Finance

 

 

Faculty of Management Studies

Master of Business Administration

Sem.-IV

Subject Code:1MS2020434

Subject Title: Behavioral Finance

1.   Course Objectives and Outline:

This course is designed to provide an overview of an exciting and fast growing area in finance, which takes as its premise that investment decision-making and investor behaviors are not necessarily driven by 'rational' considerations but by aspects of personal and market psychology. Behavioral research in finance is a large and growing field due to increase in integration of global stock markets. The efficient market hypothesis in finance is grounded in neoclassical microeconomics and argues in favor of market activity generating prices consistent with intrinsic value. Behavioral finance applies the scientific method (rejecting hypotheses for which there was no supporting evidence) to understand the impact of cognitive forces, including motivation, emotions, impulses, fear, regret, loss aversion, and genuine uncertainty upon financial market outcomes. This course can be integrated with the empirical research work in the field of behavioral finance. In particular, academic papers can be discussed, and students should have some mathematical and statistical sophistication (e.g., hypothesis testing and how to interpret regression results). The emphasis of this course is to equip students to develop the context of behavioral finance and application of behavioral finance in real world. Specifically, this course has three main objectives. Firstly, to examine how the insights of behavioral finance theories shed light on the behavior of individual investors and finance professionals in investment decision-making, secondly, to explore the possibility to improve investment performance and corporate performance by recognizing the cognitive biases and applying appropriate 'debiasing' techniques. Finally, to investigate the implications of behavioral finance for the construction of good corporate governance mechanisms.

This course enables students with following concepts:

·         History of behavioral finance research

·         Methodology of behavioral research

·         A review of expected utility theory and an introduction to prospect theory

·         Investment Decision Cycle: Judgment under Uncertainty

·         Utility/ Preference Functions: Expected Utility Theory

·         Information Processing: Bayesian Decision Making, Heuristics and cognitive biases

·         Investing Styles and Behavioral Finance

 

2.   Teaching Scheme (Hours per week)

Lecture (Hrs.)

Tutorial

Practical

Credit

Evaluation Scheme (Marks)

Total

University Assessment

Internal Assessment

4

-

-

4

60 Marks

40 Marks

100 Marks

 

 

 

3.   Syllabus

Module No.

Contents

Total Hours

Weight

1

Rational Expectations Paradigm and the Behavioral Challenge, Foundations of Rational Finance, Expected Utility Theory, Modern Portfolio Theory, Capital Asset Pricing Model, Agency Theory, Prospect Theory, Framing, & Mental Accounting, Efficient Market and Inefficient Market Hypothesis

12

25%

2

Heuristics and Biases, How the Human Mind Works, Irrationality and Adaptation, Self-deception and Forms, Forms and Causes of Overconfidence, Emotional Factors  and Social Forces, Neuroscientific and Biological Perspective, Adaptive Market Hypothesis, Implications of Heuristics and Biases for Financial Decision-Making

12

25%

3

Investor Behavior, Influence of Emotions, Behavioral Portfolio Theory, Market Outcomes, Size Effect and Seasonality, Market Anomalies, Value Investing, Evidence and Prospects of Value Investing, Strategies of Well Known Value Investors, Challenges to Market Efficiency

12

25%

4

Behavioral Corporate Finance, Capital Budgeting, Capital Structure, Dividend Policy, Mergers and Acquisitions, Agency Conflicts and Corporate Governance, Building a Smart Organisation, Neurofinance and the Trader’s Brain

12

25%

 

4.   Course Pedagogy

The pedagogy of the subject involves Lectures, Assignments, Projects, Case Discussions, Research, Presentations. Students will be given group tasks and assignments. The flipped classroom add more value to the course where students read the concept in advance.

 

5.   Suggested Readings

a.      Books

1

Behavioural Finance; by Chandra, Prasanna; McGraw-Hill Education

2

Behavioural Finance; by Sulphey M. M.; Prentice Hall India Learning Private Limited

3

Behavioural Finance; by Singh, Shuchita and Bahi, Shilpa; Vikas Publishing House

4

Understanding Behavioral Finance; by Ackert, Lucy; Cengage Learning India

5

Behavioral Finance and Wealth Management; by Pompian, Michael M; Wiley: New Jersey

6

Inefficient Markets: An Introduction to Behavioral Finance; by Shleifer, Andrei; Oxford University Press

b.      Journals/Magazines

·         Journal of Behavioral Finance, publication of the Institute of Behavioral Finance By Taylor & Francis.

·         Journal of Behavioral and Experimental Finance by Elsevier.

·         Review of Behavioral Finance by EmeraldInsight

·         International Journal of Behavioural Accounting and Finance by InderScience Press.

 

6.   Evaluation Scheme

 

Sr. No.

Component

Weight

1

University Examination

60%

2

Internal Assessment

-Depending on the need and objectives of the subject, internal assessment should include minimum three of the following sub-components;

Class Test, Quiz, Assignments, Case Presentation, Class Participation, Projects, Team/Individual Assignments.

-The weightage of a sub-component should not exceed 50% of internal assessment component weight.

-The bifurcation of sub-components shall be communicated by the instructor before commencement of the academic sessions.

40%

 

 

Subject Code:1MS2020435

Subject Title: Commodity Markets

1.   Course Objectives and Outline:

This course augment the decision making process pertaining to the commodity markets. In the years following liberalization in 1991, the economies became market driven, with levels of trade among them growing significantly. As such, the physical and derivative markets for commodities have become central not just for the purpose of facilitating direct transactions, but also in terms of generating consensus price information helpful for making production decisions and for managing the risk arising out of fluctuations in prices of commodities. Investments in the commodity derivative markets have come to be acknowledged as yet another avenue for diversification of portfolio risk. This course enables students with following concepts:

·         Knowledge of emerging commodities derivatives trading practices in India

·         Historical changes and growth of global and domestic Commodities derivatives markets

·         Issues in Agricultural and non-agricultural Commodities Markets

·         Commodities Derivative Exchanges and design of the markets

·         Role of intermediaries in Commodities Markets

 

2.   Teaching Scheme (Hours per week)

Lecture (Hrs.)

Tutorial

Practical

Credit

Evaluation Scheme (Marks)

Total

University Assessment

Internal Assessment

4

-

-

4

60 Marks

40 Marks

100 Marks

 

3.   Syllabus

Module No.

Contents

Total Hours

Weight

1

Commodity Markets: An Overview, Marketing of Agricultural Commodities, Physical Market Operations, Commodity Risk, Managing Risk, Evolution and growth of Commodity Derivatives in India, Derivative Markets and Participants, Pricing Derivatives, Economic Importance, Commodity Exchanges, Regulation

12

25%

2

Trading on Commodity Exchanges, The Exchange Platform, Exchange Membership, Commodity Brokerage, Trading Systems on Commodity Exchanges, Participants, Market Positions, Order Types, Access to Commodity Exchanges, Volume and Open Interest, Clearing and Settlement, Risks in Commodity Markets, The Settlement Process, Distinctive Features of Commodity Futures Markets, Commodity Futures Pricing, Carrying Cost, Futures-Spot Convergence, Price Relationships

12

25%

3

Commodity Futures Applications, Futures for the Hedger, Mismatches in Basis and Basis Risk, Futures for the Speculator, Spreads, Futures for the Arbitrageur, Commodity Options, Arithmetic of Option Premiums, Option Greeks, Buying and Selling Options, Pricing Options, Commodity Options Applications, Options for Hedging, Options for Speculating, Advanced Option Trading Strategies, Commodity Trading Strategies

12

25%

4

Commodities: An Emerging Investment Class, The Investment Rationale, Investing in Commodities, Commodity Indices, Risks and Challenges of Commodity Investing, Fundamental and Technical Analysis of Commodities, Supply-Demand Relationship, Equilibrium Price and Disequilibrium, Using Fundamental and Technical Analysis to Predict Future Prices of Commodities, Variety in Commodity Markets, Weather Derivatives, Electricity Derivatives, Catastrophe Derivatives, Carbon Derivatives, Currency Derivatives, Property Derivatives, Derivative Disasters, Derivatives—Positives and Negatives, Derivatives Disaster—Reasons and Lessons

12

25%

 

4.   Course Pedagogy

The pedagogy of the subject involves Lectures, Assignments, Projects, Case Discussions, Real life Business Scenarios etc. Students will be given group tasks and assignments.

5.   Suggested Readings

a.      Books

1

Commodity Markets: Operations, Instruments, and Applications; by Chatnani, N. N; Tata McGraw Hill Education Private Limited

2

Guide to Indian Commodity Market; by Gala, Ankitand Gala, Jitendra; Buzzingstock Publishing House

3

Indian Commodity Derivative Market: Operation and Performance; by Mahanta, Devajit; Primus Books

4

The Economics of Commodity Markets; by Chevallier, J., &Ielpo, F.; John Wiley & Sons

5

Commodity Markets and the Global Economy; by Clayton, B. C.; Cambridge University Press

6

Trading Commodities and Financial Futures: A Step by Step Guide to Mastering the Markets; by Kleinman, George; Prentice Hall

 

b.      Journals/Magazines

·         Journal of Commodity Markets by Elsevier

·         Recent Journal of Commodity Markets Articles by Elsevier

·         Journal of Commodity Markets by Science Direct

 

6.   Evaluation Scheme

 

Sr. No.

Component

Weight

1

University Examination

60%

2

Internal Assessment

-Depending on the need and objectives of the subject, internal assessment should include minimum three of the following sub-components;

Class Test, Quiz, Assignments, Case Presentation, ClassParticipation, Projects, Team/Individual Assignments.

-The weightage of a sub-component should not exceed 50% of internal assessment component weight.

-The bifurcation of sub-components shallbe communicated by the instructor before commencement of the academic sessions.

40%

 

 

Subject Code:1MS2020431

Subject Title: Financial Derivatives

1.   Course Objectives and Outline

Derivatives are known to be among the most powerful financial instruments. The Indian equity derivatives market has seen tremendous growth in last decade. This subject will provide insights into different types of financial derivatives instruments like Equity, Currency and Interest Rate and institutional structure of its. The course aims to develop an understanding of the importance of financial derivatives and the institutional structure of the markets on which they are traded as well as developing the analytical tools necessary to price such instruments.

2.   Teaching Scheme (Hours per week)

Lecture (Hrs.)

Tutorial

Practical

Credit

Evaluation Scheme (Marks)

Total

University Assessment

Internal Assessment

4

-

-

4

60 Marks

40 Marks

100 Marks

 

3.   Syllabus

Module No.

Contents

Total Hours

Weight

1

Introduction to Derivatives:

Brief History of Derivatives and Evolution of Commodity, Currency, Stocks and Interest Rate Derivatives. Explaining Structure of Cash and Derivative Markets: Forwards, Futures, Options, Swaps, etc. Application of Derivative: Hedging, Speculation and Arbitrage

12

25%

2

Future and Forward: Futures Contract Specifications: Underlying Asset, Contract Size, and Delivery Specifications, Marking to Market using Margin Account, Familiarizing with Market Quotes, Trading Strategies involving Futures, Futures Pricing: Pricing by Arbitrage relationship between Futures and Spot Price (cost of carry and reverse cost of carry), Futures on Dividend-paying Assets

12

25%

3

Mechanics & Properties of Options: Options Type, Boundary Conditions and Moneyness for options, Put-call parity and its interpretation, Basic options strategies. Option Pricing: Black-Scholes Models and Binomial Model of options pricing, Options sensitivity

12

25%

4

Interest Rate Futures in India: Interest Rate Future and its rational, Contractual Specification, Floating and Fixed Rate, Participants of markets. Currency Markets: Exchange rate and fixed and floating exchange rate regime, Factors affecting exchange rate, Concepts of quotes, Growth of currency derivatives in India

12

25%

 

4.   Course Pedagogy

The pedagogy of the subject involves Lectures and presentations. Students will be given group tasks and assignments and small project report on current topics.

5.   Suggested Readings

a.      Books

1

Options Futures & Other Derivatives, By Hull & Basu, Pearson Education

2

Fundamentals of Futures and Options Markets; By John C Hull; Pearson Education

3

Futures and Options, By Vohra & Bagri, Tata McGraw Hill

4

Derivatives & Risk Management, By Rajiv Srivastava, Oxford University

5

Derivatives and Risk Management, By Sundaram Janakiramanan, Pearson Education

6

Risk Management and Derivatives, By Rene M. Stulz, Cengage Publicaion

 

b.      Journals/Websites/News Paper

·         Business Dailies (Business Standard, Economic Times, Financial Express etc.)

·         Stock exchange Websites: National Stock Exchange, Bombay stock Exchange

·          NSE’s Certification in Financial Market(NCFM) modules

·         Websites: Moneycontrol, Economic times, Financial express, Other Securities companies website like. Kotak Securities, HDFC Securities, ICICI Direct

·         Journals By NSE-NYU Stern School of Business Initiative for the Study of the Indian Capital Markets https://www.nseindia.com/research/content/research_NSE_NYU.htm

 

6.   Evaluation Scheme

 

Sr. No.

Component

Weight

1

University Examination

60%

2

Internal Assessment

-Depending on the need and objectives of the subject, internal assessment should include minimum three of the following sub-components;

Class Test, Quiz, Assignments, Case Presentation, Class Participation, Projects, Team/Individual Assignments.

-The weightage of a sub-component should not exceed 50% of internal assessment component weight.

- The bifurcation of sub-components shall be communicated by the instructor before commencement of the academic sessions.

40%

 

 

Subject Code:1MS2020432

Subject Title: International Finance

1.   Course Objectives and Outline:

In a fast changing dynamic international financial system managing currency risk has become a daunting challenge, one that a modern business enterprise cannot ignore. The course attempts to decipher the linkages between international and domestic financial markets, understand the use of financial instruments and create awareness of the associated risks. The course has been designed with the following learning objectives;

·         To introduce international finance function to use market instruments, tools and techniques in managing their risk.

·         To examine the process of understanding and managing the various risks involved in financial markets

·         To understand basics and applications of the use of derivative products in managing risks

   

2.   Teaching Scheme (Hours per week)

Lecture (Hrs.)

Tutorial

Practical

Credit

Evaluation Scheme (Marks)

Total

University Assessment

Internal Assessment

4

-

-

4

60 Marks

40 Marks

100 Marks

 

3.   Syllabus

Module No.

Contents

Total Hours

Weight

1

Globalization and the Multinational Firm

International Monetary System

Balance of Payments

The Market for Foreign Exchange

12

25%

2

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

International Banking and Money Market

Interest Rate and Currency Swaps

12

25%

3

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Capital Structure and the Cost of Capital

12

25%

4

International Bond Market

International Equity Markets

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

12

25%

 

4.   Course Pedagogy

The pedagogy of the subject involves Lectures, Case Discussions, Real life Business Scenarios. Students shall be given group tasks and assignments. Spreadsheet applications shall be used to solve selected numerical problems.

5.   Suggested Readings

a.      Books

1

International Financial Management (Latest Edition); By Eun & Resnick; Tata McGraw-Hill

2

International Financial Management (Latest Edition); By V. V. Sharan; PHI

3

Multinational Financial Management (Latest Edition); By Shapiro; John Wiley Publication

4

International Financial Management (Latest Edition); By Madura; South Western Publication

5

International Financial Management (Latest Edition); By P. G. Apte; Tata McGraw-Hill

 

b.      Journals/Magazines

·         Journal of Finance-Wiley Publication

·         The Economic Journal – JSTORE Publication

·         International Finance-Wiley Publication

·         Journal of International Money and Finance- Elsevier

·         South Asia Economic Journal-Sage Publication

·         Finance India-Indian Institute of Finance Publications

 

6.   Evaluation Scheme

 

Sr. No.

Component

Weight

1

University Examination

60%

2

Internal Assessment

-Depending on the need and objectives of the subject, internal assessment should include minimum three of the following sub-components;

Class Test, Quiz, Assignments, Case Presentation, Class Participation, Projects, Team/Individual Assignments.

-The weightage of a sub-component should not exceed 50% of internal assessment component weight.

- The bifurcation of sub-components shall be communicated by the instructor before commencement of the academic sessions.

40%

 

 

Subject Code:1MS2020433

Subject Title: Management Control Systems

1.   Course Objectives and Outline:

The course intends to acquaint students with the control systems design and its implementation in profit as well as non-profit organizations in order to achieve desired goals and objectives. This course enables students with following concepts, Strategic Planning, Budgeting, Resource Allocation, Performance Measurement and Evaluation, Reward / Responsibility Centre Allocation, Thus, the main objective of this course is to equip the students with the knowledge, insight and skills for control systems design and its effective implementation of strategies as well as to identify, analyze and sort out problems related to the implementation of strategy in any organization.

  

2.   Teaching Scheme (Hours per week)

Lecture (Hrs.)

Tutorial

Practical

Credit

Evaluation Scheme (Marks)

Total

University Assessment

Internal Assessment

4

-

-

4

60 Marks

40 Marks

100 Marks

 

3.   Syllabus

Module No.

Contents

Total Hours

Weight

1

Nature of Management control systems; The management control environment : Basic Concepts Management Control System  Boundaries, Characteristics & Structural Foundation of Management Control System The Nature of Management Control Systems, Understanding Strategies: Goals  The Concept of Strategy Corporate Level Strategy Business Unit Strategies Behaviour in Organizations, Behavioral aspects of Systems. Factors affecting Human Behaviour, Issues of Goal Congruence. Structure of Organizations. Functional v/s SBU, Role of Controller

12

25%

2

Responsibility Centre: Profit Center, Investment Center, Budgeting and Reporting, Performance Measurement, Reward and Compensation, Techniques of Management and Management Control

12

25%

3

Transfer Pricing: Concept, Objectives, Methods, Managerial Consideration in the Selection of Methods, Administration of Transfer Pricing Policy, Measuring and Controlling Assets Employed, EVA v/s ROI, Performance Measurement, Balance Score Card, Management Compensation

12

25%

4

Management Control in Service Organization: Concept, Professional Service Organization, Financial Service Organization, Health Care Organizations, Non Profit Organizations, Management Control in Multinational Organization, Management Control of Projects

12

25%

 

4.   Course Pedagogy

The pedagogy of the subject involves Lectures, Case Discussions, Real life Business Scenarios. Students will be given group tasks and assignments. Selected Case studies on various aspects of Management Control Systems should be studied as a part of their continuous evaluation process.

 

5.   Suggested Readings

a.      Books

1

Management Control Systems; by Robert Anthony and Vijay Govindarajan ;  Tata McGraw Hill

2

Management Control Systems; by N Ghosh ;Prentice hall of India

3

Management Control systems text and cases; by Subhash Sharma ;Tata McGraw Hill

4

Modern Management Control Systems; by Kenneth A. Merchant; Pearson

5

Management Control Systems; by Sekhar R.C.; Tata McGraw Hill

6

Management Control System; by R. S. Aurora & S. R. Kale; Jaico publication

 

b.      Journals/Magazines/articles

·         Journal of management control- Springer Berlin Heidelberg

·         Management Accounting Research- Elsevier

·         Robert S. Kaplan and David P. Nortorn. The Balanced Scorecard: Translating Strategy into Action. Harvard Business Press

6.   Evaluation Scheme

 

Sr. No.

Component

Weight

1

University Examination

60%

2

Internal Assessment

-Depending on the need and objectives of the subject, internal assessment should include minimum three of the following sub-components;

Class Test, Quiz, Assignments, Case Presentation, Class Participation, Projects, Team/Individual Assignments.

-The weightage of a sub-component should not exceed 50% of internal assessment component weight.

- The bifurcation of sub-components shall be communicated by the instructor before commencement of the academic sessions.

40%

 

 

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