Unit 1: Investment Environment LH 4
Meaning of investment; Types of assets: real assets and financial assets; Financial markets and the economy; The investment process; The risk-return trade-off; Efficient markets; Major players in the financial markets; Ethical issues in investing; and Nepalese investment environment.
Unit 2: Assets Classes and Financial Instruments LH 8
The money market: Treasury bills, certificates of deposit, commercial paper, bankers’ acceptance, Eurodollars, yield on money market instruments; The bond market: treasury notes and bonds, inflation-protected treasury bonds, federal agency bonds, international bonds, municipal bonds, corporate bonds, mortgages and mortgage-backed securities; Equity securities: common stock – characteristics and listing, preferred stock, depository receipts; Stock and bond market indexes: stock market indexes – price-weighted index, value-weighted index, equally-weighted index; Nepal Stock Exchange index, bond market indicators; and Derivative markets.
Unit 3: Securities Markets LH 6
Concept of securities markets; Issue of securities; Privately held firms and publicly traded companies; Shelf registration; Initial public offerings; Trading of securities; Types of markets; Types of orders; Trading mechanisms; The rise of electronic trading; ECNs; New trading strategies; Globalization of stock markets; Trading costs; Buying on margin; Short sales; Functions of Nepal Stock Exchange; and Role of Nepal Securities Board.
Unit 4: Mutual Funds LH 4
Concept and functions of investment companies; Types of investment companies: unit trusts, managed investment companies – open-end and closed-end; Mutual funds: investment policies, fee structure, mutual fund returns; Concept of exchange-traded funds; and Mutual funds in Nepal.
Unit 5: Risk and Return LH 6
Concepts of risk and return; Measuring investment returns: holding period return, returns over multiple periods, annualizing rates of return, expected return, time series of return; Inflation and real rates of return; Measuring risk: variance, standard deviation, coefficient of variation; and Portfolio return and risk of a portfolio of risky and risk-free assets.
Unit 6: Efficient Diversification and CAPM LH 8
Diversification and portfolio risk; Asset allocation with two risky assets; Covariance and correlation; The risk-return trade-off with two-risky-assets; The mean-variance criterion; The optimal risky portfolio with a risk-free asset; Efficient diversification with many risky assets; The efficient frontier of risky assets; Choosing the optimal risky portfolio; The Capital Asset Pricing Model: the model, assumptions, implications, and the security market line.
Unit 7: Bond Prices and Yields LH 4
Bond pricing; Bond pricing between coupon dates; Bond pricing in excel; Bond yields: yield to maturity, yield to call, realized compound return versus yield to maturity; Bond prices over time; and Yield to maturity versus holding-period return.
Unit 8: Equity Valuation LH 4
Valuation by comparables; Limitations of book value; Intrinsic value versus market price; Dividend discount models: the constant-growth and multistage growth models; Price–earnings ratios; and pitfalls in P/E analysis.
Unit 9: Macroeconomic and Industry Analysis LH 4 Domestic macro economy; Government policy: fiscal policy and monetary policy; business cycles; Economic indicators; Industry analysis: defining an industry, sensitivity to business cycle, sector rotation, industry lifecycles, and industry structure and performance.