quiz and in-class problem
and type of financial risks discussion and solving.
Brainstorming
II Devising strategies to deal Lecturing & Short quiz consisting of numerical
with market risk Discussion, problems. In-class problem
Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models and
modelling Simulations
III Devising strategies to deal Lecturing Short quiz consisting of numerical
with credit risk &Discussion, problems. In-class problem
Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
IV Devising strategies to deal Lecturing & Short quiz consisting of numerical
with other risks Discussion, problems. In-class problem
Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling

V Understanding the role of Lecturing, Short quiz and in-class problem

Enterprise Risk discussion and solving.
Management Brainstorming
MBAFT-7411: FIXED INCOME SECURITIES
Course Objectives:

The basic purpose of this course is to acquaint the participants with the principles and practices
of investing in the instruments of fixed income securities.
39
Faculty of Management Studies, University of Delhi

Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

1. Evaluate the role of bond market in India and contemporary issues pertaining thereto
2. Assess the returns and risks of fixed income investments
3. Formulate strategies to invest in fixed income securities
4. Evaluate the markets for structured products in India
Course Contents:

Unit I: Introduction to Fixed Income Market

Fixed Income Securities market in India. Money market instruments and Debt market
instruments. Market Regulation and the Role of regulator. Sectoral Reforms and
contemporary issues. Interest Rate determination.
Unit II: Bond Pricing and Returns

Pricing of Bonds and Bond Price Theorems. Bond Yield. Spot rates and Forward rates. Yield
Curve – Par yield curve and Zero coupon yield curve. Theories of Term Structure of Interest
rates. Fitting of yield curve.

Unit III: Risks involved in fixed income investments

Bond Price Volatility. Interest Rate Risk and its measures. Purchasing Power Risk. Call
Risk. Default risk of Bond investment.

Unit IV: Strategies for Fixed Income Investments

Passive Bond Investment Strategies. Bond Index. Active Bond Investment Strategies. Bond

Portfolio Performance measures and evaluation. Portfolio management by pensions funds

and other institutions.

Unit V: Structured Products

Introduction to Structured Finance products. Securitisation. Mortgage Backed and Asset

Backed Securities. Collateralised Debt Obligations. Bond and Credit Derivatives.
Suggested Readings:

1. Alexander, C. (2008). Market Risk Analysis Vol. I – Quantitative Methods in Finance.

England: John Wiley & Sons.
40
Faculty of Management Studies, University of Delhi

2. Choudhry, M. (2010). An Introduction to Bond Markets. UK: John Wiley & Sons.
3. Fabozzi, F. J. (2016). Bond Markets, Analysis, and Strategies. USA: Pearson
Education.
4. Fabozzi, F. J. (2007). Fixed Income Analysis. New Jersey: John Wiley & Sons.
5. Hull, J. C. (2018). Risk Management and Financial Institutions. New Jersey: John
Wiley & Sons.
6. Jorion, P. (2011): Financial Risk Manager Handbook. New Jersey: John Wiley & Sons.
7. Martellini, L., Priaulet, P.,&Priaulet, S. (2003). Fixed-Income Securities: Valuation,
Risk Management and Portfolio Strategies. England: John Wiley & Sons.
8. National Stock Exchange of India. (2009). FIMMDA-NSE Debt Market (Basic)
Module. Mumbai: NSE.
9. Sen, J. &Apte, A. (2013). Fixed Income Markets in India: Investment Opportunities for
You. India: Shroff Publishers & Distributors.
10. Veronesi, P. (2010). Fixed Income Securities: Valuation, Risk, and Risk Management.
New Jersey: John Wiley & Sons.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
1. Understanding the Fixed Lecturing, Short quiz and in-class problem
Income market in India discussion and solving.
Brainstorming
2. Analysing the pricing of and Lecturing & Short quiz consisting of numerical
returns from fixed income Discussion, problems. In-class problem
investments. Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
3. Analysing the risks involved Lecturing & Short quiz consisting of numerical
in fixed income Discussion, problems. In-class problem
investments. Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling

41
Faculty of Management Studies, University of Delhi

4. Devising strategies to invest Lecturing & Short quiz consisting of numerical

in fixed income securities Discussion, problems. In-class problem
Problem Solving solving. Preparation of
and Spreadsheet Spreadsheet models
modelling
5. Analysing the structured Lecturing & Short quiz and in-class problem
financial products Discussion, solving. Preparation of
Problem Solving Spreadsheet models
MBAFT-7412: FINANCIAL MARKETS AND INSTITUTIONS
Course Objectives:

The basic purpose of this course is to develop a broad understanding of the various markets
comprising the Indian Financial System in a global context and the roles played by various
institutions in the functioning of this system.
Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

1. Analyse the role of various markets in financial intermediation

2. Analyse the roles of various market regulators in Indian Financial System
3. Identify the principles of operations of financial institutions and the issues faced by them.
Course Contents:

Unit I: Introduction to Financial Intermediation

Concept of Intermediation and Disintermediation. Kinds of Intermediation. Flow-of-Funds

in Indian Economy. Taxonomy of Financial Markets and Institutions. Regulatory

Framework and Super-regulation. Financial Sector Reforms and Contemporary issues.

Unit II: Depository Institution of Banking

Overview of Banking. Principles of Banking and Credit-creation. Banking regulations and

role of market regulator. Banking products and services. Key market players. Evaluation of
banking sector.

Unit III: Capital Market

Overview of Capital Market. Primary and Secondary market. Security market regulations
42
Faculty of Management Studies, University of Delhi

and role of market regulator. Capital market instruments and services. Key market players.
Evaluation of Capital Market.

Unit IV: Debt Market

Overview of Money market. Wholesale and Retail Debt market. Debt market regulation and
regulators. Debt market products and services. Key market players. Evaluation of Debt
Market in India.

Unit V: Other Markets

Overview of the markets for various Fee-based and Fund-based services. Regulatory issues
and roles of market regulators. Alternative financial instruments and services. Key market
players. Evaluation of each of such financial markets.

Unit VI: External Market

Overview of External Financial market. International capital flows. Capital Account

convertibility and other regulations. International financial instruments. International
financial centres. Evaluation of external financial market.
Suggested Readings:

1. Bhole, L. M.,& Mahakud, J. (2017). Financial Institutions and Markets. Delhi: McGraw-
Hill Education.
2. Fabozzi, F. J., Modigliani, F. P.,& Jones, F. J. (2010). Capital Markets – Institutions and
Instruments. Delhi: PHI Learning.
3. Khan, M. Y. (2018). Indian Financial System. Chennai: McGraw-Hill Education.
4. Madura, J. (2016). Financial Markets and Institutions. USA: Cengage Learning
5. Mankiw, N. G.,& Ball, L. M. (2010). Macroeconomics and the Financial Systems. USA:
Worth Publishers.
6. Ministry of Finance. (Latest). Economic Survey. Available Online.
7. Reserve Bank of India. (Latest). Report on Trend and Progress of Banking in India.
Available Online.
8. Securities and Exchange Board of India. (Latest). Annual Report. Available Online.

43
Faculty of Management Studies, University of Delhi

9. Vij, M.,& Dhawan, S. (2017). Merchant Banking and Financial Services. Delhi:
McGraw-Hill Education.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Outcomes Teaching and Assessment Tasks
No. Learning Activity
I Understanding the Process Lecturing, Short quiz and class presentations.
of Intermediation and its discussion and
kinds Brainstorming
II Analysing the role of Lecturing, Short quiz and class presentations.
Banking industry in India discussion and
Brainstorming
III Analysing the role of Stock Lecturing, Short quiz and class presentations.
market in India discussion and
Brainstorming
IV Analysing the role of Bond Lecturing, Short quiz and class presentations.
market in India discussion and
Brainstorming
V Analysing the role of Lecturing, Short quiz and class presentations.
Insurance and other discussion and
financial markets in India Brainstorming
VI Analysing the role of Lecturing, Short quiz and class presentations.
external financial market in discussion and
India Brainstorming
MBAFT-7413: FINANCIAL REPORTING

Course Objectives:

To gain ability to analyze financial statements including consolidated financial statements of

group companies and financial reports of various types of entities, to gain ability to apply
valuation principles, to familiarize with recent developments in the area of financial
reporting, to gain ability to solve financial reporting and valuation cases.

Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

44
Faculty of Management Studies, University of Delhi

1. Analyse the financial statements along-with consolidated statements.

2. Evaluate the intangibles assets and how they are reported in the financial statements.
3. Able to analysis the annual reports of various financial services companies.
Contents:

Unit I:
Corporate Financial Reporting - Issues and problems with special reference to
published financial statements. Consolidated Financial Statements of Group
Companies Concept of a Group, purposes of consolidated financial statements minority
interest, Goodwill, Consolidation procedures – Minority interests, Goodwill, Treatment
of pre- acquisition and post-acquisition profit. Consolidated profit and loss account,
balance sheet and cash flow statement. Treatment of investment in associates in
consolidated financial statements. Chain holding.

Unit II:

Earnings Per Share, Treatment of Bonus Issues and Right Issues and Treatment of
convertibles on EPS

Unit III:

Lease accounting and analysis—Pricing a lease deal and Structuring a lease

transaction accounting and legal aspects for lease.

Unit VI:

Accounting for Investments—issues relating to accounting for investment by

companies others than banks and financial instruments, issues relating to accounting
for investment in JV, issues relating to accounting for investment in banking
companies

Unit V:

Developments in Financial Reporting, Value Added Statement, GVA, NVA, Economic

Value Added, Market Value Added, Shareholders’ Value Added Hedge Accounting.
Accounting of derivatives. Human Resource Accounting

Unit VI:

Financial Reporting by Mutual funds, Non-banking finance companies, Merchant

45
Faculty of Management Studies, University of Delhi

bankers, Stock and commodity market intermediaries.

Suggested Readings:
1. Banerjee Ashok (2009). Financial Accounting a Managerial Perspective (3rded.).
Excel Books.
2. Brigham, E.F& Houston, J.F. (2007). Fundamentals of Financial Management.
Thomson.
3. Chandra P. (2015). Corporate Creation. New Delhi Tata Mc-Graw Hill.
4. ICWA.Corporate Financial Reporting (Final study material). (Latest Editions)
5. Damodaran, A. (2006). Damodaran on Valuation. New York.: Wiley and Sons.
6. ICWAI. Financial Analysis & Business Valuation (Final study material). (Latest
Editions)
7. ICAI-Final Course Study Material of Financial Reporting Volume I& II. (Latest
Editions)
8. ICSI –Study Material for professional program. (2011). Corporate Restructuring
and Solvency. (Module II Paper 4)

Facilitating the achievement of Course Learning Outcomes

Unit Course Learning Teaching and Assessment Tasks
No. Outcomes Learning Activity
I Consolidated Financial Lectures, Problem solving and concept
Statements of Group discussion and questions, class room exercises,
Companies Case Studies Case lets and project work
II Earnings Per Share, Interactive lectures Report Writing, Problem solving
with power-point and concept questions, class room
slides. Excel exercises, Case lets and project
work
III Pricing a lease deal and Lectures, Problem solving and concept
Structuring a lease discussion and questions, class room exercises,
transaction Case Studies, Excel Case lets and project work
IV Accounting for Investments Lectures, Group Case, Problem solving and
discussion and concept questions, class room
Case Studies exercises, Case lets and project

46
Faculty of Management Studies, University of Delhi

work
V Developments in Financial Interactive lecture Presentation, Case lets and project
Reporting and Case Analysis work

VI Financial Reporting by Lectures, Problem solving and concept

financial services firms discussion and questions, and project work
Case Studies, excel
MBAFT-7414: MERGERS AND CORPORATE RESTRUCTURING
Course Objectives:
The objective of this course is to provide an in-depth understanding of financial, accounting,
regulatory and valuation aspects relating to corporate restructuring. Understanding the linkages
between corporate restructuring and financial markets and the impact of the same share price
and on the business.
Course Learning Outcomes:

After successfully completing this course, the participants will be able to –

1. Able to understand the various methods available for corporate restructuring as a mode
of consolidation.
2. Able to do valuation of various tangible and intangible assets.
3. Able to understand various tax aspects associated with the corporate restructuring.
Contents:
Unit I:
Meaning of corporate restructuring- Needs, scope, modes of restructuring, Indian and
global scenario, Strategies Mergers acquisitions-Takeovers, Disinvestments, Strategic
alliances, Demerger and hive offs, Slump sale, Asset sale, Reserve demerger, Concepts,
modes, regulatory, tax, accounting aspects.
Unit II:
Merger and Amalgamation- Meaning, AS 14, pooling of interest method, purchase
method, treatment of goodwill and capital reserve, Purchase consideration, inter
companies holdings accounting and tax aspects, legal aspects, stamp duty, financial
aspects, swap ratio, impact on EPS, MPS and P/E ratio, gains and synergy of merger, Cost
of merger. Books of selling and purchasing companies, Realization Account.
Unit III:

47
Faculty of Management Studies, University of Delhi

Takeovers- Meaning, types of takeovers, legal aspects, SEBI regulations, financial

accounting and tax aspects, stamp duty, payment of consideration, bailout takeovers,
takeover of sick units.

Unit VI:
Financial restructuring-Reorganization of share capital, Internal Reconstruction, -
accounting, financial and tax aspects.
Unit V:
Approaches to Valuation- Valuation of Shares, Valuation of Business, Valuation of
Intangibles, Valuing Private Companies, Valuing firms with Negative Earnings, Valuing
start-up firms, Value enhancement: A discounted cash flow Valuation framework, EVA,
CFROI and other tools.
Suggested Readings:
1. Arzac, E.R. (2008). Valuation for Mergers, Buyouts and Restructuring (2nd ed.). John
Wiley and Sons, Inc.
2. Brealey, Myers & Allen. (2018) Principles of Corporate Finance. (12th ed.). McGraw
Hill.
3. Chandra P. (2015). Corporate Creation. New Delhi Tata Mc-Graw Hill.

4. Damodaran, A. (2012). Damodaran on Valuation: Security Analysis for Investment and

Corporate Finance. (2nded.). John Wiley and Sons, Inc.
5. Damodaran, A. (2017). The Dark Side of Valuation. (2nd ed.): Financial Times Press.
6. De Pamphilis, D.M. (2008). Mergers, Acquisitions, and Other Restructuring Activities.
(4th ed.).: Academic Press, Elsevier Inc.
7. ICWAI. Financial Analysis & Business Valuation (Final study material). (Latest
Editions)

8. Gaughan, P.A. (2007) Mergers, Acquisitions and Corporate Restructurings (4thed.). :

John Wileys& Sons.
9. Hayward, R. (2015). Valuation: Principles into Practice ( 6th ed.). Routledge
10. Hunt, P.A. (2007). Structuring Mergers & Acquisitions: A Guide to Creating
Shareholder Value. (3rd ed.): Wolters Kluwer, Law &Business, Aspen Publishers.
11. Reed, S.F. Alexander, L. & Nesvold, H.P. (2007). The Art of M&A: A Merger
Acquisition Buyout. (4thed.). McGraw-Hill.
12. Rosenbaum, J. & Pearl, J. (2009) Investment Banking: Valuation, Leverages Buyouts,
and Mergers & Acquisitions. John Wiley and Sons, Inc.
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Faculty of Management Studies, University of Delhi

13. Shapiro, E. Mackmin, D & Sams, G. (2018) Modern Methods of Valuation, 12th
Editions: Routledge
Reading Financial Newspapers is highly recommended. Current financial news should be
helpful for valuation projects.
Facilitating the achievement of Course Learning Outcomes
Unit Course Learning Outcomes Teaching and Learning Assessment Tasks
No. Activity
I Modes of corporate restructuring Interactive lectures with
power-point slides.
II Merger and Amalgamation Lectures, discussion and Report Writing,
Case Studies small case-let
III Takeovers Leading class discussion on Research Project,
legal problems and policy Group Discussion
issues.
IV Financial restructuring Lectures, discussion and Written Test and
Case Studies Group Discussion
V Approaches to Valuation Various case studies to Presentation,
analyze valuation strategies. Problem solving,

Excel Excel assignment

49
 II FINANCE
II.1 FINANCIAL MANAGEMENT – I
[3 Credits]

Objectives:

The broad objective of the course is to familiarize participants with the three major decision areas of
Corporate Finance, viz. Investment, Financing, and Earnings Distribution Decisions. Subsequently
the participants will be offered an integrated view of Corporate Finance decision through the process
of Corporate Valuation and Risk Management. The course aims at sharpening the financial decision
making skills of the participants.

Topics:

Session Plan
Text
Sessi
Book
Module on Topic Case Discussion
Reading
No.
**
Considering Time
Chapter 1 Financial Analysis
1 Value of Money in
&2 of Doing an MBA
Financial Decisions
Equity and Fixed
2
Capital Income Market
Market Chapter Coorg Cofee
3 Derivatives Market
20 & 21 Estate
Alpha
Risk and Return - Chapter 7
4 Management
Investment Theories &8
Company
Tata Motors: Cost
Expected 5 Cost of Capital Chapter 9
of Capital
Return
Videocon
Divisional Cost of Industries Limited:
6 Chapter 9
Capital The Cost of
Capital
Kota Tutoring:
Chapter
7 Debt vs. Equity Financing the
14 & 17
Expansion
Financing National Railroad
and Passenger
Chapter
Capital 8 Financing Decision Corporation
25
Structure (Amtrak): Acela
Financing
Capital Structure Chapter Hill Country
9
Decision 14 Snack Food Co.
 The Wm. Wrigley
Chapter Jr. Company:
Optimal Capital
10 14, 18 & Capital Structure,
Structure
19 Valuation, and
Cost of Capital
Managing Cash
Managing Chapter Cash Hoarding at
11 Reserves & Dividend
Earnings 16 Infosys
Policy
and
Working Capital Chapter Dell's Working
Liquidity 12
Management 30 Capital
Chapter 3 RIL's Super-Long
13 Basics of Bonds
& 24 Bonds
Fixed Income
14 Bond Valuation Chapter 3
Management
Valuation Boston Chicken,
of Bonds Inc: 4.5%
Valuation of Convertible
15 Chapter 3
Convertible Securities Subordinated
Debenture Due
2004
Chapter 4 TRX, Inc.: Initial
16 Issue of Equity Shares
& 15 Public Offering
Valuation
Landmark Facility
of Equity 17 Equity Valuation Chapter 4
Solution
Shares
Corporate Valuation in Chapter TSE International
18
M&A Context 31 Corporation
Corporate Commodity Risk Chapter Delta Beverage
19
Risk Management 26 Group, Inc.
Managem Forex Risk Chapter Universal Circuits,
20
ent Management 27 Inc.

**'Principles of Corporate Finance' by Richard, Stewart, Franklin, and Pitabas

 II.2 FINANCIAL MANAGEMENT – II
[3 Credits]

Course Objectives and Rationale:

• To provide you with a very good holistic understanding of the firm from a commercial
perspective and to understand the process of sustainable value creation in a firm.
➢ Irrespective of your functional specialization, as you progress in your career a
broader, commercial perspective of business would become a necessity.

• To equip you with the basic concepts that are required to analyze the financing decisions
➢ From start-ups to global conglomerates, accessing funds successfully from
increasingly sophisticated capital markets can make or break businesses.
Understanding the rich theory and the well evolved practices in the area of capital
financing have thus become imperative for the entrepreneur and the general corporate
manager

• In the area of working capital management, to train you to determine working capital
requirements, analyze impact of working capital decisions and draw up working capital
financing strategies
➢ Sometimes erroneously considered an unglamorous area of corporate finance, it is the
day to day management of working capital that actually makes or breaks a firm.
Importantly, working capital management, like capital expenditure management, is a
multi-functional area of management that involves all disciplines

Topics
Session-wise Plan
Session Topic Chapter of Text
1 Financial Economics: The Finance of Business and
The Business of Finance Chapter 1
Case: Role of Capital Market Intermediaries in
The Dot-Com Crash of 2000

2 Financing Your Start-up: Magic or Logic? Chapter 15

Case: Bladelogic (A)

3,4 Financing and Valuation: Where Does The Value Chapter 11

Come From?
Re-visiting FM I

5 Can the Capital Structure Be A Source of Value? Chapter 7, 8

De-composing Investors’ Desired Rates of Returns
Risk Factors, Betas, Leverage

6 Can the Capital Structure Be a Source of Value? Chapter 17

Capital Structure Theories
7 Raising Long Term Funds: Markets and
Institutions, Products and Instruments Chapter 14, 25

8 Accessing Public Funds, the IPO Chapter 14, 15

Case: Alibaba’s IPO Dilemma: Hong Kong or
New York?

9 Creating Value through Product Design Chapter 17

Case: Tata Steel Limited: Convertible Alternative
Reference Securities

10 How Much Debt Is ‘Good Debt’? Chapter 18

Case: Iridium LLC

11 Structuring a Project Financed Deal Chapter 14, 25

Case: Poland’s A2 Motorway

12 Enhancing Value through Financial Chapter 18

Restructuring
Case: RJR Nabisco-1990
13 Retained Earnings as a Source of Funds: Chapter 16
Earnings Distribution and Dividend Policy
Case: Dividend Policy at FPL Group, Inc.
14 Estimating the Cost of Capital for Your Firm Chapter 9
Case: H.J. Heinz: Estimating the Cost of Capital
In Uncertain Times
15 Estimating the Cost of Capital for Your Chapter 10
Business Unit
Case: Marriott Corporation: The Cost of Capital

16 The Working Capital Decision and Cash Flow Chapter 30, 31

Analysis
Case: Dell’s Working Capital

17 Growth and Attendant Financing Challenges Chapter 29,30

Case: Clarkson Lumber Co.

18 Internationalization Of Business and the Chapter 24, 25

Currency Risk
Case: Foreign Exchange Hedging Strategies
At General Motors
At General Motors

19, 20 Introduction to Forwards, Options Chapter 20

 II.3 MANAGEMENT ACCOUNTING-I
[3 Credits]

Course Objectives:
Accounting is the language of business. The course provides necessary exposure to the students on
the basics of financial accounting. It is to inculcate a broad level of understanding of accounting
principles & policies, preparation of accounting numbers, their interpretation and to develop skills
in reading annual reports among the students. The objective of the course is also to acquaint the
students with the key financial accounting standards and financial reporting practices with emphasis
on sound concepts along with their managerial (and governance-related) implications.
Session Plan:

Session No. of Suggested

Nos. Sessions Session-wise Plan Reading
Chapter 1 of
1&2 2 Blind date with Accounting + Case Discussion FAM 4e
Chapter 2 in
3&4 2 Romancing the Balance Sheet + Case Discussion FAM 4e
Profit & Loss Account: Numbers don’t lie + Case Chapter 3 in
5&6 2 Discussion FAM 4e
Chapter 5 in
7&8 2 Accounting Records + Practice Problems FAM 4e
Chapter 4 in
9 1 Flirting with Cash Flow Statement – Introduction FAM 4e
Chapter 6 in
10 & 11 2 Accounting for Joint Stock Companies + Case Discussion FAM 4e
Chapter 7 in
12 & 13 2 Financial Statement Analysis + Case Discussion FAM 4e
Chapter 4 in
14 & 15 2 Cash Flow Statement Analysis: Case Discussion FAM 4e
Methods of Depreciation & Inventory Valuation a
hallucination + Illustration on Manufacturing A/c, Trading Chapter 8 in
16 1 A/c FAM 4e
Chapter 9 in
17 & 18 2 Accounting Standards a nightmare + Case Discussion FAM 4e
Accounting Standards & Variations in Presentation of
19 1 “Statement of Equity”. Class Notes
Chapter 10 in
20 1 Eyes for Creative Accounting and Good Governance FAM 4e
Summarizing Financial Reporting Practices and Course Chapter 10 in
20 1 Debrief FAM 4e
 II.4 MANAGEMENT ACCOUNTING-II
[3 Credits]

OBJECTIVES:
➢ To build up the skills of participants to understand basic elements, concepts and system of
Cost and Management Accounting.
➢ To acquaint them with Cost and Management Accounting Mechanics and processes, with an
emphasis on sound concept and their managerial implications.
➢ To develop the skills of participants in taking management decisions based on Cost
Accounting Concepts.

TOPICS:
• Introduction to Cost and Management Accounting
• Treatment of Overheads
• Unit Costing (Cost Sheet)
• Joint Product, By Product and Contract Costing
• Process Costing
• Cost Finance Reconciliation
• Marginal Costing, Cost Volume Profit analysis and Decision Making
• Relevant Cost and Differential Cost
• Budgetary Controls
• Standard Costing
• Analysis of Variances
• Activity Based Costing
• Application of Costing Concepts in the Service and Trading Sector
 II.5 ADVANCED FINANCIAL MODELING USING R
[3 Credit]

Objective:
This course is designed to combine finance theory with active classroom experiments using R
estimate, examine and forecast using financial data and re-examine concepts introduced in diverse
finance courses. The primary focus in this course will be on building advanced financial modeling
skills among the students with real world applications. The choice of programming language will be
R, where there is no need of prior knowledge of R.
Topics :

Session Content Coverage Reading

1. R basics Creating objects, vectors, sequence, lists, arrays and Chapter-
for matrices, writing functions, importing, exporting data, listing II
Finance files and managing directory program with single and
multiple lines, and performing basic statistical operations,
Using R as financial calculator, Error handling
2 Financial Introduction to R Package Quantmode, download Chapter
Statement BS/CS/IS/CSFS using R, conducting ratio analysis using R 4
Analysis
3 &4 CapitalRetrieving data from yahoo, google finance and other sources Chapter
Asset using R, estimating return, using R to run CAPM, Estimating 5&6
Pricingbeta for multiple stocks, issues handling while forecasting
Model beta, estimating beta of a portfolio, hedging portfolio with a
target beta
5&6 Factor Generating R data set for multi factor Models , Estimating Chapter
Models Sharpe‟s Single factor Model, Estimating fundamental factor 7
(BARRA)Model, Estimating Statistical Factor Model,
Estimating Fama French 3 factor model, estimating, building
Carhart Momentum strategy, Estimating Sharpe ratio and
Treynor ratio, Jensen‟s Alfa, rolling Beta and Scholes and
William Beta
7&8 Portfolio Introducing R package “fPortfolio”, generating portfolio Chapter
Analysis return matrix, variance covariance matrix, correlation 10
matrices, constructing efficient portfolio of a two stocks and
n stocks, portfolio optimisation using Markowitz mean
variance framework.
9 & 10 Value at Introducing R package for “Performance Analytics” Chapter
Risk ,Estimating Delta Normal VaR, 1 day VaR vs. n day VaR, 11
Estimating Historical VaR, Modified VaR, Expected
shortfall
11& 12 Option Payoff functions for call and put option, profit loss function, Chapter
pricing R function for cumulative normal function, pnorm(), put call 3
Models parity, building option trading strategies and option Greeks
13, 14 Credit Introducing R codes and functions for credit risk analysis, Chapter
& 15 Risk Retrieving T-bill, T-Note and T-Bond yield data using R, 12
Analysis Moody‟s historical yields for corporate bonds matrices,
estimating Altman‟s Z score, estimating market value and
 volatility for KVM model, estimating total asset and its
volatility, estimating LPM for credit default estimation.
16, 17 Volatility Introduction to tseries and zoo …packages, estimating Reading
&18 Models in univariate symmetric and asymmetric volatility models, material
Finance estimating multivariate volatility models, AP-, RS-,CCC-, s
DCC- GARCH models estimations, Forecasting using
Volatility Models, Markov Chain Simulations, Markov
Switching Models
19 &20 Technical Introducing TTR and quandl packages, pooling data from Reading
Analysis Bloomberg, developing technical trading analysis with material
moving averages, Oscillators, price channels and trade s
indicators
 II.6 BEHAVIOURAL FINANCE
[3 Credits]

Learning Objectives and Rationale:

At the end of this course, you should:

1. Be able to define investment goals with clarity. In domains like fund management, wealth
management and corporate investment strategy, behavioural finance helps in defining the investment
goals in sharper and richer terms than traditional finance.

2. Be able to create equity/investment research reports that guard against biases. While initiating/
updating security research, analysts exhibit biases like confirmatory bias and non-Bayesian updating;
awareness of these biases and incorporating mechanisms to deal with these biases help mitigate the
effect.

3. Be able to take investment decisions that are devoid of systematic biases. Biases like
representativeness, overconfidence, over-optimism and social herding often impact investment
decision making; incorporating mechanisms that guard against these biases help mitigate their
impact.

4. Be able to trade in assets without being tied down by systematic biases. Both in high frequency
(example, stock trading) and in low frequency (example, mergers and acquisitions) decision makers
have to guard against systematic biases like loss aversion, endowment bias and the disposition effect

Topic
• One Introduction: Investment Decision Making Cycle: Traditional versus Behavioral Finance

• Two, Three Who is The Investor? Decoding Investor Goals via Pascal-Fermat Bernoulli,
Fechner, Neumann-Morgenstern, Savage, Friedman, Kahneman and Tversky
Experiments/ Instruments: St Petersburg Paradox, Risk Aversion, Allais Paradox, Ellsberg
Paradox, Reflection Effect, Framing Effect
Group Task 1: Critical evaluation and re-design of a fintech solution/ app/ financial product
that aims to customize solutions incorporating investors’ risk- return preferences
Reading: Kahneman and Tversky and the origin of behavioral Economics, Heukelom, F,
Tinbergen Institute Discussion Paper

• Four, Five Researching Securities sans Biases

Experiments/ Instruments: Confirmatory Bias, Non-Bayesian Updating Group Task 2:
Critical evaluation and re-construction of an equity/investment research report
Reading:Various Equity/ Security Research Reports ,Aspects of Investor Psychology,
Kahneman, D and Riepe, MW (1998), Journal of Portfolio Management, Vol 24, No.4

• Six, Seven Investing Biases and Blind Spots

Experiments/ Instruments: Representativeness, Overconfidence, Herding, Extreme
Probabilities, Lake Wobegon Effect, Hindsight Bias,Attribution Bias
Group Task 3: Critical evaluation of analysts’/ corporates’ forecasting, investment decisions
Reading: Before You Make that Big Decision, Kahneman, D, Lovallo, D and Sibony, O,
HBR June 2011
• Eight, Nine The Demons That Traders Have To Confront
Experiments/ Instruments: Endowment Effect, Loss Aversion,Disposition Effect, Status
Quo Bias Reading: The disposition effect in securities trading:an experimental analysis ,
Weber, M and Camerer, CF, Journal of Economic Behavior & Organization, 33(2),
1998Profitability of Momentum Strategies: An Evaluation of Alternative
Explanations , Jegadeesh,N and Titman, S, The Journal of Finance,
56(2), 2001

• Ten Conclusion: Investment Styles, Value Investing

Reading: Note on Behavioral Finance, Ivey Publishing
 II.7 BUSINESS ANALYSIS AND VALUATION
[3 Credits]

Objectives:
The course has got the following two broad objectives:
1. To help the participants understand the different techniques used in valuing companies; and
2. To provide insights into how companies create, maintain, and (or) destroy value.
After the end of this course, the participants should be able to value any company, understand the
different factors that drive the value, and understand how to maximize it.

Topics:
Module1: Introduction to Valuation (3 sessions)
1. Different Valuation Methods, Recap of Basics of Dividend Discounting Model and Modigliani
and Miller Theorem (1 session)
• Reading Materials: Chapters 1, 2 of the book
2. Sales, Profit, and Asset Based Multiples; Price-earnings and Price-Book Value Multiples: key
differences; Balance sheet and income statement based multiples: key differences (2 sessions)
a. Reading Materials: Chapter 9 of the book

Module 2: Understanding the Theory of Valuation (5 sessions)

3. Discussion of Case Kennecott Copper Corporation (1 session)
4. Understanding the basics of FCF, CCF, FCFE, and APV Valuation methods with zero growth and
in the presence of Growth, Valuation in the presence of dividend distribution tax (2 sessions)
• Reading Materials: Chapter 3 of the book (read the appendix to Chapter 3 as well)
5. Case Discussion on Sampa Video (1 session)
• Reading Materials: Read the case on Sampa Video thoroughly. Find the value of the project
using the FCF, CCF and FCFE method using a spreadsheet. Bring your laptop to this class.
6. Valuation in the context of LBO and LCO (1 session)
• Reading Materials: Appendix to Chapter 3 of the book

Class Test 1 will be held after Module 2. Only conceptual knowledge will be tested in this class test.
The test will be largely numerical in nature.
Module 3: DCF Valuation in Practice (5 sessions)
7. Estimating Discount Rates: Practical issues we face while estimating the discount rate (2 sessions)
• Reading Materials: Chapter 4 of the book
8. Estimating Free cash flow: Practical issues we face while estimating and forecasting free cash
flows, Understanding the EVA method of valuation, Finding the terminal value correctly (2 sessions)
• Reading Materials: Chapter 5 of the book
9. Case Discussion on Laura Martin and the Cable Industry (1 session)
• Reading Materials: Read the case on Laura Martin carefully. In particular, look at the
different assumptions she is making to value Cox Communications and the way she defends
her assumptions.
Class Test 2 will be held after Module 2. Questions from Module 2 only will come in this test. In
addition to conceptual knowledge, the quiz will also test your ability to apply the concepts learnt in
various practical situations.
The project report is due for submission within a week after Module 2 is over.

Module 4: Valuation in Special Cases (7 sessions)

10. Valuing in Mergers and Acquisitions: Estimating discount rate after merger, adjustments made
while computing the free cash flows, valuing synergy (1.5 session)
• Reading Materials: Chapter 8 of the book
11. Case Discussion on Cooper Industries Limited (1 session)
• Reading Materials: Read the case on Cooper Industries carefully.
12. Valuing private companies (1 session)
• Reading Materials: Chapter 10 of the book
13. Venture Capital Valuation methods, Examples of VC Valuation (1 session)
• Reading Material: Bring the Venture Capital Problem Set to the class.
14. Valuing Flexibility, Uses of Option Pricing models in asset valuation, uses and misuses of option
pricing theory in company valuation (1.5 sessions)
• Reading Materials: Chapter 10 of the book
15. Discussion of the Project Reports, Recap of the Course (1 session)
 II.8 CAPITAL EXPENDITURE PLANNING AND CONTROL
[3 Credits]

Course Objectives:
a) To provide necessary inputs to students in form of concepts, theories and financial management
tools and techniques related to capital expenditure decisions.
b) To aid the students in developing an integrated approach to capital expenditure decision making
process primarily emphasizing on sound concepts and their managerial implications.
c) To focus heavily on the practical and financial aspects of capital expenditure decisions, which
would equip the students to apply their skills and knowledge effectively in the future while dealing
with capital expenditure decisions.
d) To provide necessary inputs on various facets of working capital management essentially stressing
on the concepts of dynamics of working capital, estimating working capital requirements and
working capital financing policies.

Session No Module No The Module Broad Coverage

1 I An Introduction Cash Flows – Importance
& Utility
(Conceptual Clarification)
2, 3, 4 & 5 II The A Study of CAPEX Cash
(4 Fundamentals Flow Stream &
Sessions) Introducing Project
Evaluation Techniques
(Conceptual Clarification)
Evaluating CAPEX
Proposals (Mini Cases)
(Case Based Approach for
Clarifying Concepts)
6 II The A Re-look at IRR method
Fundamentals and Pay Back Method of
Investment Appraisal
(Conceptual Clarification)
7 III The Denominator Selecting the most
appropriate discounting
factor
(Conceptual Clarification)
8&9 IV The Numerator Components of Project
(2 Cost
Sessions) (Practical Insight)
Financial Forecasting
Techniques
(The Concepts – Tricks of
the Trade)
A Class Exercise on
Developing Meaningful &
Reliable Financial
Forecasts
(A Case Analysis Exercise)
10 - THE MID TERM Mid Term Exam of
EXAMINATION CAPEX (30%
Evaluation)
(An Open Notes
Examination)
Based on Modules I, II, III
& IV
11 V Risk Analysis Risk Analysis Exercise in
(Basic Concepts) CAPEX Decision Making
Process - Practical Insight
(Conceptual Clarification)
12 & 13 V Risk Analysis Risk Analysis in Project
(2 (The Realities) Financing Deals
Sessions) (The Real Life Scenario)
Assessing & Monitoring
Project Risks
(Financiers Viewpoint –
What happens in reality)
14 VI Long-Term Financial Reporting
Contracts (Concepts & Practice)
(Focusing on Long Term
Construction Contracts)
15 & 16 VII Working Capital Dynamics of Working
(2 Management Capital
Sessions) Issues Estimating Working
Capital Requirement
(Conceptual Clarification)
Various Committee
Recommendations
(An Overview)
Evaluating Working
Capital Financing
Proposals
(Practical Insight)
Related Issues in Working
Capital Management
(A Few Mini Cases)
17 VIII Leasing Concepts Various Facets of Leasing
Arrangement
(Conceptual Clarification)
18 IX Project Financing Project Financing &
(Practical Capital Rationing
Aspects) Problem
Project IRR vs. Equity
IRR (A Clarification)
Infrastructure Financing
(Important Features)
(Concepts & Practice)
19 X Taxation How applicable tax
Interfaces regulations monitor and
govern Capital
Expenditure Decisions
(An Overview)
20 XI Miscellaneous M&A Decisions versus
CAPEX Decisions
(Various Interfaces –
Similarities &
Dissimilarities)
Financial Reporting
Aspects / Issues
(Long Term Construction
Contracts - Concepts)
Practical Difficulties in
CAPEX Decisions
(A Case for Conceptual
Clarification)
 II.9 COMMODITIES DERIVATIVES MARKET
[3 Credits]

Objectives:
The aim of the course is to equip young managers with the knowledge of emerging commodities
derivatives trading practices in India. The commodities markets design and rules in India will be
focused. Further, the regulatory framework of these markets and domestic and international historical
developments in commodities market will also be highlighted. A clear distinguishing from
commodities from securities market and need for separate domain knowledge will be explained. Spot
price anomalies and efforts of the commodities exchanges in resolving the issue will also be
discussed. Importance of hedgers, speculators and arbitragers will be presented. Commodity indices
as a investment class and how they fulfill the need of investors will be elaborated.

Topics
• Historical changes and growth of global and domestic Commodities derivatives markets
• FCR Act 1952 and Regulatory structure of Commodities Derivatives Markets in India
• Issues in Agricultural Commodities Markets
• Issues in Non-Agricultural Commodities Markets
• Commodities Derivative Exchanges and design of the markets
• Issues Related to Product Design and contract specifications
• Issues related to Spot price and present practices of commodities exchanges
• Clearing House operations and Risk Management Procedures
• Delivery Related Issues like delivery centers, deliverable varieties, assying
• Issues related to monetering and surveillance by Exchanges and Regulator
• Role of intermediaries in Commodities Markets
• Basis Risk and its importance in pricing
• Agricultural Commodity Futures trading pattern in Exchange – Case study
• Non- Agricultural Commodity Futures trading pattern in Exchange – Case study
• International commodity indicies and as a investment tool for investors
• Commodity Options on Futures and its mechanism
• Internationally traded Commodities based ETFs
• Commodities as a New Asset Class
• Essential Commodities Act and role of state governments
• Warehousing Act Bill and its implications
 II.10 CORPORATE TAXATION
[3 Credits]

Course Objectives
• To acquaint the participants with basic principles underlying the provisions of direct and
indirect tax laws and to develop a broad understanding of the tax laws and accepted tax
practices
• To introduce practical aspects of tax planning as an important managerial decision-making
process
• To expose the participants to business situations involving taxation and to equip them with
techniques for taking tax-optimized decisions
• To update the participants on current topics/ debatable issues involving direct and indirect
taxation.

Program contents
Part A: GST

Basic principles governing Indirect Taxation namely levy/ recovery/ incidences/set off of credits et
all of indirect taxes -Brief overview of the erstwhile Indian indirect taxation system trajectory and
inherent limitations thereof. - GST, Principles, Functionality, Relative advantages /disadvantage of
GST over and above the erstwhile indirect tax system.

Arithmetical enunciation of the entire GST system. Understanding the principles of enhancement in
the marginal productivity of revenue in the hands of the economy without the consumers having to
bear higher incidences of taxes in the long run. Basis of charge, Taxable event, Flow of the tax
credits, Time of Supply, Place of Supply , reverse charge mechanism(RCM), threshold & registration
and impacts therefore -Anti Profiteering Rules in the GST regime

Overview of various returns in GST regimes. The irritants of the present GST systems with particular
reference to a robust IT system creating huge bottleneck in the flow of Information system including
that of submission of plethora of returns as prescribed in the GST laws. Debate……. Is GST able to
achieve the desired objectives? What ought to have been done differently?

Part B: INCOME TAX

Introduction
• Concept
• Residential Status

Tax Avoidance and Tax Evasion, Tax Planning

Exempted Incomes -Sec 10
Deductions under Chapter VIA -Sec 80, Tax Computation
Salary (Introduction only)
Income from House Property
• Profits and Gains of Business or Profession
• Business expenditures, Business losses
• Depreciation allowance
• Disallowances (u/s 40(a),40A)/ 43B
 • Deductions under Chapter VIA -Sec 80 for corporates
• Specific allowances for businesses/specific industries, certain specified expenditures
• Computation/ case studies

Capital Gains
• Capital gains on transfers other than shares
• Capital Gains on share transactions
• Capital Gains Exemptions
• Computation / Case studies

Income from Other sources

• Treatment of other income, interest income etc.
• Taxation of gifts

Set off and carry-forward of losses

Minimum Alternate Tax
Mergers, Demergers and Slump Sale
Computation / Case studies

International Taxation and other topics

• Double Taxation Avoidance Agreements (DTAA)
• Withholding Taxes (WHT) on Foreign Remittances and business implications thereof - Tax
cost of grossing up of WHT.
• International Taxation……Concept of Overseas Branch or Foreign Subsidiaries and tax
implications of these structures.
• Concepts of GAAR/POEM/APAs/Safe Harbor and business implications
• Cross Border Transactions with overseas related Entities;
• Arm’s Length Pricing
• Transfer Pricing Regulations with background
• Transactions with domestic Related Parties….back ground and methodologies
 II.11 DEBT MARKETS AND THEIR DERIVATIVES
[3 Credits]

Objectives:
This course is intended to analyze debt securities and their market characteristics such as instruments,
selling techniques, pricing and valuation, yield curve determination, and term structure modellig.
It analyses corporate debt and convertibles, credit default swaps and their valuation.
It deals with investments in debt funds and debt portfolio management, and interest rate risk
management using interest rate derivatives FRAs, swaps, options and futures.
The course is primarily built around extensive Excel based techniques to analyze bond cash flows
and interest rate analytics.
It will use extensively Bloomberg real time database for the purpose.

Topics
Lecture 1 & 2:
Fixed Income Markets and its role in the economy, Institutional Arrangements in debt markets,
Market Participants: Investors & Intermediaries, Debt Instruments, Government Debt Management
& Interest rate markets, Monetary Policies and Interest rate markets

Lecture 2: Bond Valuation, Price and Yield Conventions, Yield & Return, Horizon Return;
Valuation of Repo & Reverse Repo.

Lecture 3: Valuation of Other Bonds: Floating Rate Securities, Inflation Index Bonds.

Lecture 4: Introduction to Bloomberg, Understanding Market Quotes And Conventions,

Understanding Pricing Structures, Global and Indian Markets

Lecture 5 & 6: Risk Identification in Bonds: Duration, Convexity, and Portfolio Immunization

Lecture 7: Yield Curve Building: Bootstrapping, Nelson-Seigel and Spline Methods, Spot &
Forward Rates, Valuation of STRIPS

Lecture 8: Theoretical Consideration of Term Structure, spot and forward rate dynamics

Lecture 9: Auction, When-Issued Markets, Discreminatory vs Single Price Auction, Primary

Dealers & Auction Bidding Behavior, Bond Market & Interest Rate Implications

Lecture 10: Corporate Bonds Valuation: Yield Spread Analysis, Implications For Rating &
Migration, Investment Grade and Low Rated Bonds,

Lecture 11: Valuation of Callable Bonds and Convertibles, Modeling Interest Rate Tree.

Lecture 12: Analysis of Mortgage-Backed Securities, Collateralized Mortgage Obligations

Lecture 13 & 14: Portfolio Management, Passive Strategies(Bullet, Barbell, Ladder Strategies) &
Active Portfolio Strategies, Immunization & Asset Liability Management applications in Banks

Lecture 15: Interest Rate Derivatives: Forward Rate Agreements & Interest Rate Futures, Pricing
of Futures Contracts, NSE Interest Rate Futures Contracts, Valuation of Interest Rate Swaps.
Lecture 16: Analysis of Debt Funds, Income Funds & Gilt Funds, Duration based strategies .

Lecture 17 & 18: Credit Derivatives, Valuation of Credit Default Swaps, Indian CDS Market

Lecture 19 & 20: Assignment Presentations & Discussions

 II.12 EARNINGS MANAGEMENT: DETECTION AND CONTROL
[3 Credits]

Course Objectives

What is it? Creative reporting is the manipulation of financial numbers, usually within the letter
of the law and reporting standards, but sometimes against their spirit. The course aims to
highlight problem areas in reporting and examine why (incentives) and how (methods) they are
used to manipulate reported numbers. The course will also explore how such creative reporting
affects firm valuation.

Now that we know, what do we do? Being an insider sometimes allows direct knowledge of
creative reporting, being an outsider requires quantitative and graphical tools to predict or detect
patterns of creativity. Once detected, corrective action needs to be taken followed by establishing
preventive measures.
The course will explore these detection tools and monitoring and governance mechanisms
employed by regulators, auditors, investors, banks and other financial institutions to combat
earnings manipulation.

Why do we care? Every stakeholder, whether internal like investors, managers and employees or
even external like lenders, analysts, suppliers and policy makers, is affected by such reporting
creativity. Awareness is key. More so, in today’s whistleblowing world. The course, through the
awareness of creative reporting, its detection, rationalization and compensating measures, aims to
create a generation of aware, ethical and action-oriented stakeholders who understand when and
how they may be affected and how they can take corrective and/or preventive action!

Session Session Topic Learning Objectives

No(s)
1 Understand the role of financial reporting
The Financial
and the disclosure environment
Reporting
Environment
2-3 Creative Financial
Understand what good earnings quality is,
Reporting – What it is and
what earnings and cash flow manipulation
Why does one do it?
means and what incentivizes creativity in
financial reporting

Common reporting Understand how and why revenue is

4
hacks – Revenue manipulated to alter earnings and cash
flows

Understand how categorizing expenses as

5 revenue or capital can be used to
Common reporting
manipulate earnings
hacks – Expenses I:
Now vs Later and cash flows

Understand how cost of acquiring an asset

6 and different ways of allocating its cost
Common reporting
through its life can be manipulated to alter
hacks – Expenses II:
Fixed Asset earnings and cash flows
Investments

Understand how different inventory

7 costing methods, valuation principles and
production decisions can change earnings
Common reporting and cash
hacks – Expenses III:
flow figures
Inventory

Understand how leases are structured and

8
executed to enable earnings and cash
Common reporting
hacks – Expenses IV: flow manipulation
Lease

Understand how manipulation affects

9 valuations and which stakeholder it
How does it help?
benefits or
Asset-based Valuation
hurts
Models
Understand the differences between
10 When is it Fraud? manipulation and fraud
 Understand what information is available
How do we detect it? publicly and privately to detect reporting
11 Sources of Information manipulation and fraud

How do we detect it? Understand how to use the information to

12-13 detect manipulators
Forensic Models and
Analytics

Understand how standards, voluntary and

Compensatory mandatory disclosures, whistleblowing and
14
Mechanisms I: Regulations other regulatory mechanisms help monitor

Understand how the different shareholder

types (promoter, institutional, minority)
15 Compensatory impact decisions to manipulate and how this
Mechanisms II: impact varies in business group or family firm
Shareholders like structures

Understand how internal control systems

Compensatory and external audit are designed and
16 Mechanisms III: Audit implemented as
monitoring mechanisms

Understand what Boards, different

committees and director types are, what
Compensatory Board level regulations exist, why they help
17 Mechanisms IV: Board and whether or not it is useful in
of Directors the practical world

Understand ESOPs, performance-linked

Compensatory and EVA-linked bonuses, and how they
18
Mechanisms V: Executive alter reporting incentives
Compensation
Understand how firms design their corporate
Corporate governance framework and how it helps
19 Governance combat
Framework reporting issues

20 Guest Speaker and Wrap Understand real world relevance of

up learnings
 II.13 FINANCIAL ANALYSIS, PLANNING AND CONTROL
[3 Credits]

Course Objectives
a) To provide necessary inputs to the students in form of “Financial Analysis, Planning & Control”
tools and techniques. However, emphasis is laid on sound concepts and their managerial
implications.
b) To focus heavily on practical and strategy aspects of “Financial Analysis, Planning & Control”
which would equip the students to apply their skills and knowledge effectively in future while
dealing with real life business situations efficiently.
c) To develop an appreciation about the utility and applicability of “Financial Analysis, Planning &
Control” tools and techniques as an essential and integral component of Management Information
System (MIS) for the purpose of the entire financial decision making process.
d) To enrich the learning process through exposure to real life cases / business situations and project
work.

The Course Module The Module Broad Coverage

Flow & No
Session No
1 I An Introduction An Overall Introduction to
(First 30 Minutes) the FAPC Course
Clarifying a Few Few Fundamental Concepts
Vital Concepts in Corporate Finance
(A Concept Clarification
Exercise)
2 II A Recapitulation Financial Accounting
Fundamentals
(The Module in the nature of
a Recapitulation Exercise)
3, 4 & 5 III Financial Cash Flow & Fund Flow
(3 Sessions) Analysis Statements
(Part I) (Creation, Presentation &
Analysis Technique)
6, 7 & 8 IV Financial Analyzing Financials
(3 Sessions) Analysis (Utility & Applications)
(Part II) (The tricks of the trade – Case
Based Approach)
9 & 10 V Financial SECTOR SNAPSHOT (The
(2 Sessions) Analysis Format)
(Part III) (Detail Explanation of the
Overall Design & Structure)
Conducting Analysis with
Appropriate Focus
(The Tricks of the Trade -
Case Based Approach)
11 VI Financial Various Performance
Planning Measurement Yardsticks
(Part I)
 (Looking at non conventional
parameters)
12 VII Creating Introducing Consolidated
Awareness Financial Statements
(An Overview (An Overview – Conceptual
Only) Clarification)
13 & 14 VIII Financial Special Issues in Corporate
(2 Sessions) Planning Restructuring Deals
(Part II) (Conceptual Clarification &
Various Practical Realities)
15 IX Financial Financial Forecasting
Planning Technique
(Part III) (The Tricks of the Trade –
Concepts & Practice)
16, 17 & 18 X Financial The FAPC Assignment
(3 Sessions) Controls (Components A & B)
(Part I) (Explaining the Design /
Structure & Focus)
Various Audit Control
Mechanisms
(Concepts & Practices)
19 XI Financial Creative Accounting
Controls Practices
(Part II) (Conceptual Framework &
Industry Practices)
20 XII Financial Revival of Sick Companies
Planning (Clarifying Conceptual
(Part IV) Framework & Industry
Practices)
II .14 FINANCIAL CONSIDERATIONS & GST FOR SALES FUNCTION
[1.5 credits]

The Course Objective

There are various interfaces between the finance function and Marketing function in an organization
and hence, the need for a reasonable degree of understanding and appreciation of various financial
considerations while managing Marketing related issues can hardly be overemphasized. This elective
course (being in the nature of a cross-functional elective course) has been structured / designed in
such a manner so as to ensure that budding Marketing Specialists and Managers are well equipped
to visualize and address the impact of financial decisions on Marketing function and they would also
be in a position to instrument financially correct Marketing decisions. It may also be noted that the
focus of this course would be more on practical aspects of “FCGM” activity rather than on theories
and academic inputs. In other words, this course has been specially designed to be highly practically
oriented in order to ensure that the students undergoing this course would be capable to handle real
life situations (which they may encounter in their career at a later date) appropriately and effectively.

The Course Flow & Coverage (FCGM)

Session Module The Module Broad Coverage

No

1 I Cash Managing Short Term Cash Crisis (A Case)

Management (Clarifying the Concepts & Practice)

2&3 II GST Goods & Service Tax (GST) – Part I

(2 (Part I) (Clarifying the Basic / Fundamental
Sessions) Understanding)

4&5 III GST Goods & Service Tax (GST) – Part II

(2 (Part II)
Sessions) (Clarifying the Specific Features / Clauses /
Provisions etc that relate to the Marketing
Function)

6, 7 & 8 IV Receivables Management of Receivables (A Financial

Perspective)
(3 Management
Sessions) (Clarifying the Concepts & Practice)
9 & 10 V Management Developing Quality Management Reports
Reports
(2
Sessions) (Case Based Approach Essentially Focusing on
Bottom Line Implications of Various
Marketing Decisions)

10 TOTAL
Sessions
 II.15 FINANCIAL DECISION MAKING UNDER INFORMATION
ASYMMETRIES
[1.5 Credits]

Objectives:
It is widely accepted that most financial decisions are rarely made in scenarios where full information
relevant to the decision is available to all decision makers, an assumption of standard models dealing
with economic decision making in general and financial decision making in particular. The study of
financial decision making in the presence of information asymmetries and incomplete information
attempts to bridge the gap between existing financial decision making models and real-life decision
scenarios. The primary objective of this course is to equip students with an intermediate to advanced
understanding of some applications of decision models in making financial decisions in the presence
of the information asymmetry problem, a field that has rapidly grown over the past three decades.
By the end of the course, students are expected to be equipped with a broader range of analytical
tools for enhancing their understanding of financial decisions taken under the presence of
information asymmetries.

Topics:

• Debt as a Signaling Mechanism: The Role of Maturity and Collateral Choices

• Credit Rationing & Sorting Equilibria in Debt Markets
• Capital Structure Choices and Credible Signaling in Repeated Games
• Financial Market Panics as Self-Fulfilling Equilibria
• Optimal Information Disclosure in the Presence of Agency Costs
• The Agency Problem & Optimal Security Design
 II.16 FINANCIAL MARKETS
[3 Credits]

Course Objective:
The broad objective of this course is to expose the students to the various forms of financial markets,
acquaint them with financial institutions and instruments’ In the process it aims at the following
specific objectives
• To understand the functions performed in functional markets
• To help form a clear view of the various components of financial markets and intermediaries
• To understand how and why these components interact
• To appreciate that quest for efficiency drive financial innovation

Topics:
Session Discussion topics Readings/cases
1 Introduction to Financial markets and Chapter –I : Why study
Institutions Financial Markets
- Why study financial markets Chapter-II: Overview of
- Functions of financial Market Financial systems
- Classification of financial Markets
- Process of resource transfer
- Instruments of financial markets
- Characteristics of Financial Markets
- Entities in financial markets
- Process of issuing financial instruments
- Role of FIIs in the capital market

2 Money market Chapter 9

- Need for money market
- Money market Participants
- Money market instruments and Eurodollar
- Characteristics of money market instruments
- Valuation of money market instruments

3 &4 Bond market Chapter 10

- Purpose of the capital market Treasury inflation protected
- Capital market participants securities (TIPs)- HBR
- Bond market instruments and
Trading(Treasury bonds, Municipal bond and
Corporate bond)
- Treasury inflation protected securities (TIPs)
- GDP Linked bonds
- Investment grade bond
- Junk Bond
- Foreign Bonds & Euro Bonds
- Financial Guarantees for bonds
- Bond Yield and Bond Valuation
5, 6 &7 Foreign Exchange Market (FX Market) Chapter 13
- Nature, Function and participants in the FX Fx Market and Tractions
Market (HBS Case Note)
- FX regimes, FX rate determination Problem solving in class
- Factors affecting exchange rate exercises:
- Foreign Exchange Markets and Transactions
- Fundamental Parity Relationships and
Arbitrage in the FX market
- Trading in currency market

8, 9 &10 Stock Market Chapter 11

- Common stock vs. preferred stocks Guest lecture
 II.17 FINANCIAL MODELING USING EXCEL
[3 Credits]

Introduction

Modeling techniques for accurate financial forecasting are used in many areas of finance, such as derivatives,
valuation, project evaluation, deal structuring, portfolio management and the like. In the course, the
participants will learn the model building skills required to build powerful models in finance with the help of
excel. There are many features of model building that are common irrespective of the final model that one
intends to build. In the course we will also emphasize on the different model building skills that one should
have irrespective of the final use that one is going to make of it.

By the end of the course the participants should be better able to:
Understand how to build models in excel to suit one’s purpose
Building models in different areas of finance including corporate finance and investments
Build sensitivities into their financial models

Content:
Model 1: Building a Project Finance Model for Smokey Valley
Sessions 1 to 7:
Building Project Finance Model for Smokey Valley
• Do’s and Don’ts of Modeling
• Doing Date Calculations
• Managing Currency and Currency Units
• Estimating NPV, IRR, etc.
• Sensitivity analysis using Excel
• Scenario Manager
• Other sensitivity analysis features
• Building an Executive Summary for the Model

Model 2: Building a Financial Statements Model for OLP

Sessions 8 to 11:
Building a Financial Statements Model
• Balancing the Model
• Managing Circularity
• Valuing the Entity

Model 3: Building a Valuation Model for AB Cements

Sessions 12 to 16:
Building a Valuation Model
• Managing Consistency in Dates
• Building the different blocks for completing the financial statements
• Valuing the company using DCF and relative valuation model

Model 4: Building a Valuation Model for a Private Equity Firm

Sessions 17 to 20
Developing the Model Assumptions
• Valuing the Business
• Estimating Equity IRR
• Building sensitivities in the model
 II.18 Fundamental Analysis – 2

[1.5 Credits]

Course Description:

This elective course on Finance deals with the fundamentals that determine the value of a firm
to its equity shareholders and debt investors. This course may help the participants in answering
the following questions
+ What are the fundamentals that determine the value of a firm?
+ What are the fundamentals that determine the P/E multiple of a firm?
+ How can we make use of our understanding of the determinants of P/E ratio in arriving at the
value for a firm on standalone and comparative basis?
+ How can we make use of our understanding of the determinants of P/E ratio in arriving at the
value for a market across time and across markets?
+ What are the fundamentals that determine the PEG ratio of a firm?
+ How can we make use of our understanding of the determinants of PEG ratio in arriving at the
value for a firm on standalone and comparative basis?
+ What are the fundamentals that determine the EV/EBITDA ratio and other EV based multiples
of a firm?
+ How can we make use of our understanding of the determinants of EV/EBITDA ratio and other
EV based multiples in arriving at the value for a firm on standalone and comparative basis?
+What are the fundamentals that determine the P/B multiple of a firm?
+ How can we make use of our understanding of the determinants of P/B ratio in arriving at the
value for a firm on standalone and comparative basis?
+ How can we make use of our understanding of the determinants of P/B ratio in arriving at the
value for a market across time and across markets?
+ What are the fundamentals that determine the Value-to-Book multiple of a firm?
+ How can we make use of our understanding of the determinants of Value-to-Book multiple in
arriving at the value for a firm on standalone and comparative basis?
+What are the fundamentals that determine the P/S multiple of a firm?
+ How can we make use of our understanding of the determinants of P/S ratio in arriving at the
value for a firm on standalone and comparative basis?
+ How can we make use of our understanding of the determinants of P/S ratio in arriving at the
value for a market across time and across markets?
+ What are the fundamentals that determine the Value-to-Sales multiple of a firm?
+ How can we make use of our understanding of the determinants of Value-to-Sales multiple in
arriving at the value for a firm on standalone and comparative basis?
+ How to decide on a marketing decision’s
impact on the value of a firm?
+ How to measure the Brand Value of a firm?
+ How to compute Return Spread?
+ How to compute CFROI?

Course Objectives:

1. To enable the participants in identifying the sources of value creation for a firm
2. To facilitate the participants in concluding on whether a firm is overvalued or undervalued
 using the fundamental analysis
3. To encourage the participants in visualizing, analyzing and optimizing the solution for the value
creation challenges faced by a firm

Session Session Topic Learning Objectives

No(s)
1-2 Introduction to To encourage the participants in
fundamental analysis understanding
- Fundamental analysis Framework
- The perspective differences in fundamental
analysis
- How to compare firms on their fundamentals
3 Fundamentals To enable the participants in understanding
determining PE Ratio - Various types of PE multiples
- The determinants of PE ratio
- How to Estimate the PE ratio for a high growth
firm
- How to compare PE ratios across time
across countries and across firms in a sector and
market
4 Fundamentals To encourage participants in familiarizing
determining PEG with
Multiple & Other - The determinants of PEG ratio
variants of PE multiple - How to Estimate the PEG ratio for a high
growth firm
- How to compute Relative PE & its
determinants
- Price to future earnings
- Price to earnings before R&D expenses
5 EV to EBITDA and other To facilitate the participants in
EV based multiples understanding
Reasons behind the popularity of
EV/EBITDA ratio
How to estimate EV/EBITDA for a firm with
cross holdings
The determinants of EV/EBITDA ratio
How to compare firms using EV/EBITDA
multiple
The determinants of the other EV based
earnings multiples
6-7 Price to Book Multiple To motivate the participants in
understanding
- The determinants of PB ratio
- How to Estimate the PB ratio for a high growth
firm
- How to compare PB ratios across time, across
countries and across firms in a sector & market
- PBV ratio and ROE
- Determinants of ROE
8 Value to Book Ratio To facilitate the participants in
understanding
Reasons behind the popularity of EV/ IC ratio
The determinants of EV/IC ratio
How to compare firms using EV/IC multiple
EV/IC & ROC
Determinants of ROC
The determinants of Tobin’s Q ratio
9-10 Revenue Multiples To encourage the participants in
understanding The fundamentals
determining the P/S and V/S ratios
- Revenue multiple & Margin relationship
- How to compare firms using revenue multiples
- Use of revenue multiples in deciding on
marketing choices
- How to value brand names using revenue
multiples
 II.19 FINANCIAL RISK MANAGEMENT
[3 Credits]

Objectives:
The course analyzes approaches to financial risk measurement and management, develops excel-
basedmodels of measuring risk in asset classes (interest rates, equity prices, currency rates and
commodity prices), drawing from models used by global banks and financial institutions. It equips
future managerswith financial risk management skills such as:
• Risk in Asset Classes(currency, bonds, commodity, equity)
• Measure volatility in market prices,
• VaR Techniques, Simulation: Historical & Monte Carlo
• Measurement of credit risk and models of credit risks
• Liquidity, operational, country risks
• Lessons from Global Cases of Financial Risk & Disasters.
• Risk and Regulations, Basel-III, and RBI Approaches
It attempts to provide the basic foundations to work in a world of finance with risk and arbitrage. It
willequip students in analytical as well measurement tools of financial risk, and is therefore should
berelevant for those looking at a career opportunity in a global institution.

Topics:

1. The Evolving World of Finance & Risk, Risk Environment in Global Banking & Finance,
Episodes of Financial Crisis, Defining Risk in Asset Classes

2. Risk and Return, Return & Risk, Distribution, Volatility Measurement(SD,EWMA, GARCH
processes, Implied Volatility, VIX), Volatility Clustering, Time VaryingVolatility2. Market Risk
Measurement Techniques, Value-at-Risk(Var), Variance-Covariance Approach, expected shortfall

3. Measuring using Simulation Methods, Historical simulation VaR, Stress testing and back-testing,
P&L in historical simulations, Extreme Value Methods, Monte Carlo methods in measuring risk,
Portfolio Var using stochastic simulations.

4. Sector Risk Analytics: Interest Rate Markets, Interest Rate Markets & Their Risk Measurement,
Measurement of Duration, Convexity, M-Square, Active Portfolio Risk Management

5. Sector Risk Analytics: Currency Markets, Trading & Arbitrage, Spot & forward markets
dynamics, Currency Arbitrage and Carry Trade.

6. Sector Risk Analytics: Equity Portfolio Risk, Measuring downside exposure in equity,
Explanations of various Risk terminologies & their computations( Alpha, Beta, Sharpe Ratio,
Sortino Ratio, Trenor Ratio, Tracking Error).

7. Sector Risk Analytics: Commodity Price Risk, Commodity as alternate asset class, Spot &
Future prices, Backwardation & Contango, Market, basics of commodityderivatives & their pricing

8. Measuring and Managing Credit Risks, Credit Derivatives, Credit Risk Basics(PD, LGD), Market
based measurement of credit risk, Contingent claim approach and the KMV Model, Credit VaR,
Credit Derivatives
9. Liquidity Risk, Liquidity trading and funding risks, tightness, depth and resilience in trading
liquidity, marked-to-market and market-to-exit concepts, Liquidity valueat risk measurement

10. Operational Risk, Categorization of Operational Risks(loss severity and loss

frequency), modeling operational risk techniques

11. Country Risk Ratings & Implications, Country Risk Assessment (S&P Methods),Incorporating
Country Risk in equity return(adjusting for country beta).

12.Risk Management Lessons, Case studies

 II.20 FINANCIAL TECHNICAL ANALYSIS AND INTRODUCTION TO
GLOBAL INTERMARKET ANALYSIS
[1.5 Credits]

Objectives:

The main objective of this course would be to facilitate the understanding of graduate students of
Finance of the diverse Financial Technical Frameworks and Tools applicable to the Indian and
Global Financial Markets, with a greater thrust on Global Inter-Market Analysis. The course is
modeled to provide would-be managers with the right balance of Financial Technical Analysis
Theory and it’s applicability to the Indian and Global Financial Markets using real-life charts. In the
course, the participants will learn sophisticated quantitative and analytical skills and charting
techniques to better analyze various financial markets such as equities, bonds, commodities and
currencies. A special emphasis would be placed on Indian Equities Markets and Commodities
Markets through Real-time Charting Techniques. In the wake of increasing Globalization of
Financial Markets worldwide, the course would undoubtedly render the students capable of making
better and more informed decisions in the realm of Investment Analysis, Asset Allocation and
Hedging Mechanism.

By the end of the course the participants should be better able to:

• Understand the philosophy and rationale of the Financial Technical Analysis approach

• Understand the underpinnings of important theories and frameworks in Financial Technical

Analysis

• Identify, interpret and analyze the varied financial technical patterns and indicators presented on
the real-life stock charts.

• Understand the important inter-linkages between global financial markets including equities,
bonds, commodities, currencies and their underlying futures markets

Topics:

A. FINANCIAL TECHNICAL ANALYSIS

1. Introduction to Financial Technical Analysis

• Philosophy & Rationale of Technical Approach to Investing
• Flexibility and Adaptability of Technical Analysis
• Technical Analysis Applied to Different Trading Mediums and Time Dimensions
2. The Dow Theory
• Introduction
• Basic Tenets of Dow Theory
• The Forerunner of All Technical Theories
• Characteristic Phases of Bull and Bear Trends
• Stocks as Economic Indicators
• Critical Appraisal of Dow Theory
3. The Japanese Candlestick Theory
• Introduction to Japanese Candlestick Charting Techniques
• Candlestick Construction & Analysis
• Major Candlestick Reversal and Continuation Patterns
• The Rule of Multiple Technical Techniques

4. The Basic Concepts of Trend

• Definition of Trend
• Trend has Three Directions
• Trend has Three classifications
• Trendlines – Support and Resistance
• Definition of Support and Resistance Levels
• How They Reverse Their Roles
• Reasons for Support / Resistance Phenomena
• Tests for Determining Potential
• Importance of Volume

5. The Major Reversal Patterns

• Introduction
• Price Patterns
• Two Types of Patterns
• Reversal and Continuation
• The Head and Shoulders Reversal Pattern
• The Importance of Volume
• Finding a Price Objective
• The Inverse Head and Shoulders
• Double and Triple Tops and Bottoms
• Saucers and Spikes
• How Insiders Distribute
• Volume Characteristics

6. The Major Continuation Patterns

• Introduction
• Triangles
✓ The Symmetrical Triangle
✓ The Ascending Triangle
✓ The Descending Triangle
• The Broadening Formation Flags and Pennants
✓ The Wedge Formation
✓ The Rectangle Formation
✓ The Measuring Formula

7. Price Gaps
• Their Significance
• Various Kinds of Gaps
• Breakaway Gaps, Continuation or Runaway Gaps
 • Measuring Implications
• Exhaustion Gaps
• Island Reversals

8. The Moving Averages

• The Technical Oscillators
• The Stock Market Indicators
• Volume and Breadth Indicators as crucial determinants of the Overall Health of a
Particular Stock Market
• Measuring Market Breadth
• The Advance
• Decline Line
• AD Divergence
• New Highs Versus New Lows
• New High
• New Low Index
✓ Upside Versus Downside Volume
✓ The Arms Index

B. GLOBAL INTERMARKET ANALYSIS

1. The Study of International Financial Markets

• A New Dimension in Technical Analysis
• Interlinkage of Various Financial Markets like Currencies, Bonds, Commodities, Equities
across the Globe
• Global Inter-Market Analysis with the help of Technical Analysis

2. Understanding the Business Cycle through Global Inter-Market Analysis

• The Impact of the Business Cycle on Various Market Sectors
• The Six Stages of Business Cycle
• Stovall’s Diagram to Describe a Complete Economic Cycle
 II.21 Indian Accounting Standards (IndAS)
[1.5 CREDITS]

Objectives:
Accounting Rules the world over is undergoing (rather undergone) some major changes and the
AccountingStandards (previously in force in the Indian soil) had already been re-drafted in order to
align (rather converge) those with International Accounting Standards / IFRS.

In that connection the Institute of Chartered Accountants of India (ICAI) has already re-drafted the
entire set ofAccounting Standards which had already been launched and made applicable to
companies operating in India under the title "Ind AS".The objective of this course is to introduce the
“Ind AS” (which is now governing and monitoring theentire financial reporting process) to the XLRI
BM Senior Students specifically focusing on their purpose, importance, utility and managerial
implications.Important Note Currently, ICAI has issued many Ind AS out of which a few are highly
specialized by their very nature (e.g. IndAS 20 on Government Grants, Ind AS 31 on Interests in
Joint Ventures etc). This course (being of 1.5 creditonly), would essentially cover 16 Ind AS (8
Sessions * 2 Ind AS per session) which ALL finance managers wouldbe expected to be aware of. In
a session of 90 minutes duration more than 2 Ind AS cannot be covered becauseit may prove to be
too heavy for participating students. In case this course gets expanded to a 3-credit electivecourse
at a later date (if AT ALL), the remaining set of Ind AS may also be covered in this course.

Course Coverage (showing session wise distribution)

SESSION NUMBER 1
INTRODUCTORY SESSION
• Clarifying the “FRAMEWORK” of Ind AS (Focus & Significance)
• Clarifying the Basic Features of “Schedule III” Reporting Format
ON NUMBERS 2 & 3 (First Half)
PRESENTATION OF ITEMS IN FINANCIAL STATEMENTS
• Ind AS 1 – Presentation of Financial Statements
• Ind AS 34 – Interim Financial Reporting
• Ind AS 7 – Statement of Cash Flows
SESSION NUMBERS 3 (Second Half), 4 & 5
A FEW ITEMS RELATED TO INCOME STATEMENT REPORTING
• Ind AS 18 – Revenues
• Ind AS 11 – Construction Contracts
• Ind AS 24 – Related Party Disclosure
• Ind AS 23 – Borrowing Cost
• Ind AS 33 – Earnings Per Share
SESSION NUMBERS 6 & 7 (First Half)
MEASUREMENT BASED ACCOUNTING POLICIES
• Ind AS 8 – Accounting Policies, Changes in Accounting Estimates and Errors
• Ind AS 10 – Events after the Reporting Period
• Ind AS 113 – Fair Value Measurement
SESSION NUMBERS 7 (Second Half), 8 & 9
REPORTING OF ASSET & LIABILITY ITEMS IN FINANCIAL STATEMENTS
• Ind AS 2 – Inventories
• Ind AS 16 – Property, Plant & Equipment
 • Ind AS 37 – Provisions, Contingent Liabilities and Contingent Assets
• Ind AS 38 – Intangible Assets
• Ind AS 36 – Impairment of Assets
SESSION NUMBER 10
LOGICAL CONCLUSION
PUBLISHED ANNUAL REPORTS OF INDIAN COMPANIES
(Interfaces, Applicability & Compliance with Ind AS)
Essentially Focusing on Ind AS covered in Class
 II.22 INTERNATIONAL BUSINESS ECONOMICS

[3 Credits]
Objective:
This course looks into the ECONOMIC aspects international business. The market outcomes of liberalising
trade environment, trade policy framework of the WTO, economics of the currency market and
macroeconomic linkages of the open economy are the primary points of emphasis of the course.

Part I INTERNATIONAL TRADE

Module 1 Trade Theories

The nation is adopting freer trade regime. How do we expect the price to move? What will be the quality /
variety of product available to the consumers? Which businesses are likely to survive or grow?
o Issues of pricing under differing degrees of international competitiveness
o Understanding free trade arguments that govern trade agreements.

Session plan for Module 1

• Ricardo and Comparative advantage – (Session 2 and 3)
• Heckscher Ohlin model of factor abundance – (Session 4)
• Krugman’s model of Intra-Industry Trade – (Session 5)

Module 2 Trade policies (unilateral and multilateral)

WTO governs trade policy choices for Member countries. How a protectionist trade policy improves the
prospects of survival / growth of business? What kind of support can we expect from the government as
exporters? How free we are to choose a price of our product? What are the implications of trade related
policies under different levels of product market concentration?
o Tariff
o Quota
o Voluntary Export Restraints
o Antidumping duties
o Export taxes
o Export subsidies
o Regional integrations

Session plan for Module 2

• Tariffs in competitive markets – (Session 6)
• WTO tariff policy and problem solving based on WTO tariff policy – (Session 7)
• Quota, Tariff and quota in monopolistic markets – (session 8)
• Voluntary Export restraints – (Session 9)
• Dumping and Antidumping Duty under the WTO – (Session 10)
• Subsidies and Countervailing duties under the WTO, regional integration – (Session 11)

Part II CURRENCY AND INTERNATIONAL FINANCE

Module 3 Currency market and exchange rate

How does currency market work? How to minimise risk in international currency transactions?
o Spot and forward markets
o Central Banks actions in the currency market

Session plan for Module 3

 • Currency market and basic Central Bank operation, Product market approach to determination of
exchange rate – (Session 12)
• Asset market approach to determination of exchange rate – (Session 13)
• Currency futures and options and Problem solving on currency market - – (Session 14)

Module 4 Exchange rate policies and macroeconomic management

How does foreign exchange policy affect the business environment? How do macroeconomic policies affect
foreign exchange market transactions? How is the risk in foreign investment determined by the
macroeconomic environment?
o Fixed and flexible rates – Central Banks actions
o Impact of changing exchange rates on exports and imports
o Volatility managements by the government and Exchange rate regimes
o Open economy macroeconomics
o Monetary approach and asset market approach to predict future exchange rate
o 3 International Financial Crises models - Understanding the recent few crises
o The Euro Crisis/ crisis in Venezuela
o Economic risk indicators for FDI and FII

Session plan for Module 4

• Basics of fixed and flexible exchange rate, export import and currency market – (Session 15)
• Monetary approach and asset market approach to predict future exchange rate – (Session 16)
• Open economy macroeconomics - (Session 17)
• 3 International Financial Crises models - Understanding the recent few crises, The Euro Crisis/ crisis
in Venezuela, Economic risk indicators for FDI and FII – (Session 18 and 19)
• Students’ presentation of term papers – (Session 20)

6. Session plan:

Sessions Topics Learning goals

MODULE 1
1 Introduction - International comparisons Quest for excellence
Internationalisation of business – meaning, Functional knowledge
dimensions
2 Ricardo and Comparative advantage Quest for excellence
Problem solving Global mindset
3 Decision making
Functional knowledge
4 Heckscher Ohlin model of factor abundance Quest for excellence
Problem solving Global mindset
Decision making
Functional knowledge
5 Krugman’s model of Intra-Industry Trade Quest for excellence
Global mindset
Functional knowledge
MODULE 2
6 Tariffs in competitive markets Quest for excellence
Global mindset
Functional knowledge
7 WTO tariff structure and problem solving based on Quest for excellence
WTO tariff structure Decision making
 Global mindset
Functional knowledge
8 Quota, Tariff and quota in monopolistic markets, Quest for excellence
Voluntary Export restraints Global mindset
Functional knowledge
9 Dumping and Antidumping Duty under the WTO Quest for excellence
Global mindset
Functional knowledge
10 Subsidies and Countervailing duties under the WTO, Quest for excellence
regional integration Decision making
Problem solving Global mindset
Functional knowledge
11 Strategic Trade Policy under oligopolistic markets Quest for excellence
Global mindset
Functional knowledge
MODULE 3
12 Currency market and basic Central Bank operation, Quest for excellence
Product market approach to determination of exchange Functional knowledge
rate
13 Asset market approach to determination of exchange Quest for excellence
rate Functional knowledge
14 Currency futures and options and Problem solving on Quest for excellence
currency market Decision making
Global mindset
Functional knowledge
MODULE 4
15 Basics of fixed and flexible exchange rate, export Quest for excellence
import and currency market Global mindset
Functional knowledge
16 Monetary approach and asset market approach to Quest for excellence
predict future exchange rate Functional knowledge
17 Open economy macroeconomics Quest for excellence
Global mindset
Functional knowledge
18 3 International Financial Crises models - Quest for excellence
Understanding the recent few crises, The Euro Crisis, Decision making
19 Economic risk indicators for FDI and FII Global mindset
Functional knowledge
20 Students’ presentation of term papers Quest for excellence
Decision making
Global mindset
Functional knowledge
 II.23 INTERNATIONAL FINANCIAL MANAGEMENT
[3 Credits]
Objectives:
The broad objective of this course is to expose the students to the various issues related Investment,
Financing and Risk Management functions of Corporate Financial Management in an international
context. In the process it aims at the following specific objectives
1. To develop an understanding and appreciation of the critical financial issues facing managers of
international firms and international investors in today’s increasingly globalized world.
2. To develop a practical framework for the analysis of exchange rates and foreign exchange
exposures including an understanding of forces affecting exchange rates, possible models and
approaches for forecasting exchange rates, and techniques for managing various types of foreign
exchange exposures.
3. To develop students’ understanding of current issues and use of relevant data in the area of
international finance through regular readings of articles from financial press and important web-
sites pertaining to international finance and international business.

Course Content:
I. Introduction to International Financial management: Domestic vs. international finance,
International financial market integration, currency crisis, and global recession and risk spill over.
Case Discussion: Global Financial Crisis and Overview ,Chapters - 1 of the Text Book

II. Balance of Payments - Structure - Contents of Current, Capital, and Reserve Accounts – Linkages
and Impact on Exchange Rates, Capital Markets, & Economy - Understanding BOP structure of a
country for Investment and Raising Finance. Problem Assignment,Chapters - 5 of the Text Book

III. Foreign Exchange Markets and Exchange Rate Mathematics: Nature, Functions, Transactions,
Participants, Forex Markets in India, Forex dealing, Foreign exchange regimes, Foreign exchange
rate determination, factors affecting foreign exchange and Foreign Exchange Rate Mathematics.
Problem solving in class exercises: Fx Market and Tractions (HBS Case Note) ,Trading in Forex: A
Dummy Trading Practice Account,Chapters - 2 of the Text Book

IV. Fundamental Parity Relationships and Exchange Rate Forecasting– Purchasing Power Parity,
Covered and Uncovered Interest Rate Parity – International Fisher's Effect - Forward Rate Parity –
Influence of these parity relationships on Exchange Rates and Methods of Forecasting foreign
exchange rates and foreign exchange volatility.,Chapters - 4 of the Text Book,Forecasting exercises:
Application of Univariate and Multivariate models

V. Foreign Exchange Spot and Derivative Market: Spot and Forward Contracts- Cash and Spot Forex
Trading, Forward Contracts- Long and Short Forward contract, Foreign Exchange Futures
Contract- Contract specification trading at National Stock Exchange of India, Option Contracts
American and European Currency Options, call and Put option, Option and risk management
strategies. Introduction to currency swap.Problem solving in class exercises
Case Discussion: Hedging strategies at AIFS (HBS Case) Chapters - 7 and 8 of the Text Book

VI. Foreign Exchange Exposure: Risk, Measurement and Management: Global Firms Foreign
exchange exposure - Transaction, economic and translation exposures, potential currency exposure
impact on global firms and investor performance, Foreign exchange risk management strategies
through Forward contracts, future contracts, money market hedges, and options contracts. Case
Discussion: (i) Foreign Exchange Hedging Strategy and General Motors: Transactional and
Translational Exposures (ii) Foreign Exchange Hedging Strategy and General Motors: Competitive
Exposures (if time permits)Problem solving in class exercises: Using Bloomberg Market Data to
price FX Instruments (as on trading floor Chapters – 10 and 11 of the Text Book

VII. International Capital Markets - Sources of International Finance - Debt and Equity Markets –
International Equity Diversification, Short-term Vs Long-term Finance – Export Import Finance ,
ADRs; benefits and costs of ADR holdings for investors; benefits and costs of ADR issuance for
corporations, External Commercial Borrowing and International refinancing, issues and challenges
before multinational subsidiaries.Case Discussion: (i) Refinancing SGM and (ii) Innocents Abroad
(HBS Cases) Chapters – 12 and 15 of the Text Book

VIII. International Capital Structure – Parent Vs Subsidiary Norms, Global Capital Structure –
Factors affecting the choice of markets and structure. International Cost of Capital – Calculation –
Cost of Foreign Debt, Cost of Foreign Equity, Use of International CAPM. Case Discussion:
Globalizing Cost of Capital at AES Problem solving in class exercises,Chapters - 14 , 16 & 17 of
the Text Book

IX. International Capital Budgeting – Key Issues – Unique Cashflows – Adjusted Present Value
Approach. Foreign Direct Investment – Motives – Determinants – International Portfolio
Diversification. Chapters -15 of the Text Book

X. International Working Capital Management – International Cash Management – Decentralised

Vs Centralised Cash Management – Bilateral Vs Multilateral Netting – Central Cash Pool
Case Discussion: Belco Global foods Chapters – 18 and 19 of the Text Book
 II.24 ISSUES IN EMPIRICAL FINANCE
[3 Credits]
Objectives:
This course will cover some applied issues in Finance. The issues will be discussed in a way that
will facilitate students to appreciate empirical issues and help identify research questions in the areas
discussed. The topics discussed will also include survey of few empirical studies, evaluation of
econometric techniques, and research applications in the Indian and international context. The course
also gives students to prepare their own research questions, and make presentations during the term.

Topics:

The topics would be broadly in the areas of empirical finance, would cover, but not limited to, the
following areas:

• Financial Market Microstructure Issues (of Bond & Stock Market), Liquidity in Short term and
Long term market segments.

• Asset Pricing Theories & Applications I: Mean-Variant Portfolio Frontier, Separation Theorem,

• Asset Pricing Theories & Applications II: Capital Assets Pricing Model, Arbitrage Pricing
Theory, Conditional CAPM

• Term Structure Modeling and Yield Curve Building, Idiosyncratic factors affecting yield and
prices in bond markets, YC and the Economy.

• Volatility Modeling and Forecasting, ARCH & GARCH Processes, Volatility Estimation in
Recent Financial Market Turbulence.

• Risk Measurement in Financial Institutions, Measuring Market and Credit Risks, Credit Risk
Analysis and Measuring Default Adjusted Bond Return.

• Empirical issues in International Finance, International Arbitrage and Parity Conditions, Yen
Carry Trade and Interest Rate Parity,

• International Investment Issues, International Capital Asset Pricing Model(I-CAPM Extension).

• Introduction to Financial Stochastic, Interest Rate Modeling, generating Interest Rate Processes,
Vasicek and Cox-Ingersoll and Ross calibration.
 II.25 MANAGEMENT OF BANKING
[3 Credits]

Objectives and scope :

The course aims at providing insightful understanding of Conceptual, Strategic and Operational
issues in the Management of Commercial Banks.
Starting from the policy making level – the Monetary Policy – the course will trace the macro and
micro level issues and risks that modern day Bank management has to contend with. These are some
of the more critical issues and concepts:
• The Monetary Policy of the central bank and its impact on the country’s banking industry
and the economy
• How to read and interpret bank balance sheets – and off balance sheet transactions
• Credit and investment decisions
• Managing credit risk
• Managing Bank Capital
• Managing other banking risks – market risk, interest rate risk and liquidity risk

The differences in the regulatory regimes among various institutions comprising the bank market
would also be brought out during the course
At the end of this course, students would have gained familiarity with all important managerial
aspects of banking operations and their risk entailments. They would be able to evaluate banks’
macro role in the economy as well as individual bank performance.
The emphasis of the entire course will be to arm participants with a managerial perspective of this
extremely vital and dynamic industry.

SESSIO TOPIC CLASS READING

N NO ACTIVITY FROM TEXT
1, 2 Changing role of Lecture/ Chapters 1 and 2
banking – a macro discussion
view /numerical
A study of and exercises
discussion on RBI’s
latest monetary
policies
Case: Group assignment
3,4 Analysis of Banks’ Analysis of Chapter 3
financial statements actual financial
statements of
banks
Mini project based on analysis Group assignment
of banks’ financial statements
5 Bank sources of Exploring how Chapter 4
funds funds are
sourced by the
bank and at
what
cost/numerical
exercises
6.7,8,9, 1. Issues in Credit Chapters 5, 6
10 Analysis, Appraisal 1. Case: and 15
and delivery of 2. Lecture/
a. fund based, discussion on
b. non fund based basics of credit
c. asset based credit appraisal and
2. Pricing of loans delivery with
based on risk profile special
and customer reference to
profitability analysis norms in India
3. An overview of 3. Numerical
legal aspects of exercises
lending with special
reference to India
Mini project –credit appraisal of Group presentations
a listed company, risk profile of
the company
11 Credit Risk
Case: Chapters 7, 8
Management – The Lecture/ case
role of Credit
discussion/
monitoring, and
simple
workout processes numerical
exercises
12, 13 Advanced topics in Chapter 9
Credit Risk 1. Case:
Management – 2. Working out
Credit risk a

models, role of Loan sales and

Credit derivatives credit migration model for a single
corporate loan
3. Simple Numerical exercises

14 Market risk Lecture / Chapter 10

management discussion/
simple
problems
15, 16 Bank Capital – Risk, Lecture/case Chapter 11
Regulation and discussion/
Adequacy simple
problems. The
class will look
at the basic
features of
bank capital
and explore the
successive
Basel norms for
 capital
adequacy

17, 18 Other Banking risks Lecture/ case Chapter 12

discussion.
These crucial
issues will be
addressed
through
examples and
problems
19,20 FINAL PROJECT
PRESENTATIONS
II.26 MERGERS, ACQUISITIONAND CORPORATE RESTRUCTURING
[3 Credits]

Course Objectives: Merger, acquisition and corporate restructuring activities are increasingly
becoming common in the corporate world. Because of the higher frequency of such activities, it is
critical for the business management students to have a basic understanding of why and how such
activities take place. This course focuses on the activities involved in M&A, business alliances, and
corporate restructuring. The set of cases planned for discussion will enrich the students with the real
time commercial issues involved in such activities. The activities involved in the M&A and corporate
restructuring activities will be discussed from the various stake holders perspective. The course is
designed with five modules; (1) Introduction, (2) The Process, (3) The Environment, (4) Post-
Transaction Issues, and (5) Other forms of corporate restructuring.

Session Topic Text Book Reading Case Discussion

1 M&A Process and Startegic Chapter: 1 David M. Dodson
Motives Chapter: 4
2 Target Appraisal Chapter: 5 Dr. Reddy's
Laboratories (A)
3 Valuation, Pricing and Chapter: 7 Yeats Valves and
Estimating Swap Ratio Chapter: 8 Controls Inc.
Chapter: 9
4 Estimating Synergy value Chapter: 10 Vodofone AirTouch
Chapter: 11 Bid for Mannesman
5 Financial Reporting and Taxation Chapter: 12 Accounting for
Issues in M&A Acquisition at JDS
Uniphase
Corporation
6 Strategic vs. Financial The Bid for Bell Canada Enterprise (BCE)
Acquisition
7 Hostile Takeover Defensive Chapter: 3 Fashion Faux Pas
Strategies Gucci & LVMH
8&9 Stratgeic Issues in Growing Nucor at a Cross Roads
Business
10 & 11 Managing Consistent Inorganic Ispat International N.V.: Spinning Steel into
Growth Gold
12 Cross Border M&A Chapter: 17 Tata Motor's
Acquisition of
Daewoo Commercial
Vehicle Company
13 Managing Post M&A Issues Chapter: 6 Tata Motor's
Integration of
Daewoo Commercial
Vehicle Company
14 Factors leading to Value Air India vs. Indian Airlines
Destroying M&As
15 Joint Venture Chapter: 14 Fiat's Strategic
Alliance with Tata
16 Buy-Outs Chapter: 14 Seagate Technology
Buyout
17 Leveraged Buyouts Chapter: 13 Dupont Corporation:
Sale of Performance
Coatings
18 Spin-Off and Equity Carve Out Chapter: 16 Canadian Pacific
Ltd: Unlocking
Shareholder Value in
a Conglomerate
19 Divestitures Chapter: 16 Newfield Energy
20 Privatising a Public Firm Chapter: 16 Southeastern Asset
Management
Challeneges
 II.27 OPTIONS AND FUTURES
[3 Credits]

Objectives:

At the end of this course you will:

1. Be familiar with the design of financial derivatives and the types of players in the markets.
2. Be comfortable with general frameworks for valuation of derivatives.
3. Be comfortable with trading strategies using derivatives.
4. Understand how to identify risk and hedge it using derivatives
5. Understand how structured products are created, managed and used

Topics:
1 Introduction, FX Forwards and Markets, Chapter 1

2 FX Forwards and Variants

3 Forward Contracts: Pricing, Usage, Valuation, Chapter 5

4 FRAs- Usage, Pricing, Valuation, Chapter 4

5 Futures: Markets, Basis Risk, Cross Hedging, Chapter 2

6 Futures: Optimal Hedge Ratio; Liquidity and Other Risks, Chapter3

7 Index Futures, Chapter 3

8 Interest Rate Futures: Quotation, Pricing, Usage, Chapter 6

9 Swaps: Quotation, Pricing, and Usage, Chapter 7

10 Option Basics, Chapter 8

11 Option Strategies, Chapter 10

12 Option Pricing Bounds and Put-Call Parity, Chapter 9

13 Binomial Option Pricing Models, C-R-R Model, Chapter 11

14 Delta Hedging, Chapter 17

15 Modeling Stochastic Processes, Chapter13

16 Ito Processes, Ito’s Lemma, B-S-M Differential Equation, Chapter13

17 Black Scholes, Option Greeks and Implied Volatilities, Chapter 17, 18

18 Exotic Options, Chapter 24

19 Credit Derivatives, Chapter 23

20 Slack
Text: John C. Hull and Sankarshan Basu: Options, Futures, and Other Derivatives, 7/e
 II.28 RISK MANAGEMENT AND INSURANCE

[3 Credits]

Objectives:
The Indian Insurance sector has traversed a full circle. Till 1956, when life insurance was
nationalised, it was totally in the private sector. In 1971, commercial insurance was also nationalised.
After around four decades of this nationalised monopoly, private sector participation has again been
allowed. The ensuing competition is likely to offer challenging careers for MBAs. This course seeks
to prepare the students for the same.
There are two kinds of career opportunities: one in the insurance companies per se and the other in
terms of risk management in corporate sector using insurance as one of the tools. There are also other
emerging career opportunities in insurance marketing and distribution, insurance advisory services
and Third Party Administration (TPA) of insurance contracts.This course will focus primarily on
those concepts, techniques and issues in the context of a person aspiring for a career in insurance and
risk management.

Topics:

• Risk: Alternative Definitions, Types of Risk, Risk Management Process and Methods
• Objectives of Risk Management
• Risk Pooling and Insurance including Review of Probability Concepts
• Institutions for Insurance and Reinsurance - Economic Rationale and requirements
• Insurance Laws and Regulation
• Insurance Pricing
• Asymmetric Information / Moral Hazard / Adverse Selection
• Deductibles/ Co-insurance
• Life Insurance
• Auto Insurance, Home Insurance, Worker Compensation / ESIC, Health Insurance Commercial
Insurance: Transport, Marine, Catastrophe, Liability etc
• Pension Plans
• Corporate Risk Management and Insurance
• Actuarial Mathematics
 II.29 SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
[3 Credits]

Objectives:
The focus of Security Analysis is on how others analyse your company’s securities on their own.
Whereas, that of Portfolio Management is on how investors analyse your company’s securities in
comparison with others’ on the security market. The course is designed with a view:
• To acquaint the students with the working of security market and principles of security analysis;
and
• To develop the skills required for portfolio management so as to be able to judge the competitive
position of firms in capital market and review the related business decisions.

Topics:
1. The Role of Security Markets in Economy

2. The Organisation and Mechanics of Indian Security Markets

Various Securities and their Characteristics
Objective of the Security Analysis
Functions of an Organised Security Market
Mechanics of Security Trading

3. Various Types of Security Markets and their Functions

Stock Exchanges
OTCEI
Depository

4. Role of SEBI with regard to Secondary Markets

5. The Role and Functions of Various Players and Agencies in the Secondary Market

6. Risk and Return

Utility Theory
Portfolio Theory
CAPM
APT
Multi-factor Models

7. Options and Futures

8. Security Analysis
Fundamental Analysis
o Internal Value and Market Value of Various Securities; Internal Value and Market
Value of Firm
o Pricing of Security (IPOs and Seasoned Equity Open)
o Financial Statement Analysis
o Projecting Earnings under Stable as well as Dynamic Conditions, including Risk and
Inflation Factors
o The Risk Factors, including Internal Risk
Technical Analysis of Security Pricing
Market Efficiency and Behavioral Finance

9. Portfolio Management
Portfolio Theory
Portfolio Criteria
Efficient Set
Portfolio Selection and Diversification
The Shape and the Risk Function (including CAPM Model Technical Analysis,
Random Walk and Martingale Model)
Portfolio Management
Portfolio Objective
Size of Portfolio
Selection Basis and Readjustment
Timings of Disinvestment
 II.30 SOCIAL FINANCE
[3 Credits]

Introduction:
Social finance deals with the mechanisms of savings, credits, insurance, pension and other forms of
financial services for the asset poor households; credits and other financial products for the micro
entrepreneurs; and broadly encompass the financial ecosystem for the income-generating activities
of the poor and coping with their livelihood risk. Promoting micro business at the bottom of the
pyramid require the provision of finance. Widening access to finance at the BOP segments requires
the design of innovative contracts and instruments, unbundling of the risk of lenders as well as
borrowers, including significant credit enhancements and guarantees. Innovations in financial
contract design and risk unbundling can have tremendous potential for financial inclusion, ensuring
equity and, at the same time, enhancing confidence among formal financial institutions engaged in
lending to the asset poor. Social Finance therefore is concerned with the design of financing and
institutional arrangements which would cater to the financial needs of the vast majority at the BOP,
that include asset poor, micro-entrepreneurs, farmers, including social ventures with impacts. This
course intends to integrate the broader areas of finance that have implications for social sector.

Scope:
The course will address broadly the following issues:
• How do low income households organize their income, consumptions and savings, and make
consumption smoothing & investment decisions?
• How traditional financial systems meet such demands (basically supply side perspectives, to
serve only as a prelude)?
• What are the instruments that support financial inclusion? (micro credits, micro insurance,
micro savings, micro mortgages, securitization, health insurance, weather insurance, etc)
• What are the financial market innovations facilitating risk unbundling of the poor, and made
financing viable for the banks and other financial institutions?
• How the innovations in transaction banking space do are enables poor to have broader
financial market access (e.g. mobile banking, G2P, agent banking models, conditional cash
transfers)?
• How do companies in social sector create sustainable value creation while working profitably
at the bottom of the pyramid?
• What is the role of credit information in reducing information asymmetry, facilitating credit
market access?
• What are the governance issues, disclosures, and fiduciary responsibilities of companies that
are in the social finance space?

Topics:

Module I: Access to Finance: Introductory overview of supply side issues involving access to
finance(information asymmetry in credit decisions, the process of social intermediation and
community-based models of financial intermediation) and demand side issues(understanding the
income vulnerability of low income households, behavioral issues in access to finance). Recent
financial inclusion initiative under PM’s Jan Dhan Yojona

Module II: Financial Market Architecture and Access to Poor: Evolution of institutional
financial architecture for financing at the bottom of the pyramid, regulatory evolution, performance
and programs. We discuss the bank-led model for financial inclusion, branchless banking models
such as business correspondents, microfinance institutions (MFI) models, payment banks and small
banks, and the commercialization of microfinance.

Module III: Financial Innovations as Market Access: Pro-poor financial innovations that have
gone beyond microcredit, discuss financial innovations to support savings, credit, insurance and
pension of asset poor households, drawing from global as well as Indian innovations(Self Help
Group based lending, peer-to-peer lending, group credit guarantee approach, etc)

Module IV: Micro Enterprise Financing Framework: Finance constraints faced by

microenterprises, the institutional legal constraints restricting access to finance, financial market
innovations supporting micro finance, role of credit information and credit bureau, etc

Module V: Micro insurance & Insurance-linked Products: Transition from a credit-based to

credit-insurance based financing arrangement, thereby including micro-insurance products(life,
health, disaster, cattle, etc). Innovations in micro insurance (RSBY::Rashtriya Swasthya Bima
Yojna, Aam Admi Bima Yojona, NPS Lite(pension), RGSS scheme of equity investing, weather
based agricultural insurance, etc)

Module VI: Technology Innovations for Financial Inclusion: Innovations in transaction banking
enabling poor to have financial market access; while at the same time reducing transaction costs,
mobile banking, payment system innovations for remittances(mobile banking, white-level ATMs,
M-PESA, RuPay, OxiCash, payments banks, etc).

Module VII: Risk Management and Livelihood Promotion: Weather insurance in Agriculture,
Livelihood Risk Management using Crop Insurance; Index Based Insurance are discussed, with
valuation of insurance products workings. We also discuss briefly the Indian commodity derivatives
markets and how have they benefitted farmers.

Module VII: Impact Investing: Value Creation at the Bottom of the Pyramid
Here we seek to explore the strategies adopted by investors in social enterprises created value, by
promoting innovations, the difference impact investing makes as contrast to stylized venture capital
and private equity, balancing the needs of investors as well as social entrepreneurs.
 II.31 STRUCTURED FINANCE

[3 Credits]

Objectives:
Structured Finance is the design of debt, equity and hybrid financing techniques in order to resolve
particular issuer or investor problems that cannot be solved by conventional methods. To put it
simply, whatever is not available off-the-shelf we can create a tailor made financial solution which
will be called a structured product. Structured Products originates from the mid-seventies in US when
the process of securitization started. From the nineties there had been a deluge of different types of
structured securities in the market in the form of credit derivatives and different credit linked notes.
In the early years of this century we have seen the advent of CDOs and other advanced structured
products. In the recent past, these structured products have earned a lot of bad name due its linkage
with the crisis-laden investment banks in the Wall Street. However, we understand now that it was
not the product itself that was to be blamed but the disclosure of the underlying risks and other human
elements which were primarily responsible.

This course focuses on identifying situations that call for nonstandard corporate finance solutions
and the design and pricing of the situation-specific financing instruments.During the course
securitization concept will be discussed in-depth and students will understand the various situations
where this instrument or process will be preferred. Credit derivatives and its offshoots will be
analyzed at length. In the later stages the advanced products like CDOs and CLNs will be taken up.
The course also aims to expose the students the underlying risk-return trade-off and the economics
of the products and the solutions. The causes of recent global financial crises will be analysed
threadbare and policy level issues emerging from that will be taken up for discussion. The structuring
and pricing of the products—the concepts and methods—will also be covered.

Session- Planning:
Session 1&2
• Introduction
• Definition and evolution of Structured Finance
• Major Types of Structured Finance Products
• Structured Finance in India and globally.
• Introduction to Securitization
• What is a Securitized Transaction?
• Illustration of a Securitization
• Why Entities Securitize Assets
• Benefits of a Securitization to Investors
• What Rating Agencies Look at in Rating
• Asset Backed Securities
• Description of a Collateral
• Prepayments Measures
• Defaults & Delinquencies
Reading: Ch 1, 4 & 5 (Fabozzi)
A Primer on Structured Finance-Andreas A. Jobst (IMF Working Paper) Securitization-- Gary
Gorton & Andrew Metrick (NBER Working Paper 18611),Indian Securitisation Market—Vinod
Kothari,The dark side of the moon: structured products from the customer's perspective --Thorsten
Hens Marc Oliver Rieger (February, 2009, ISB, University of Zurich),The Structured Finance
Market: An Investor's Perspective—Fabozzi (Financial Analysts Journal, Vol. 61, No. 3 May - Jun.,
2005) Case: Enron Oddesy and SPE-HBS Case Study IFMR Capital
Video: Enron the Smartest Guys in the Boardroom

Session 3
Financial Crisis in post 2007 era
▪ What caused Financial Crisis in 2007-09
▪ Role of Structured Products in Financial Crisis
▪ Hidden Risks in Structured Finance Market
Reading:
Structured Finance and the Financial Turmoil of 2007-2008: An Introductory Overview--Sarai
Criado and Adrian van Rixtel (Bank of Spain, Occasional Paper)The Economics of Structured
Finance---Joshua D. Coval, Jakub Jurek &Erik Stafford (HBS Working Paper) Global Financial
Crises and the Future of Securitization- Mathis, Tozzolino &Ramaswamy (HBS Note)Subprime
Meltdown : American Housing and Global Financial Turmoil – Julio Rotemberg (HBS Note)NY
Fed Report on Subprime SecuritizationSecuritization and Fixed Rate Mortgage-NYFED
Cases: Bear Sterns and the seeds of the demise-HBS Case Study,The Rise and Fall of AIG – Richard
Ivy School Case StudyUnderstanding Credit Crises- HBS Case Study
Videos: City Uncovered (1-3)Inside Job (film) Big Short (film)

Session 4 & 5
Credit Derivatives
• Documentation & Credit Derivative Terms
• Credit Default Swaps
• Credit Default Swap Index
• Basket Default Swaps
• Asset Swaps
• Total Return Swaps
• Economics of a Total Return Swap
Reading: Ch 3 (Fabozzi)
A Beginner's Guide to Credit Derivatives--- Noel Vaillant (Nomura International)Introduction to
Credit Derivatives—Vinod Kothari (Sl. Nos.- 11,12) Credit derivatives and structured credit: the
nascent markets of Asia and the Pacific--Eli M Remolona & Ilhyock Shim (BIS Quarterly Review,
June, 2008),An Overview of Credit Derivatives—HBS Material Note on Credit Derivatives—HBS
Material,Credit Default Swap Index Options--Evaluating the viability of a new product for the
CBOE---- Mike Jakola ( Kellogg School of Management, Northwestern University, June,
2006),Emergence of CDSI—Stanford Business School Material
Case: First American Bank Credit Default Swaps –HBS Case Study Black Stone and the Sale of
Citigroup’s Loan Portfolio- HBS Case Study,Metro de Porto IRS—HBS Case Study

Session 6
Cash Flow Collaterized Debt Obligations
• Family of CDOs
• Basic Structure of a Cash Flow CDO
• CDOs and Sponsor Motivation
• Compliance Tests
Reading: Ch 6 (Fabozzi)
ABC of CDO—CRISIL Document,The Barclays Capital Guide to Cash Flow Collateralized Debt
Obligations,CDOs—HBS Material,CLO: A Primer--- Andreas Jobst (LSE Working Paper, 2007)
Session 7
Synthetic Collaterized Debt Obligation Structures
• Motivations for Synthetic CDOs
• Mechanics
• Funding Mechanics
• Investor Risks in Synthetic Transactions
• Variations in Synthetic CDOs
• The Single-tranche Synthetic CDO
• Summary of the Advantages of Synthetic Structures
• Factors to Consider in CDO Analysis
Reading: Ch 7 (Fabozzi)
Understanding the Risk of Synthetic CDOs--Michael S. Gibson (Federal Reserve, USA, 2004)
The Normal Inverse Gaussian Distribution for Synthetic CDO Pricing-Anna Kalemanova, Bernd
Schmidy & Ralf Wernerz ( Journal of Derivatives, Spring, 2007),Issues in the Pricing of Synthetic
CDOs--Christopher C. Finger (Riskmetrics Working Paper 2004),Synthetic CDO: An
Introduction—Laurie Goodman,Moody's Approach To Rating Synthetic CDOs,Valuation of a CDO
and an nth to Default CDS Without Monte Carlo,Simulation--John Hull and Alan White (Journal of
Derivatives, 2004)

Session 7
Securitized and Synthetic Money Market Funding Structures
• Commercial Paper
• Asset-Backed Commercial Paper
• Synthetic-Funding Structures
Reading: Ch 5, 6, 34 (Fabozzi)
Synthetic securitization:use of derivative technology for credit transfer---Ian Bell and Petrina
Dawson (Standard and Poor, Europe) Conventional versus Synthetic Securitisation– Trends in the
German ABS Market --Dr.Martin Böhringer,Ulrich Lotz, Christian Solbach,Jochen Wentzler
(Deloitte & Touche Germany, 2001) Key issues in structuring a synthetic securitisation transaction—
Elizabeth Uwaifo and Mark I Greenberg (Sidley Austin Brown & Wood)

Session 8
Credit-Linked Notes
• Description of CLNs
• Illustration of CLN
• Investor Motivation
• Settlement
• Forms of Credit Linking
• The First -to- Default Credit Linked Note
Reading: Ch 9 (Fabozzi)
Credit-Linked Notes: A Product Primer---Frank J . Fabozzi , Henry A . Davis , and Moorad
Choudhry (The Journal of Structured Finance 2007,Vol. 12, No.4) Effect of Asset Value Correlation
on Credit-linked Note Values ----C. H. Hui (International Journal of Theoretical and Applied Finance
Vol. 5, No. 5, 2002)

Session 8
Structured Notes
 • Structured Notes Defined
• Motivation for Investors & Issuers
• Issuance Form and Issuer
• Creating Structured Notes
• Examples of Structured Notes
Reading: Ch 10 (Fabozzi)
Anatomy of Structured Finance Market- LE Crabbe, JD Argilagos - Journal of Applied Corporate
Finance, (1994),Structured note markets: products, participants and links to wholesale derivatives
markets ---David Rule and Adrian Garratt, Sterling Markets,Division, and Ole Rummel, Foreign
Exchange Division (Bank of England)
Case : Structured Notes – Dearden Case Study
Ticonderoga Inverse Floating Rate Notes- HBS Case Study

Session 9-11
􀀀 Structuring Concepts in Securitization
▪ Creating Asset Side of the Cash Flow
▪ Matching the Liability with the Asset Side
▪ Excel Modeling
Reading: Ch 1-8 (Altman)

Session 12-19
􀀀 Case Studies in Structured Finance
▪ PPL’s Growth Strategy
▪ Formula One
▪ Tata Steel CARS
▪ Inverse Floating Rate Bonds
▪ Athens Ring Road
▪ The Bourland MBS
▪ International Investor
▪ Islamic Finance
▪ Tianjinn Plastics
▪ Angels and Crowds
▪ Sensigiz- Funding a Start-up
▪ Emirates Airlines-Sukuk Issue
▪ Islamic Finance and the Equate Project

Session 20
Guest Faculty Sessions
▪ Rating Agency’s Perspective (CRISIL 1 session)
 II. 32 SUSTAINBLE FINANCE AND CLIMATE RISK
[3 Credits]

Course Description:

This course introduces the concepts and principles of sustainable finance and climate risk, and
helps learners develop the skills and knowledge to apply them in their professional or academic
context. Sustainable finance is the practice of incorporating environmental, social and governance
(ESG) factors into financial decision-making, with the aim of enhancing long-term value creation,
supporting social and environmental goals, and reducing negative externalities. Climate risk is the
potential impact of climate change on the financial system, through physical and transition risks
that affect the profitability and solvency of financial institutions and entities.

This course broadly touches upon at least FIVE Sustainable Development Goals (SDGs):
1. Goal 13 (Climate Action),
2. Goal 7 (Affordable and Clean Energy),
3. Goal 8 (Decent and Inclusive Work and Sustained Economic Growth),
4. Goal 9 (Build resilient infrastructure, promote inclusive and sustainable industrialization,
and foster innovation), and
5. Goal 12 (Responsible Consumption and Production).

In the context of 'Business and Climate Change,' we will explore the following key questions:
In this course, learners will:

• Learn the drivers and benefits of sustainable finance and climate risk management, and the
challenges and barriers to their adoption.
• Explore the frameworks and standards for measuring and reporting ESG performance and
climate risk exposure, such as the Task Force on Climate-related Financial Disclosures
(TCFD), the Sustainable Development Goals (SDGs), and the Principles for Responsible
Investment (PRI).
• Apply the tools and methods for assessing and integrating ESG factors and climate risk into
financial analysis, valuation, and portfolio construction, such as ESG ratings, carbon
footprinting, scenario analysis.
• Analyze the regulatory and market developments and initiatives that support and promote
sustainable finance and climate risk mitigation and adaptation, such as the Network for
Greening the Financial System (NGFS), the European Green Deal, and the Paris
Agreement.

This course is designed for students, professionals, and researchers who are interested in or
working on sustainable finance and climate risk related topics. The course will combine lectures,
case studies, exercises, and guest speakers from academia, industry, and policy. The course will
also provide learners with the opportunity to interact with peers and experts, and to apply their
learning to real-world problems and projects.

Course Learning Objectives:

By the end of this course, learners will have a solid foundation and a practical perspective on
sustainable finance and climate risk, and they will be able to:

• Explain the key concepts and principles of sustainable finance and climate risk, and their
relevance and implications for different stakeholders and sectors.
• Evaluate the ESG performance and climate risk exposure of financial institutions and
entities, using various frameworks, standards, and indicators.
• Incorporate ESG factors and climate risk into financial decision-making, using various
tools and methods, and considering the trade-offs and uncertainties involved.
• Identify and analyze the regulatory and market trends and opportunities that shape and
influence the field of sustainable finance and climate risk.
 II.33 VENTURE CAPITAL AND PRIVATE EQUITY
[1.5 Credits]

Course Objectives:

This course is the study of (private) equity invested in firms that are not publicly traded on stock
exchanges. The objectives of this course are:

1. Understand venture capital and private equity industry (pre-IPO—initial public offering)

2. Understand hybrid securities such as preferred and convertible securities

3. Understand how the offering document of a venture fund (term sheet) is structured

4. Understand exit options (such as initial public offering, and merger & acquisition) for illiquid
investment by venture and private equity funds

Session Session Topic Course Learning Objectives

No(s)
1 Introduction to the This session introduces the venture capital
private equity process and private equity process, their partnership
and the process of agreements and fund-raising
investment
2 Private equity securities Private equity funds generally do not use
traditional sources of capital: equity and
debt. They typically use hybrid securities
such as preferred and convertible securities.
This session introduces the preferred and
convertible securities
3 Overview of private This session introduces and sharpens
equity deal structures students' understanding of convertible
preferred stock, convertible
participating preferred stock, and convertible
preferred stock with multiple liquidation
preference
4 Structuring of offering This session sharpens students'
documents for venture understanding on characteristics of term
funding (known as term sheets such as liquidation preference,
sheets) redemption right, antidilution, differential
voting rights, vesting, employee stock
options
5 Term sheet negotiations Entrepreneur of a promising startup receives
interest from several venture funds. The
venture funds offer term sheets that are
similar in structure but different in
significant ways. These term sheets have
advantages and disadvantages for the
entrepreneurs. Choosing one over the other
requires careful analysis as well as a
specific set of assumptions about the future
performance of a startup
6 Valuation and This session covers valuation techniques
capital structure of (private) firms whose equity is not
listed on exchanges.
7 A behavioral aspect of This session introduces the behavioral
term sheet negotiations aspect of entrepreneurs in choosing one
term sheet over the other
8 Due diligence This session covers the intellectual
framework necessary to perform due
diligence. this session also discusses the
challenges to due diligence and provides the
framework and guidance to conduct due
diligence
9 Private equity exits This session introduces a variety of exit
options
and to discuss the pros and cons of each
such as initial public offering, and merger &
acquisition. This session also covers the
analysis of market conditions as they relate
to exit alternatives, valuation in different
scenarios, and the impact of terms
negotiated at the time of investment
10 Private equity in the From a private equity point of view,
emerging markets, future of emerging markets differ from developed
private equity, and closing markets such as the U.S. and European
thoughts Union. For example, in emerging markets,
return driven by growth rather than
leverage, weak contract
JAMNALAL BAJAJ INSTITUTE OF MANAGEMENT STUDIES
(Autonomous)

UNIVERSITY OF MUMBAI

MSC FINANCE COURSE STRUCTURE AND SYLLABUS

(2024-26)
(BASED ON NEP 2020)

PROGRAMME STRUCTURE AND SYLLABUS

 CONTENTS

Preface

Scheme of Assessment

Contents
Semester I............................................................................................................................................................... 6

Economics.........................................................................................................................................................................7

Costing and Control System..............................................................................................................................................9

Financial Accounting, Reporting &Analysis ....................................................................................................................10

Financial Management ...................................................................................................................................................12

Taxation (Direct and Indirect) .........................................................................................................................................14

Business Law...................................................................................................................................................................15

Research Methodology ..................................................................................................................................................16

Semester II............................................................................................................................................................ 17

Corporate Finance ..........................................................................................................................................................18

Financial Markets and Institutions .................................................................................................................................20

Corporate Governance and Regulatory Environment of Finance ..................................................................................21

Econometrics and Financial Modelling ...........................................................................................................................23

Practical: Econometrics and FinancialModeling .............................................................................................................25

Investment Banking and PEVC (Private Equity and Venture capital)..............................................................................26

Fixed Income Securities ..................................................................................................................................................28

Semester III........................................................................................................................................................... 30

Portfolio Analysis and Management ..............................................................................................................................31

Derivatives ......................................................................................................................................................................33

Mergers, Acquisitions and CorporateRestructuring .......................................................................................................35

Technical Analysis ...........................................................................................................................................................38

Risk in Financial Services.................................................................................................................................................40

Infrastructure and Project Financing ..............................................................................................................................41

2
Semester IV .......................................................................................................................................................... 42

Structured Finance..........................................................................................................................................................43

Behavioural Finance .......................................................................................................................................................45

International Finance......................................................................................................................................................46

Business Analytics...........................................................................................................................................................48

Alternative Investments .................................................................................................................................................49

3
 PREFACE

The Syllabus Book presents the broad objectives, structure, and contents of our two-year full
time MSc Finance course, University of Mumbai. The syllabus is directional in scope and
permits the much desirable flexibility to keep pace with the ever-growing body of
knowledge, technology and explorations in management education with special emphasis on
the finance of enterprise.

JBIMS-2023

University of Mumbai

4
 Scheme of Assessments for courses of 4 credits (100 Marks)

• The Semester End Examination will be conducted for 50 Marks.

• Internal Assessments will be conducted for 50 Marks.

The allocation of 50 marks shall be on any three of the following basis : -

Class test, quizzes, mid semester test, project, term paper, presentation etc may
be conducted for 50 marks internal continuous assessment.

Note: A Student has to separately secure minimum 50% marks (i.e 25 out of 50) in the internal
assessments and secure minimum 50% marks (i.e 25 out of 50) in the Semester End Examination
in every course to be declared as Pass.

5
 Semester I

Code Course Title Credits

Course 501 Economics 4

Course 502 Costing and Control system 2

Course 503 Accounting & Financial Reporting 4

Course 504 Financial Management 4

Course 505a Taxation (Direct and Indirect) 4

Business Law 4
Course 505b
Course 506 Research Methodology 4

6
Semester I COURSE 501

Economics
Course Objectives
This course provides the student with the fundamentals of managerial decision making. The course uses
structured thinking based on microeconomic theory to understand how economic fundamentals – such as
demand, cost, market structure and competition – shape pricing strategies, capacity choices, and market entry
decisions. The tools and concepts are ones that will repeatedly apply in your subsequent classes and in daily
decisions as managers.

Course Outline
Module I: Microeconomics

Consumer Theory: Choice, Preferences, Utility; Demand, Revealed Preferences, Comparative Statics; Consumer
Surplus, Aggregation; Variations to the Basic Choice Model (Time, Uncertainty). Producer Theory: Technology,
Profit Maximization, Cost Minimization; Supply, Aggregation Markets; Monopoly; Oligopoly and Game Theory;
Walrasian Equilibrium. Market Failures: Externalities; Public Goods; Small Number of Agents, Nash Bargaining.
Asymmetric Information: Adverse Selection, Moral Hazard, Principal-Agent Model; Auction Design; Voting and
Other Applications.

Module II: Macroeconomics

An overview of the modern market economy as a system for dealing with the problem of scarcity. The analysis
of relationships among such variables as national income, employment, inflation andthe quantity of money.

Managing aggregate demand; fiscal policy; money and the banking system; monetary policy; the debate over
monetary and fiscal policy; budget deficits in the short and long run; trade-off between inflation and
unemployment.

Module III: International Economics

Trade Theories: Ricardian Trade Model; Modern Trade Theory; Trade and Income Distribution; Alternative
Trade Theories.Trade Policy: Commercial Policy: Tariffs and Nontariff Trade Barriers; Political Economy of Trade
Policy; Economic Integration (Free Trade Agreements); International Factor Movements and Multinational
Enterprises; Balance of Payments; Foreign Exchange Market; Exchange Rate Determination; Modern Exchange
Rate System and Policies.

Module IV: Financial Economics

Fundamental Theory of Finance: Absence of Arbitrage and Efficient Markets; Existence of Positive Linear
Pricing Rule; Risk Neutral (Martingale) Probabilities and State Pricing. Preferences and Uncertainty:
Expected Utility Theory; Linear Risk Tolerance Preferences; Jensen’s Inequality and Risk Aversion; Ordering
Preferences by Risk Aversion; Stochastic Dominance; Insurance and Certainty Equivalence; Alternative
Psychological and Behavioral Approaches.

7
Required Texts
Economics by N. Gregory Mankiw and Mark P. Taylor (2006), Thompson Learning.

Reference Text
▪ Intermediate Microeconomics 7e by Varian, Hal R., W.W. Norton (2005).
▪ Macroeconomics 6e by Abel, Bernanke, and Croushore, Prentice Hall (2007).

8
Semester I Course 502

Costing and Control System

Course Objectives
This course will help to understand costing and management accounting techniques that could
be utilized for decision making and control.

Course Outline
Module I

1. Preparation of Cost sheet

2. Method of Costing

Module II

3. Process Costing
4. Absorption Costing, Marginal Costing, Cost Volume Profit Analysis and Decision Making
5. Relevant Cost and Differential Cost

Module III

6. Budgetary Controls
7. Standard Costing

Module IV

8. Inventory Management and Cost Audit (An Overview)

9. Activity Based Costing
10. Application of Costing concepts in the Service and Trading Sector

Reference Text:
• Horngren's Accounting (12e) by Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
(2017). New Delhi: Pearson (India) Limited.
• Management Accounting for profit control by Keller & Ferrara
• Cost Accounting for Managerial Emphasis by Horngreen
• T. P. Ghosh: Financial Accounting for managers (Taxmann).

9
Semester I Course 503

Financial Accounting, Reporting &

Analysis
Course Objectives
This course will explore the main items within corporations’ financial statements and how financial information
is communicated to external parties. It will look at financial accounting from an international accounting
perspective. Additionally, the course will examine consolidation policies and accounting for international
corporations.

Course Outline
Module I

1. Context and Purpose of Financial Accounting: Nature of financial and managerial accounting
information; accounting profession and accounting careers; accounting equation; Core financial
statements.
2. The Use of Double-Entry and accounting systems: Accounts, debits and credits; The journal; The
general ledger; Trial balance; Computerized processing systems; T-Accounts; Double-entry book-
keeping principles including the maintenance of records and sources of information; Recording
Transactions and events - Sales and purchases; cash; stock; tangible fixed assets; depreciation;
intangible fixed assets and amortisation; accruals and prepayments; debtors and creditors; provisions
and contingencies; capital structure and finance costs.

Module II

3. Income Measurement: Measurement transactions and events; periodicity assumption and its
accounting implications; Basic elements of revenue recognition; Basic elements of expense
recognition; adjusting process and related entries; Accrual versus cash-basis accounting.
4. Context and Purpose of Financial Reporting: The reasons for and objectives of financial reporting;
users’ and stakeholders’ needs; the main elements of financial reporting.
5. The qualitative characteristics of financial information: Define, understand, and apply accounting
concepts, including concept of true and fair view, going concern, accruals, consistency, materiality,
relevance, reliability, substance over form, neutrality, prudence, completeness, comparability,
understandability, and business entity concept.

Module III

6. Regulatory Framework of Accounting: Reasons for existence of a regulatory framework; legal

provisions relating to accounting; setting Indian accounting standards, convergence of international
accounting standards, International Financial Reporting Standards (IFRS).
7. Accounting Analysis: Accounting and Analysis of Asset: Historical cost and conservatism, asset
reporting challenges, common misconceptions about asset accounting.

10
 8. Accounting and Analysis of Liability and Equity: Liability definition and reporting challenges; common
misconceptions about liability accounting; equity definition and reporting challenges.

Module IV

9. Revenue Analysis: Revenue recognition rule, revenue recognition challenges

10. Expense Analysis: Matching and conservatism, expense reporting challenges
11. Interpretations of financial statements: Ratio analysis; cash flow analysis; funds flow analysis; value
added statements; limitations of financial statements; Calculation and interpretation of accounting
ratios and trends to address users’ and stakeholders’ needs; limitations of interpretation techniques.

Required Texts
Financial Reporting and Analysis by Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt
McGraw-Hill (2011).

Reference Text
International Financial Reporting and Analysis by Alexander, Britton, Jorissen Thomson (2007).

11
Semester I Course 504

Financial Management
Course Objectives
The course is designed to provide an understanding of the essential elements of financial management and the
financial environment in which the business firm operates. The paper will examine the objective of shareholder
wealth maximization which encompasses much of modern corporate finance and its implication for decision
making in the present context.

Course Outline
Module I
1. Introduction: Role of the corporate financial manager (CFO); corporate finance decisions; goals of firm
- profit maximization v. shareholders' wealth maximization; basic responsibilities of financial managers; social
responsibility of the firm; agency relationships and conflicts.

Module II

2. Environment of finance: Financial markets – capital markets (equity markets, debt market), money
markets, foreign exchange market, and derivatives markets; term loans and leases; accounting treatment
of leases; convertibles, and warrants.

3. Valuation Concepts: Future values and compound interest; present values; level cash flows: perpetuities
and annuities; valuation of long-term securities; risk and return; measuring portfolio risk.

Module III

4. Financial Planning: Introduction to financial planning; financial planning models; components of a

financial planning model; pitfalls in model design; role of financial planning models; external financing and
growth; deferred taxes and financial analysis; sustainable growth modeling.

5. Working Capital Management and Short-Term Planning: Components of working capital, working capital
and the cash conversion cycle, working capital trade-off; links between long-term and short-term
financing; tracing changes in cash and working capital; cash budgeting, forecast sources of cash, forecast
uses of cash, a short-term financing plan, options for short-term financing, evaluating the plan, sources of
short- term financing; cash management, management of account receivables.

Module IV

6. Investment in Capital Assets: Capital budgeting and estimating cash flows; capital budgeting techniques;
multiple internal rates of return; replacement chain analysis; risk and managerial options in capital
budgeting.

12
7. Cost of Capital, Capital Structure, and Dividend Policy: Required returns and the cost of capital; operating
and financial leverage; capital structure determination; theories of capital structure; dividend policy;
theories of relevance and irrelevance of dividend policy.

Required Text
Fundamentals of Financial Management by Eugene F. Brigham, Joel F. Houston (2011), South Western
(Cengage Learning)

Reference Text
Fundamentals of Financial Management by James C. Van Horne, John M. Wachowicz (2008), Prentice Hall.

13
Semester I Course 505a

Taxation (Direct and Indirect)

Course Objectives
The objective of the course is to introduce concepts of taxation; the issues in computation of
taxable income under different heads of income tax; assessment of tax and filing of returns; and
provide an understanding of goods and service tax.

Course Outline
Module I

Direct Tax: Income Tax Act and rules

Module II
Computation of Total Income and Determination of Tax Liability – individuals and Companies

Module III
Indirect Taxes: Central Excise and CENVAT, Customs Duty, Service Tax

Module IV
Central Sales Tax and VAT, Maharashtra Value Added Tax and Primer on GST

Reference Text:
Taxation Growth and Fiscal Institutions by Albert Lee

14
Semester I COURSE 505b

Business Law
Course Objectives
This course is designed to provide the student with knowledge of the legal environment in which a consumer and
businesses operates, and to provide the student with knowledge of legal principles.

Course Outline
Module I: Contract law
1. Formation of Contracts
2. Performance of Contracts
3. Discharge and Breach of Contracts.

Module II: Law of Sale of Goods

4. Formation of Contract of Sale of Goods
5. Conditions and Warranties; Transfer of Property in Goods
6. Rights of Sellers and Buyers; Performance of Contract of Sale of Goods.

Module III: Overview of Company Law

7. Development of Company Law
8. Features and Types of Companies
9. Formation of Companies: Memorandum and Articles of Association

Module IV: Negotiable Instruments

10. Features of promissory notes, bills of exchanges, and cheques
11. Endorsements of Negotiable Instruments
12. Dishonour of Negotiable Instruments
13. Procedure for dishonour of cheque

Reference Text
• Business Legislation for Management by Kuchal and Prakash. Vikas Publishing House.

15
Semester I COURSE 506

Research Methodology
Course Objectives
The business research method section of the course introduces the basics of business research. After completing this
course, a student can expect enhanced knowledge and skills to carry out research for businesses and better
awareness of business research methods. The quantitative methods section of the course emphasises achieving an
understanding of quantitative methods and associated statistical techniques considered so that the student can think
critically about suitable procedures for research design, collection and analysis of data, and the usefulness of statistics.

Course Outline
Module I
1. The landscape of management and business research: Elements of a research proposal; research questions and
research objectives; description of the research design and methods.
2. Reviewing the literature: What is a literature review and what are its main purposes? Preparing a literature review;
Finding relevant literature; Evaluating literature; Writing a literature review.
3. Designing management and business research: The essence of research design; Experimental methods; Survey
research; Case method and grounded theory; Mixed methods; Common design dilemmas; Contrasting views on validity
and reliability; Research design template.

Module II
4. Business Statistics: Visual Description of Data; Descriptive Statistics.
5. Probability: Review of Basic Concepts; Concept of random variable and its properties; Discrete Probability
Distributions; Continuous Probability Distributions.

Module III
6. Sampling Distributions and Estimation: Data Collection and Sampling Methods; Sampling Distributions; Estimation
from Sample Data
7. Hypothesis Testing: Hypothesis Tests Involving a Sample Mean or Proportion; Hypothesis Tests Involving Two
Sample Means or Proportions; Analysis of Variance Tests; Chi-Square Applications; Nonparametric Methods.

Module IV
8. Regression, Model Building, and Time Series: Simple Linear Regression and Correlation; Multiple Regression and
Correlation; Model Building; Models for Time Series and Forecasting.

Reference Text
• Research Methods for Business: A Skill–Building Approach, 6e by Uma Sekaran and Roger Bougie (2013). John
Wiley & Sons.
• Business Research Methods (13e) Pamela Schindler (2018). New Delhi: McGraw-Hill.
• Applied Statistics in Business and Economics (6e) by David Doane and Lori Seward (2019). New Delhi: McGraw-
Hill.

16
 Semester II
Code Course Title
Credits
Course 511 Corporate Finance
4
Course 512 Financial Markets and Institutions
4
Course 513 Corporate Governance &
RegulatoryEnvironment 2
Course 514 Econometrics and Financial Modelling
2
Course 515 (Practical) Econometrics and
FinancialModelling 2
Investment Banking and PEVC
Course 516a 4
Course 516b Fixed Income Securities
4
Course 517 OJT/FP
4

17
Semester II COURSE 511

Corporate Finance
Course Objective
This course explores the foundations of financial theory through of the analysis of the financial situation of a
business and drivers of the cost of capital, the evaluation of capital investment decisions, and the
determination of the optimal capital structure. The student will also cover advanced corporate finance topics
like dividend and buy back policy, corporate restructuring, issuance of securities, agency problems, asymmetric
information, or executive compensation policies.

Course Outline
Module I
1. Framework for Financial Decisions: An overview of financial decisions; the financial environment; bond and
share valuation.

2. Investment Decisions and Strategies: Investment appraisal methods; project appraisal – applications;
investment strategy and process.

3. Value, Risk and the Required Return: Analysing investment risk; identifying and valuing options;
relationships between investments: portfolio theory; setting the risk premium: the capital asset pricing
model; the required rate of return on investment; enterprise value and equity value.

Module II

4. Valuation: Conceptual framework of valuation; approaches and methods of valuation - asset-based

approach, earnings based approach, discounted cash flow approach, market value based approach,
relative valuation approach, real options approach, selection of approach; applications of valuation
methods to valuation of different types of companies.

5. Short-Term Financing and Policies: Treasury management and working capital policy; short-term asset
management; short - and medium-term finance;

Module III

6. Strategic financial decisions: Long-term finance; returning value to shareholders: the dividend decision;
capital structure and the required return; relevance of capital structure; acquisitions and restructuring;
Operating Leverage; Dividend Policy; Pricing Strategy; Asset-Liability Management.

7. Corporate Performance Management: Execution Problem; Balanced Scorecard; Real-time Financial

Systems: Corporate Performance Management (CPM); Integrated Financial Management

18
Module IV

8. International Financial Management: Overview of market for foreign currencies; foreign exchange risks
–transaction, translation, and economic risks; managing currency risk; foreign investment decisions.

Required Text
Corporate Finance by Stephen A. Ross, Randolph Westerfield, Jeffrey Jaffe (2006), McGraw-Hill/Irwin.

Reference Text
Corporate Finance: Linking Theory to What Companies Do by John Graham, Scott B. Smart, William L.
Megginson (2008), South Western Cengage Learning.

19
Semester II COURSE 512

Financial Markets and Institutions

Course Objective
The course aims to help students to appreciate and understand how financial markets and institutions operate.
It introduces financial institutions and other market participants, their roles in the financial system and the
ways they interact with each other. A second and equally important objective is to help students to understand
commonly used financial instruments and how they work.

Course Outline
Module I

1 Introduction: Determination of Interest Rates; Interest Rates and Security Valuation; Monetary Policy,
and Interest Rates.
2 Securities Markets: Money Markets; Bond Markets; Mortgage Markets; Stock Markets; Foreign
Exchange Markets; Derivative Securities Markets.
Module II
3 Banks: Industry Overview; commercial banks, cooperative banks; microfinance institutions; Banks'
Financial Statements and Analysis; Regulation of banks.
4 Nonbank Financial Institutions: Lending Institutions; Finance Companies; NBFCs; Insurance
Companies; depositories and depository participants, clearing corporations, Brokerage Firms; Merchant and
Investment Banks; Mutual Funds and Hedge Funds; Pension Funds; registrars and transfer agents, credit rating
agencies, portfolio management services, asset reconstruction companies; money market institutions –
primary dealers, DFHI, CCIL, FIMMDA; insurance institutions – life insurance companies, non-life insurance
companies, actuaries.
Module III
5 Regulatory bodies – Self Regulatory Organisation (SROs), SEBI, RBI, IRDA. International financial
institutions – Federal Reserve Bank (US); Bank of England; European Central Bank; Securities Exchange
Commission (SEC).
Module IV
6 Risk Management In Financial Institutions: Types of Risks Incurred by Financial Institutions; Managing
Credit Risk on the Balance Sheet; Managing Liquidity Risk on the Balance Sheet; Managing Interest Rate Risk
and Insolvency Risk on the Balance Sheet; Managing Risk off the Balance Sheet with Derivative Securities;
Managing Risk off the Balance Sheet with Loan Sales and Securitization.

Required Text
Financial Markets and Institutions by Bhole, Tata McGraw-Hill (2009).

Reference Text
Financial Markets and Institutions 4/e by Saunders and Cornett, McGraw-Hill (2009).

20
Semester II COURSE 513

Corporate Governance and

Regulatory Environment of Finance
Course Objective
This course will acquaint the participants with the fundamentals and practices of corporate governance in
India and other countries in the light of the prevailing legal provisions and codes of good governance.

Course Outline
Module I

1. Corporate Governance: Objectives; definitions and importance of corporate governance; reputation,

competition and corporate governance; corporate ethics; corporate governance and corporate responsibility;
globalization and corporate governance; Models of corporate governance; mechanisms of corporate
governance.
2. Shareholders and Stakeholders: Shareholder rights; equitable treatment; responsibilities of shareholders;
minority shareholders’ protection; stakeholder protection.
3. Board of Directors: Structure and independence of the board; responsibilities and duties of the board; selection,
remuneration and evaluation of the board; board committees; the board and the management.
4. Audit Committee: Organization of audit committee; responsibilities of the audit committee; working with
auditors and management.

Module II
5. Code of Corporate Governance: SEBI Code of Corporate Governance (Narayan murthy Committee Report);
Ministry of Finance (Naresh chandra Committee Report); US Sarbanes-Oxley Act of 2002; The UK Corporate
Responsibility Act 2002.
6. Economic Rationale of Financial Regulation: Externalities; market imperfections and failures; economies of scale
in monitoring; moral hazard; mandatory versus voluntary disclosure; regulation and competition; alternative
approaches to regulation.

Module III
7. Legal Framework of Capital Markets: Securities Contracts (Regulation) Act, 1956, and Securities Contracts
(Regulation) Rules, 1957; Foreign Exchange Management Act (FEMA); Overview of relevant provisions of the
Companies Act, 1956, Indian Stamp Act, Registration Act, Competition Act; , Stock exchanges – trading rules,
listing agreement, enforcement of listing compliances; Banking Regulation Act; Reserve Bank (Board for
Financial Supervision (BFS)) Regulations.
8. SEBI Regulations and Guidelines: SEBI Act, 1992; SEBI (ICDR) Regulations; SEBI (Insider Trading) Regulations; SEBI
(Substantial Acquisition of Shares and Take Over) Regulations; SEBI (Buyback of Securities) Regulations; SEBI
(Foreign Institutional Investors) Regulations.
9. Regulation of Mutual Funds: SEBI (Mutual Funds) Regulations; taxation of a mutual fund - resident unit holders,
non-resident individual unit holders, non-resident unit holders being a company; Regulation of Overseas
21
 Investment in the Domestic Mutual Fund Sector - Setting up an AMC, Investing via a Domestic Mutual Fund,
Investing as a FII in an Indian mutual fund, role of self-regulatory organisations.

Module IV
10. Overview of Regulatory Bodies: Reserve Bank of India, Securities Exchange Board of India, Forward Market
Commission, Insurance Regulatory Development Authority, Providend Fund Regulatory and Development
Authority, Ministry of Finance, Ministry of Corporate Affairs, Registrar of Companies.
11. International Financial Regulation: Challenges of international regulation of financial markets; overview of
financial regulation in USA, UK, EU.

Required Text
▪ Corporate Governance by Robert A. G. Monks and Nell Minow (2011), Wiley.
▪ Company Law: Theory, Structure, & Operation by Cheffins (1997), Clarendon Press.
▪ Global financial regulation by Howard Davies, David Green (2008) Polity Press.

Reference Text
▪ Sebi Manual 16e Taxmann Publications Pvt. Ltd, 2011
▪ Foreign Exchange Management Manual Taxmann Publications Pvt. Ltd, 2011

22
Semester II COURSE 514

Econometrics and Financial Modelling

Course Objective
The course is divided into two sections. Section I covers basic econometrics and Section II covers quantitative
models as applied to functional specialisations. The objective of Section I is to prepare students for basic
empirical work in economics. In particular, topics will include basic data analysis, regression analysis, testing,
and forecasting. Section II aims at exposing the students to various fundamental and emerging models in
finance, marketing, operations and supply chain management, and human resource management.

Course Outline
Module I: Econometrics
1. Introduction to econometrics
2. Univariate regression model
3. Multivariate regression model

Module II
4. Use of Dummy variables
5. Relaxation of assumptions of CLRM: multicollinearity, heteroskedasticity, autocorrelation and
endogeneity
6. Time series data analysis and Times series econometric forecasting models
7. Panel data analysis: Simultaneous use of cross sectional and time series data

Module III
1. Preliminaries: Introduction financial modelling; objectives of financial modelling; spreadsheet features,
techniques; best practices in spreadsheet design.
2. Systematic Design Method: Model Design and structure; Building business case models; spreadsheet
techniques and methods.
3. Auditing and Testing: Essential testing and auditing techniques; Testing financial analysis model with cash
flows and ratios; Debugging and checking a financial model.
4. Macros and Security: Writing and auditing and macros; Spreadsheet security.

Module IV
5. Forecasting Models: Review of forecasting methods; financial "drivers"; Adding forecasts to the case models.
6. Risk Techniques: Risk and multiple answers; Scenario techniques; Advanced financial functions; adding
sensitivity to the case model; Advanced scenario methods; Composite methods.

23
 7. Optimisation and Targeting: Overview of optimisation and targeting; Goal seek and Solver methods;
optimising the case model.
8. Management Reporting: Requirement to consolidate and summarise data; consolidating data from
different sources; spreadsheet report managers; pivot tables; Techniques for summarising data;
producing a management analysis.
9. Model Completion: Model review; Documentation; Final audit.

Reference Text:
▪ Introductory Econometrics 4e by Wooldridge, J. South-Western Cengage Learning (2009).
▪ Financial Modeling 3e by S Benninga, MIT Press (2008).

24
Semester II COURSE 515

Practical: Econometrics and Financial

Modeling
The application of the following topics to real world issues in Finance:

A Econometrics

1. Univariate regression model.

2. Multivariate regression model.
3. Dummy variables, heteroskedasticity, endogeneity.
4. Time series data analysis
5. Times series regression model
6. Panel data analysis: Simultaneous use of cross sectional and time series data
7. Endogeneity: Instrumental variables and simultaneous equations.

B Financial Modelling

1. Forecasting Models: Review of forecasting methods; financial "drivers"; Adding

forecasts to the case models.
2. Risk Techniques: Risk and multiple answers; Scenario techniques; Advanced
financial functions; adding sensitivity to the case model; Advanced scenario
methods; Composite methods.
3. Optimisation and Targeting: Overview of optimisation and targeting; Goal seek and
Solver methods; optimising the case model.
4. Management Reporting: Requirement to consolidate and summarise data;
consolidating data from different sources; spreadsheet report managers;
pivottables; Techniques for summarising data; producing a management
analysis.

Assessment:

Final submission of practical report followed by viva or test: 50 marks| Internal assessment: 50 marks

25
Semester II
COURSE 516a

Investment Banking and PEVC

(Private Equity and Venture capital)
Course Objective
This course delves into the structure, management and practices of investment banking (IB)— from larger more
universal players to boutique operations. It covers the business activities of mergers and acquisitions, financing
and investment; and, the creation of value through advisory services and the choices of client business models.
It looks into the business practices of private equity, hedge funds and trading operations; and, the role of each
in facilitating investment, the deployment of capital and the changing face of risk-taking activities.

Course Outline
Module I: Investment Banking
• Introduction: Overview of Investment Banking

Corporate debt and underwriting procedures securitization and asset backed debt securities, high yield debt
investment bankers as traders and market-makers, private placements
• Investment Process
Methods - Sources of funding/investor decision making – Credit borrowing Vs Issuing Equity - Analysis of funding
options: bank borrowing, cross currency, private placements, private equity, public stock/bond market, high yield
market, floating rate vs. fixed rate borrowing, equity vs. convertible securities Disinvestments mechanism —
Incentives — Future Prospects

Module II
• Mergers & Acquisitions
Introduction to valuation of companies; the law of mergers & acquisitions, markets for takeover stocks and risk
arbitrageurs restructuring: theory of adding value, LBOS, practice of adding value
• How Investment Bankers Compete
Developing new business, international business, professional standards and management,Structure of banking
industry, major developments in India, and in international capital markets 1975-1997: legal basis of corporate
finance and investment banking.

Module III: Private Equity and Venture Capital (PEVC)

• Private equity and venture capital in the financial system:

• The special role of private equity and venture capital industry: why are they necessary in a modern
economy?
• Market trends in Europe and in US.
26
 • Competitive models of private equity and venture capital: angels and informal investors; incubators; start-
up financer; closed-end funds; merchant banks; vulture funds.
• Regulatory and legal issues:
• Regulations and supervision towards investing in non-financial firms.
• The functioning of private equity fund: management fee and carried interest; managers and investors.

Module IV

• Legal and fiscal issues for venture capital investment schemes: European versus US and UK patterns
(closed-end fund, venture capital fund, Sbic, VCT, angel investing).
• Management of a private equity and a venture capital fund:
• Introduction to different categories of investment: new ventures, start up, young firms, high potential
firms, family owned firms and turnaround involved companies.
• The value chain of investing in firms: a broad vision.
• The valuation of the target company: how to evaluate and how to manage the deal?
• Management issues: managing the single investment, funding process, managing the portfolio of
investments, exit way process

Reference Text:
Stowell, David P., Investment Banks, Hedge Funds and Private Equity, Academic Press, 2013

27
Semester II COURSE 516b

Fixed Income Securities

Course Objective
The objective of this course is to give the participants an in – depth knowledge of the investment in fixed
income generating securities.

Course Outline
Module I

1. Understanding Forward Rate Analysis and Yield curves

Term structure of interest rates and forward rate analysis; yield measures; analysing changes in the yield
curve.

2. Framework for Analysing Bonds

Cash flows for typical bond structures; time value of money; annuities; bond yields: coupon, current, yield to
maturity (YTM), yield to call, realised yield; yield conventions; yield decomposition: current yield, interest
upon interest, pull-to-maturity; duration; modified duration; convexity and relative convexity. yield curve
analysis - coupon yield curve and the spot curve, interpretations of the yield curve, pricing bonds using the
yield curve; implications of duration and convexity for bond analysis; using horizon analysis to evaluate bond
strategies; analysis of bonds with embedded options; asset and mortgage backed security analysis.

Module II
3. Risk Analysis for Bonds

Sources of risk - credit risk; interest rate risks; reinvestment risks; liquidity; calls on bonds; analysis of
corporate bond risk; analysing rating agencies criteria – Moodys, Standard and Poors; risks involved in
treasury securities; price volatility and interest rate volatility; sources of interest rate volatility; key ratios for
interest rate sensitivity.

Module III
4. Fixed Income Strategies

Passive fixed income strategies; active fixed income strategies; common strategies - buy and hold, bullets and
barbells, butterflies, ladders, immunization, hedging.

28
Module IV

5. Fixed Income Fund Management Practice

Constructing a fixed income portfolio, importance of asset allocation, funding liabilities, asset
liability management (ALM), balanced fund approach.

Required Texts
▪ Fixed Income Securities: Tools for Today's Markets, 2nd ed. by Bruce Tuckman, Wiley.
▪ Understanding and Managing Interest Rate Risks, by Ren-Raw Chen, World Scientific.
▪ Options, Futures, and Other Derivatives 6e by John C. Hull, Pearson/Prentice Hall.

Reference Texts
▪ Credit Derivatives, by M. Ansen, F. Fabozzi, M. Choudhry, and R.-R. Chen, Wiley

29
 Semester III
Code Course Title Credits

Course 601 Portfolio Analysis and Management

4
Course 602 Derivatives
4
Course 603 Mergers, Acquisitions and
CorporateRestructuring 4
Course 604 Technical Analysis
2
Course 605a Risk in Financial Services
4
Infrastructure and Project Financing
Course 605b 4
Research Project
Course 606 4

30
Semester III COURSE 601

Portfolio Analysis and Management

Course Objectives
The course objective is to acquaint students with the theoretical foundation of modern portfolio theory, the
major groups of investors and their investment objectives and constraints, and to master practical skills in
investment management, forming capital market expectations and forecasting markets activity to justify
major investment portfolio management strategy for equity and fixed-income instruments.

Course Outline
Module I

1. Efficient Market Hypothesis (EMH)

Efficient market hypothesis conceptual underpinnings; empirical studies and anomalies of efficiency;
implications of the EMH for investment analysis.

2. Modern Portfolio Theory

Measures of uncertainty and risk; Markowitz (Mean Variance) Efficient Frontier; introduction of a risk free
asset; Capital Asset Pricing Model – CAPM; Critique of CAPM; arbitrage pricing theory – APT; single index
models for portfolio construction.

Module II

3. Investment policy and portfolio creation

A framework for investment policy; investment policies and practices for institutions and individuals;
monitoring and re-balancing asset allocation with respect to risk, return and investment policy; case studies in
investment management; investment strategies - passive to active; structuring an international investment
strategy.

Module III

4. Performance Attribution Analysis

Evaluation of portfolio performance; traditional measures – Sharpe, Treynor, Jensen; decomposition of

portfolio performance; cases in portfolio decomposition; performance attribution support systems; value at
risk (VaR) measurement.
5. Measurement and Presentation of Portfolio Returns

Global investment performance standards.

31
Module IV

6. Stock Market Indices

Types of indices; Index versions; free-float indices; Weighting, capitalization-weighted index; Criticism of
capitalization-weighting; Indices and passive investment management. Applications - overview of NSE and BSE
indices.

Required Texts
Modern Portfolio Theory and Investment Analysis by Edwin J. Elton, Martin J. Gruber, Stephen J. Brown, William
N. Goetzmann (2010), John Wiley and Sons.

Reference Text
Quantitative Methods for Portfolio Analysis by TakeakiKariya (1993), Kluwer Academic Publishers.

32
Semester III COURSE 602

Derivatives
Course Objective
This course will analyze the foundations of derivatives, their valuation, and how they are used to
manage risk and for investment decisions. The student will learn the management of financial
risk as well as the different techniques available to measure said risk. The course will also cover
the evaluation of financial risks both in financial and non-financial institutions and the role of risk
management within the overall corporate strategy.

Course Outline
Module I

1. Evolution of Derivatives: Concept of derivatives, definitions, purposes and criticisms; derivative markets;
past and present; difference between exchange traded and OTC derivatives; derivative market participants
- hedgers, arbitrageurs and speculators.

2. Forward Market and Products: Structure and role of global forward market; concept, characteristics and
definition; types of forward contracts - equity forward, currency forward, interest rate forward, forward
rate agreement; valuation of forward; generic valuation principles; valuation of individual product; hedging
using forwards; credit risk and forward contracts.

Module II

3. Futures Market and Products: Structure and role of global future market including leading futures
exchanges; concept, characteristics and definition; trading mechanism and concept of margins; futures vs.
forward; types of futures contracts - stock futures, index futures, currency futures, interest rate futures,
commodity futures; generic valuation principles; valuation of individual futures product; basis risk; daily
and final settlement price; hedging using futures; speculation using futures.

4. Option Market and Products: Structure and role of global option market including OTC and leading; options
exchanges; concept, characteristics and definition; option terminology; American style and European style
option; option payoffs; trading mechanism and concept of margins; futures vs options; types of options -
stock options, index options, currency options, commodity options, options on futures, interest rate
options;

Module III

5. Option Pricing: Factors affecting option pricing, upper and lower bounds of option prices, binomial model,
Black and Scholes option pricing model, option Greeks (delta, gamma, theta, vega, rho), delta hedging;

33
option strategies (spreads, straddles and strangles); exotic options - hedging with exotic options, pricing of
exotic options.

6. Swaps: Concept, characteristics and definition, Types of swaps, Interest rate swap (IRS), Currency swap,
Equity swap, Other types of swaps, valuation of swaps, Swaption, credit risk and swaps, strategies and
applications of swaps.

Module IV

7. Credit Derivatives: Concept role and structure of credit derivatives, Types of credit derivative, credit default
swap, total return swap, credit spread option, Credit link notes, collateralized debt obligations.

8. Accounting and taxation of derivative instruments.

Reference Text
Derivatives: Valuation and Risk Management by David A. Dubofsky and Thomas W. Miller (2002), Oxford
University Press.

34
Semester III COURSE 603

Mergers, Acquisitions and Corporate

Restructuring

Course Objectives
An objective of the course is to expose the student to core valuation concepts, tools and skills required for
valuation of a business enterprise.

Course Outline
Module I

1. Strategies for Value Creation

M&A as a tool of competitive advantage. Performance of M&A: why do acquisitions fail? Strategic, financial
and managerial drivers of M&A activity. Reasons for M&A and its influence on shareholder value. Types of
corporate control strategies. Major forces driving domestic and international M&A activity. Major players on
the M&A landscape and their incentives. Analysis of successful and failed M&As. Likely future of M&A activity.

2. Stages of an M&A Transaction.

Overview of the stages of an M&A transaction, from origination to closing. Origination of M&A ideas, clarifying
strategy, valuing the target, carrying out due diligence assessment and developing an implementation plan.
Process timeline for an M&A transaction. Role of synergies in M&A analysis. Performance of pro forma “merger
consequences” analysis. Tactical considerations before approaching a potential target.

Module II

3. Mechanics of M&A

Setting up an M&A function; Aligning M&A with business strategy; Active deal generation; Other sources of
deals; Typical deal stages; Deal documentation; Valuations and deal returns; Due Diligence; Post acquisition
integration.

4. Valuation for Mergers and Acquisition

Valuation techniques appropriate to M&A analysis. Valuing synergies. Control and liquidity discount/premium.
Pricing acquisitions. Meeting the challenges of sum of the parts valuation. Estimating the cost of capital for
business units. Estimating the business unit cost of capital. Peer group analysis and benchmarking. Applying

35
peer group analysis. Valuing the business units. Estimating a target capital structure and Valuation for mergers
and acquisitions.

5. Financial Strategy

The M&A as an effective corporate finance strategy. Build or buy decisions: striking the right balance.
Leveraging financial assets through an M&A. Preparing the stage for a successful acquisition. Financial and non-
financial criteria for acquisitions. Pitfalls and rebalancing the risk reward ratio. Cost reducing and revenue
enhancing synergies. Purchasers motivated by diversification. The approach and requirements of financial
purchasers. Valuing a consideration other than cash

Module III

6. Legal aspects ofM&A

• Company Law Provisions: Statutory framework for compromises, arrangements and amalgamations.
Drafting of the scheme. Approval of the scheme by members and creditors. Court’s sanction of the
scheme. Legal aspects of valuation of shares and share-exchange ratios. Issue and allotment of shares.
Standard time-schedule for procedural formalities of completing an M&A transaction. Takeover by
acquisition of shares.

• SEBI (Substantial Acquisition of Shares & Takeover Code) Provisions: Overview of the SEBI (Substantial
Acquisition of Shares & Takeover Code). Takeover of an unlisted company by acquiring controlling
interest. Takeover of a listed company. Procedural formalities.

• Competition Law Provisions. Overview of the Competition Act, 2002. Anticompetitive agreements.
Abuse of dominance. Meaning and definition of combinations. Concept of void combinations and
exceptions. Market dominance of a group in and outside India. Concept of control of affairs or
management. Overview of the role, powers and functions of the Competition Commission of India.

• FEMA Provisions Relating to Cross-Border M&A: Overview of provisions of the Foreign Exchange
Management Act, 1999 relating to issue and transfer of securities between residents and non-
residents, external commercial borrowings, American depository receipts, overseas investment by
Indian companies, foreign direct investments, and wholly-owned subsidiaries of Indian companies
abroad.

7. Accounting for M&A

Overview of Accounting Standard 14 and international accounting standards relating to M&A. Equity method
of accounting for investments. Accounting for minority interest. Treatment of minority interest for enterprise
valuation. Accounting for ESOPs, restructuring charges, discontinuance of operations. Recognizing asset
impairments.

Module IV

8. Tax Aspects OF M&A

Tax aspects of choice of entity. Definition of amalgamation under Income Tax Act, 1962. Amortization of certain
preliminary expenses. Tax treatment of expenditure of amalgamation, purchase of patents, copyrights,

36
scientific research. Cost of assets acquired through M&A. Capital gains on assets transferred in M&A. Carry
forward and set off of accumulated losses and unabsorbed depreciation. Deferred income taxes and reporting
ofincometax. Tax issue in structuring debt financing. Estimating the tax bases oftarget company’s assets. Tax effects of
ESOPs.

9. Developing the Acquisition Integration Framework

Prioritizing integration issues and ensuring buy-in by both organizations. Integrating organizations and major
projects. The integration framework and its elements, and how its use will benefit you. Facilitating individual
and small task group working relationships. Identifying the connections between each element and acquisition
strategic intent. Achieving common focus by reaching agreement on the details of each element.

Reference Text
Mergers, Acquisitions, and Other Restructuring Activities by Donald M. DePamphilis (2010) Academic Press

37
Semester III COURSE 604

Technical Analysis
Course Objective
This course fulfills the objective of providing all relevant tools and techniques to understand the
various facets of the capital market covering practical exposure.

Course Outline
Module I

1. Background and Basics

Technical analysis as an integral part of market analysis; History of technical analysis.

2. Constructing and Interpreting Charts

Tools - the construction of different types of charts - line chart, bar chart, point and figure chart,
candlestick charts etc.; What to Look for on the Charts.

3. Trends

Basics of pattern recognition; determination of price trends; support and resistance levels; real time
presentations at end of session; moving averages; gaps; volume; comparative relative strength.

Module II

4. Phases of Price Activity and Pattern Recognition

Phases of price activity - pattern recognition on bar charts, pattern recognition on point and figure
charts, pattern recognition on candlestick charting; turning points; continuation patterns; climax;
candlesticks; volume; point and figure; behavioral; pairs trading / derivatives.

5. Technical Analysis Theories

Dow theory, Elliott wave theory, Fibonacci sequence, Gann analysis, Cycle analysis.

Module III

6. Technical Indicators
38
RSI indicator; Stochastics; Rate of change (RoC) indicator; MACD; Bollinger bands; Moving averages.

7. Sentimental Indicators

Volatility index (VIX), Put/call ratio, Bull/bear indicators, Dow's psychology of bull and bear
markets, Insider activity

8. Applying technical analysis to bonds, currencies, futures and options.

Module IV

9. Technical Analysis and Portfolio Management, Technical analysis tools for sentiment;
Efficient market considerations; Short versus long trading strategies; Risk tools; Advanced
derivative use and technical analysis; Quant tools.

Reference Text:
Technical Analysis: The Complete Resource for Financial Market Techniciansby By Charles D. Kirkpatrick, Julie
R. Dahlquist (2011), Pearson Education.

39
 Semester III COURSE 605a

Risk in Financial Services

Course Objective
This course will help to understand the processes typically used to identify, reduce and manage
specific aspects of risk.

Course Outline

Module I

• Principles of Risk Management

• International Risk Regulation

Module II
• Operational Risk
• Credit Risk
• Market Risk

Module III

• Investment Risk
• Liquidity Risk
• Model Risk

Module IV

• Risk Oversight and Corporate Governance

• Enterprise Risk Management (ERM)

The course content is based on Chartered Institute for Securities & Investment’s Risk in
Financial Services certificate program. The detailed syllabus can also be viewed on www.
cisi.org.

Reference Text:
Certificate in Risk in Financial Services, Risk in Financial Services, learning Manual, Edition 7,
May 2018

40
Semester IV COURSE 605b

Infrastructure and Project Financing

Course Objectives
This objective of the course is to provide an understanding and appreciation of a financing
technique that is widely used to finance infrastructure projects today.

Course Outline
Module I
An Overview of Infrastructure: Demand for Infrastructure; Sustainability and Infrastructure;
Definition and Characteristics of Infrastructure; Types of infrastructure companies; Value chain
elements; Sources of revenue and financing; Competition and regulation.

Module II
Infrastructure Investments: Infrastructure as an Asset Class; Investors in infrastructure; Risk-
return profiles of unlisted infrastructure; Benchmarking infrastructure investments; Portfolio
diversification through infrastructure.

Module III
Organisational Model: Privatisation Models; Partnership Models; Business Models; Contractual
Models; Financing Models.
Risk Management: General Risks; Project/Asset-specific Risks; Sector-specific Risks

Module IV
Project Finance: Project Finance Basics; Project Finance and PPP; Basic Structure of Project
Finance; Structuring Project Financings - Advisory, Project assessment, Risk analysis and
allocation, Financing, Implementation and monitoring.

Text Book
Infrastructure as an Asset Class: Investment Strategy, Sustainability, Project Finance
and PPP (2e) by Barbara Weber, MirjamStaub-Bisang, Hans Wilhelm Alfen. John Wiley &
Sons (2016).

41
 Semester IV
Code Course Title Credits

Course 611 Structured Finance 4

Course 612 Behavioural Finance 4

Course 613 International Finance 4

Course 614a Business Analytics 4

Course 614b Alternative Investments 4

Course 615 Research Project 6

42
Semester IV COURSE 611

Structured Finance
Course Objectives
The objective of this course is to develop good understanding of securitization structure,
economics of structured finance, various structured instruments and valuation
techniques.

Course Outline
Module I

1. Introduction to structured finance.

Financing with Asset-Backed Securities

2. ABS: Ratings and Cost-Benefit Analysis

Collateralized Debt Obligations: Structure and Pricing; Collateralized Loan Obligations

Module II

3. Credit swaps

Credit Derivatives; Synthetic ABS and related instruments.

4. MTNs and equity-linked structured notes

Module III

5. Design and pricing of convertible, hybrids and mezzanine debt

6. Structuring leveraged finance

Module IV

7. Economics of Financial Innovation

Competition and the Product Cycle in Financial Innovations; Sources of Innovations;
Transactions and Monitoring Costs; Regulation, Taxes, Constraints; Market Segmentation.
8. Understanding New Instruments
43
The Building Block Approach; Hedging and Managing New Instruments.

Required Text
Elements of Structured Finance by Ann Rutledge, Sylvain Raines (2009), Oxford University Press.

Reference Text
Structured Finance: Techniques, Products and Market by Stefano Gatti (2005), Springer.

44
Semester IV COURSE 612

Behavioural Finance
Course Objective
Psychology plays a pivotal role in the pricing of assets. On average, during rainy days the stock
market underperforms in comparison with sunny days. How human psychology affects these
variables will be covered in this course, which will run though the most up to date literature on
these issues.

Course Outline
Module I
1. Investment Decision Cycle: Judgment under Uncertainty

2. Utility/ Preference Functions: Expected Utility Theory [EUT]

3. Brief History of Rational Thought: Pascal-Fermat to Friedman-Savage

Module II

4. Paradoxes (Allais and Others)

5. Prospect Theory

6. Information Screening Biases

Module III

7. Information Processing: Bayesian Decision Making, Heuristics and cognitive biases

8. Forecasting Biases

9. Emotion and Neuroscience

Module IV

10. Group Behavior: Conformism, herding, fatal attractions

11. Investing Styles and Behavioral Finance

Reference Text:
• Handbook of Behavioral Finance – Brian R. Bruce
• Behavioral finance - Wiley Finance - Joachim Goldberg, Rüdiger von Nitzsch

45
Semester IV COURSE 613

International Finance
Course Objectives
The course aims to provide students with:
(a) a basic knowledge of how international financial markets work;
(b) an understanding of exchange rates and why currency values fluctuate, and methods used to
manage risk in the global markets.

Course Outline
Module I

1. Introduction and Motivation for International Finance

Key Issues in International Business Finance; Role of an International CFO.
2. Institutional Background of International Finance
International Payment Mechanism; International ("Euro") Money and Bond Markets; Balance of
Payments; Exchange-Rate Regimes.
3. Currency Markets
Spot Markets for Foreign Currency; Exchange Rates; Major Markets for Foreign Exchange; Law of
One Price for Spot Exchange Quotes; Translating FC Figures: Nominal Rates, PPP Rates, and
Deviations from PPP.

Module II
4. Forward Exchange Rates for Currency
Introduction to Forward Contracts; Relation between Exchange and Money Markets; Law of One
Price and Covered Interest Parity; Market Value of an Outstanding Forward Contract; Forward
Forward and the Forward Rate Agreement; Using Forwards for International Financial
Management.
5. The Market for Currency Futures
Handling Default Risk in Forward Markets; How Futures Contracts Differ from Forward Markets;
Effect of Marking to Market on Futures Prices; Hedging with Futures Contracts; Pros and Cons of
Futures Contracts Relative to Forward Contracts.
6. Markets for Currency Swaps
Fixed-for-Fixed Currency Swaps; Interest-Rate Swaps; Cross-Currency Swaps.

Module III
7. Currency Options
Concepts and Uses of Currency Options; Institutional Aspects of Options Markets; Options on
Futures; Using Options for Arbitrage, Hedging; Speculation; Hedging and Valuation.
8. Exchange Risk, Exposure, and Risk Management

46
What Makes Forex Markets Tick? Behavior of Spot Exchange Rates; PPP Theory and the Behavior
of the Real Exchange Rate; Exchange Rates and Economic Policy Fundamentals; Measuring
Exposure to Exchange Rates; Concepts of Risk and Exposure: Measuring and Hedging of Operating
Exposure; Accounting Exposure.
9. Managing Credit Risk in International Trade
Payment Modes without Bank Participation; Documentary Payment Modes with Bank
Participation; Standard Ways of Coping with Default Risk;

Module IV
10. Long-Term International Funding and Direct Investment
International Fixed-Income Markets; "Euro" Deposits and Loans; International Bond and
Commercial-Paper Markets; Borrowing Alternatives.
11. Cost of International Capital and International Taxation of Foreign Investments

Reference Text
International Finance: Theory and Policy By Steve Suranovic (McGraw-Hill) 2011.

47
Semester IV COURSE 614a

Business Analytics
Course Objectives
The objective of the course is to provide an understanding of the fundamental concepts of the
emerging field ofbusiness analytics and providesvital toolsinunderstandinghowdata analysis worksin
today’sorganizations. Students will learn to apply basic business analytics principles, communicate
with analytics professionals and effectively use and interpret analytic models to make better
business decisions.

Course Outline
Module I: Foundations of Business Analytics

Module II: Descriptive Analytics Visualizing and Exploring Data

Module III: Predictive Analytics

a. Predictive Modeling and Analysis;
b. Forecasting Techniques;

c. Simulation and Risk Analysis;

d. Introduction to Data Mining

Module IV: Prescriptive Analytics

a. Linear Optimization;
b. Applications of Linear Optimization;

c. Integer Optimization;
d. Nonlinear and Non-Smooth Optimization;
e. Optimization Models with Uncertainty
f. Making Decisions: Decision Analysis

Text Book
Business Analytics (2e) by R. Evans James. Pearson Education (2017).

48
Semester IV COURSE 614b

Alternative Investments
Course Objectives
The objective of this course is to explore the world of alternative investments, such as hedge
funds, private equity, venture capital funds, real estate, and commodities either directly or
through funds of funds.

Course Outline
Module I

1. Introduction to alternative investments: History, evolution, types, regulations,

comparison of alternative investments with traditional investments; Categories of
alternative investments; Aspects of risk and return

Module II

2. Investing in Commodities: Gaining Exposure to Commodities; Commodity Prices Compared

to Financial Asset Prices; Economic Rationale; Commodity Futures Indexes.
3. Investing in Real Estate: The Benefits of Real Estate Investing; Real Estate Performance;
Real Estate Risk Profile; Real Estate as Part of a Diversified Portfolio; Core, Value-Added,
and Opportunistic Real Estate.

Module III

4. Investing in Real Estate Investment Trusts; Advantages and Disadvantages of REITs;

Different Types of REITs; Economics of REITs.
5. Introduction to Hedge Funds: Hedge Funds vs. Mutual Funds; Growth of the Hedge Fund
Industry; Categories of Hedge Funds; Hedge Fund Strategies; Considerations in Investing
in Hedge Funds; Hedge Fund Performance; Hedge Fund Investment Strategy.

Module IV

6. Investing in Mezzanine Debt: Overview of Mezzanine Debt; Examples of Mezzanine

Financing; Mezzanine Funds; Venture Capital and the Distinction Between Mezzanine;
Financing and Different Forms of Private Equity; Advantages of Mezzanine Debt to the
Investor.
7. Investing in Distressed Debt: Vulture Investors and Hedge Fund Managers; Distressed
Debt and Bankruptcy; Distressed Debt Investment Strategies; Risks of Distressed Debt
Investing.
49
Reference Text:
Alternative Investments: A Primer for Investment Professionals by Donald R. Chambers,
Keith H. Black, Nelson J. Lacey. CFA Institute Research Foundation (2018).

50
JBIMS - MMS
Accounting: Financial, Costs, and Management - Master of Management Studies (MMS)
Course Objectives: This course introduces the basic concepts and methods used in
corporate financial statements for the information of investors and other interested external
parties. The course examines the concepts and procedures underlying the development of a
cost accounting system for managerial decisions, control, and performance reporting.
Course Outline
Unit I: Introduction to Financial Accounting
1.​ Introduction to Accounting and Business
2.​ The Double Entry System
3.​ Analyzing and recording transactions
4.​ The adjusting process; completing the accounting cycle
Unit II: Preparation of Financial Statements
1.​ Preparation of Profit and Loss Account
2.​ Preparation of Balance Sheet
3.​ Preparation of Cash Flow Statement
Unit III: Cost Accounting
1.​ Understanding different cost types and their significance in cost control
2.​ Preparation of Cost Sheet and Absorption Costing
3.​ Job Order Costing and Process Cost Systems
4.​ Inventory Costing and Overhead Costing
5.​ Marginal Costing; Break-even Point and Cost-Volume-Profit Analysis
6.​ Standard Costing; Variance Analysis
Unit IV: Management Accounting
1.​ Activity-Based Costing and Activity-Based Management
2.​ Transfer Pricing with reference to Responsibility Accounting
3.​ Budgeting: Flexible Budget, Cash Budget, and Production Budget
4.​ Decision Making and Relevant Information
Textbooks:
1.​ Horngren's Accounting (12e) by Tracie L. Miller-Nobles, Brenda L. Mattison, Ella
Mae Matsumura (2017). New Delhi: Pearson (India) Limited.
2.​ Cost Accounting (2e) by M.Y. Khan and P.K. Jain (2017). McGraw Hill Education.
Corporate Finance - Master of Management Studies (MMS)
Course Objectives: The objective of the course is to introduce the issues, theory, and
methodology that comprise a framework for rational decision-making by financial
managers. The objective of this course is to use examples, problems, and cases to develop
analytical ability and to illustrate the practical application of financial theory and analysis.
Course Outline
Unit I: Introduction to Corporate Finance
1.​ Definition, nature, goals, and scope of corporate finance.
2.​ The time value of money and its applications
3.​ Introduction to financial statement analysis
Unit II: Capital Budgeting
1.​ Making capital investment decisions: project cash flows, incremental cash flows,
2.​ Investment Appraisal criteria: accounting rate of return, payback period, net present
value, and internal rate of return
3.​ Capita Rationing
Unit III: Raising Long Term Finance
1.​ Capital structure: determinants of capital structure; capital structure theory
2.​ Long term financial instruments: equity, debt, hybrids
3.​ Degree of operating, financial and combined leverage
4.​ Distribution Policy: determinants of dividend policy; buyback of shares.
Unit IV: Working Capital Management
1.​ Nature of working capital and determinants of working capital requirements
2.​ Short-term financial planning: determination of working capital requirements
3.​ Sources of short-term finance.
Textbooks:
1.​ Financial Management (7e) by M.Y. Khan and P. K Jain (2017). McGraw Hill
Education.
2.​ Financial Management (6e) by Prasanna Chandra (2017). McGraw Hill Education.
3.​ Corporate Finance (11e) by Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe,
Bradford D. Jordan. McGraw-Hill Education (2015).