Faculty of Management

Bachelor of Business Studies Program (BBS)

Fourth Year Curriculum

Office of the Dean

Faculty of Management
Tribhuvan University
Kathmandu, Nepal

2013
 Faculty of Management

The Faculty of Management (FOM), Tribhuvan University has its ultimate objective of educating students for
professional pursuits in business, industry and government. It is further dedicated to contributing to an increase in
the knowledge and understanding of business and public administration. FOM aims to develop a networking with
management institutes in the country and abroad to exchange new knowledge, technology, and methods of
achieving higher level efficiency in management of business and public entities. It also aims to continuously
innovate and promote cost-effective, socially relevant, modern technology based educational programs in Nepal.

The FOM offers instructions leading to Bachelor of Business Studies (BBS-4years annual system) , Bachelor of
Travel and Tourism Management (BTTM), Bachelor of Hotel Management (BHM), Bachelor of Information
Management (BIM), Bachelor of Business Management (BBM), Bachelor of Public Administration (BPA), Post
Graduate Diploma in Police Sciences (PGDPS), Master of Business Management (MBM), Master of Business
Studies (MBS), Master of Public Administration (MPA), Master of Travel and Tourism Management (MTTM),
Master of Hospitality Management (MHM), Master of Finance and Control, Master of Business Administration
(MBA) and Master of Business Administration in Global Leadership and Management (MBA-GLM). The FOM
also offers Master of Philosophy in Management (M Phil) and doctoral program in management leading to a
Degree of Doctor of Philosophy (Ph D).

FOM’s GOALS

  Prepare professional managers capable of handling business in a dynamic global environment.

 Produce socially responsible and creative entrepreneurs capable of promoting business and industry for
 the socio-economic development of Nepal.
 Conduct research and management development programs for updating the knowledge and skill base of
 academics and practicing managers.
 Innovate and promote management programs catering to the various social and economic sectors of
 Nepal.
 Establish linkages with leading universities and management institutes abroad and collaborate with them
in program development and implementation.
 Bachelor of Business Studies (BBS)

Programme Objective
The objective of the BBS programme at the FOM is to develop students into competent managers for any sector
of organized activity. The programme is based on the principle that graduates will spend a major portion of their
life in a constantly changing environment. Therefore, the student should have an opportunity to obtain a broad
knowledge of the concepts and reality- based skills underlying the operation and management of organizations.
Upon graduation, students should be equipped to function as a manager in business, industry and government.
The graduate should also have a variety of career opportunities in different sectors of business including
entrepreneurship and create much needed jobs for others.

The BBS programme specially attempts to:

1. Equip the students with the required conceptual knowledge of business and administration to develop a
general management perspective in them.
2. Develop required attitudes, abilities and practical skill in students, which constitute a foundation for their
growth into competent and responsible business managers.
3. Encourage entrepreneurial capabilities in students to make them effective change agents in the Nepalese
society.
4. Develop necessary foundation for higher studies in management and thereafter take up careers in
teaching, research and consultancy.

Curricular Structure
The FOM recognizes the need for both breadth and depth in the total academic pattern. Therefore, the
curriculum for BBS degree comprises four separate and distinct course components:
1. A strong foundation allied areas of business such as language, economic analysis, legal environment and
quantitative method to prepare graduates to understand, analyze and comprehend the management
concepts, theories and practices.
2. Core business studies encompassing and integrating all functional areas to provide graduates with and
appreciation of the diversity and inter-relationship of business and management issues.
3. The opportunity to concentrate in one area of specialization such as accounting, finance, human resources
management and marketing in order to provide graduates with some degree of functional expertise.

Minimum General Requirements

The minimum general requirement for the 4-years BBS programme are as follows:
1. An academic year will consist of a minimum of 150 teaching days excluding the days taken for admission
and annual examinations.
2. The total instructional hours in an academic year will be 615 (150 day *4:10hours a day). For courses
requiring field and practical works, additional hours of study will be required.
3. A paper of 100 marks will have 150 lectures each of 50 minutes. However for practical works, extra class
hours will be required as fixed by the Faculty Board.
4. There will be a minimum of five periods (i.e class hours) each teaching day. The campuses running
morning or evening shifts will also be required to meet this minimum class requirement.
Attendance, Evaluation and Grading System
The final evaluation of students is done through the annual examination conducted by the office of the Controller
of Examinations, Tribhuvan University. However for qualifying to aapear in the annual examinations, students
must meet the following requirements:
a) The student must have a minimum of 70 percent attendance of the classes actually held.
b) No student will be allowed to appear in the second year final examinations without first appearing in the
first year final examinations.
The grading system in the annual examinations is as follows:
Third Division 35 percent
Second Division 45 percent
First Division 60 percent
Distinction Division75 percent

Methods of Instruction
The campuses offering the BBS programme should use the methods of instruction which help prepare the student
for the realities of Nepalese business, industry and government in which he/she has to work. A combination of
lecture, group discussions, problem- solving exercises, guest lectures, practical work, and project work will be
used as approaches to learning. The campuses are also encouraged to use the case method of instruction whenever
required and wherever possible.

Graduation Requirements
The BBS programme extends over four academic years and the BBS degree is awarded on its successful
completion. All candidates for BBS degree must fulfill the following requirements:
1. The successful completion of 19 courses of 1950 marks and submit a final project report of 50 marks as
prescribed with passing grades in all the courses.
2. The passing scores obtained in all theory and practical components of the courses separately.
3. Completion of courses for the fulfillment of BBS programme must occur within the time limit as prescribe by
Tribhuvan University.
The Fourth Year Programme
In fourth year, the students are encouraged to focus on a particular functional and concentration area of business
studies. Building on the foundation laid in the first, second and third years, the principal mission of the fourth year
twofold:
1) To enable the students to concentrate in one functional areas of business. FOM offers four stream of
concentration courses:
a) Accounting
b) Finance
c) Management
d) Marketing
2) To provide opportunity to students to engage in research and final project prsentation.

Fourth Year (500)

MGT 220: Entrepreneurship and Enterprise Development 100
Concentration I 100
Concentration II 100
Concentration III 100
MGT 221: Business Research Methods 50
MGT 401: Final Project 50

Project Work

The education of future manager will be incomplete without exposure to organizational reality. Therefore, the
final project work is made an essential academic requirement for the fourth year students in all concentration
courses. To write a project work students will undergo a field work and spend four weeks studying and learning
from the organization during the time fixed by the campus/college. After the field work, the student will write a
project report on the format prescribed by the FOM and submit it to the college/campus for evaluation. The
student may also be asked to present the report to the general class and/ or faculty members. The evaluation of the
report will be made by a team of external and internal examiners appointed by the by the Research department of
the respective campus/ college. The project work should relate to the student's specialization.
The student must complete the prescribed number of hours of practical work in all courses requiring such work to
the satisfaction of the concerned department. The final practical examination will be conducted jointly by team of
external and internal examiners appointed by the office of controller of examinations.

A student will have to pass the theoretical, practical and project work examinations separately in all the courses
having theoretical, project work and or practical components.
 MGT220: Entrepreneurship and Enterprise Development
Full Marks: 100
Pass Marks: 35

Lecture Hours: 150

Course Objective
This course aims at familiarizing students with the significance of entrepreneurship and enterprise development,
the role and functions of entrepreneurship and entrepreneurs, the concept of women entrepreneurship, the factors
affecting entrepreneurship development, and the need for institutional support in entrepreneurship development.

Course Description
This course contains introduction, women entrepreneurship, growth of entrepreneurship, entrepreneurship
competency development, entrepreneurial venture creation, Legal Issues of Entrepreneurial Venture, Institutional
Support to Entrepreneurship Development.

Course Details
Unit 1: Introduction LH 30
Concept and Significance of entrepreneurship; entrepreneurship importance, entrepreneurial process;
entrepreneur, and entrepreneurial venture; Types of entrepreneurship; Traits of an entrepreneur;
Distinction among entrepreneur, entrepreneur and owner-manager; Functions of an entrepreneur; Small
business vs. entrepreneurship; Entrepreneurial motivation, the entrepreneurial process, entrepreneurship
vs. entrapreneurship, managerial and entrapreneurial decision making, corporate vs. entrepreneurial
culture, intrapreneurial leadership characteristics, the individual entrepreneur, entrepreneurial feelings,
male vs. female entrepreneurship, entrepreneur vs. inventors.

Unit 2: Women entrepreneurship LH 12

Concept of women entrepreneurship; Women empowerment through entrepreneurship; Women
entrepreneurship in Nepal; Problems of women entrepreneurship; Future challenges of women
entrepreneurs and their success factors.

Unit 3: Growth of Entrepreneurship LH 15

The concept of socio-economic growth; Factors affecting entrepreneurial growth; Rural entrepreneurship
– types, problems and factors affecting rural entrepreneurship; Tourism entrepreneurship – types,
problems and factors affecting tourism entrepreneurship; Emerging concepts in entrepreneurship growth.

Unit 4: Entrepreneurship Competency Development (ECD) LH 13

Concept of entrepreneurial competency; Need for Entrepreneurial competency development (ECD);
Entrepreneurial competency development programs (ECDPs); Phases of ECDPs; Evaluation of ECDPs;
Different institutions and agencies operating ECDPs in Nepal.

Unit 5: Entrepreneurial Venture Creation LH 30

Idea generation; identifying and recognizing opportunities, personal characteristics of a entrepreneur,
techniques for generating ideas, encouraging and protecting ideas; Preparing business plan – concept and
scope, significance and elements; presenting the business plan, financial information needs, using the
Internet as a resource pool, writing a business plan,: industry analysis, marketing research, understanding
the marketing plan, characteristics of a marketing plan, steps in preparing marketing plan, Venture
creation – venture project formulation, implementation and evaluation; choosing a format of business
organization: sole proprietorship, partnership, corporation, limited liability company, developing
enterprise in Nepal- legal and ethical considerations.
Unit 6: Legal Issues of Entrepreneurial Venture LH 10
Legal requirements for venture creation – legal structures, venture registration, PAN and VAT
registration, obtaining intellectual property rights, contract laws, labor laws and environmental laws.

Unit 7: Financing of Entrepreneurial Venture LH 10

Need for financial planning; Sources of finance for entrepreneurial ventures – angel investors and venture
capitalists; Types of financing – equity and debt; Sources of short-term loans for ventures.

Unit 8: Institutional Support to Entrepreneurship Development LH 30

Institutional support – concept and need; Financial support agencies – Rural Development Banks, micro
finance institutions, commercial banks; micro enterprise development projects and programs; Logistic
support agencies - government, specialized and consultancy agencies; Industrial estates , Role of
Government in promoting entrepreneurship incentives, subsides and grants. Export oriented units-Fiscal and
Tax concession, role of financial institutes in the entrepreneurship development in Nepal. Introduction to
Entrepreneurship Development Projects in Nepal with reference to IED, MEDEP and ELAM. (MEDEP,-
ELAM).

Text and References

Khanka, S.S., Entrepreneurial Development. New Delhi: S. Chand & Company
Barringer, B.R. & Ireland, R.D. Entrepreneurship: Successfully Lunching New Venture. New Delhi: Pearson
Hisrich, R.D., Manimala, M. J., Peters, M.P. and Shepherd, D.A. Entrepreneurship, New Delhi: McGraw-Hill
Education (India) Pvt. Ltd.
Aqrawal, G.R., Entrepreneurship Development in Nepal. Kathmandu: M.K. Publishers
Shrestha, P., Entrepreneurship Development. Kathmandu: Samjhana Publication Pvt. Ltd.
Joshi, S., Entrepreneurship Development (Nepali). Kathmandu: Taleju Prakashan,
 MGT 221: Business Research Methods
Full Marks: 50

Lecture Hours: 75
Course Objectives
The primary aim of this course is to introduce students to the principle of research methods used most frequently
by business students. Basic knowledge of these methodological approaches is absolutely critical to the
comprehension of academic understanding and comprehensive and critical writing which is an essence of
business students. Therefore, the basic objective of this course is to provide knowledge and understanding of
basic principles of business research methods.

Course Description
The course has a preliminary focus on problem identification, theoretical framework development and hypothesis
formulation. The course will then deal with research design issues, measurement, sampling, data collection and
analysis. This encompasses the overall understanding and application of appropriate research techniques and
research statistics, and report writing and presentation skills.

Course Details
Unit 1: Introduction LH 20
Meaning of research; Scientific research – features,; Types of research: applied and basic; The scientific
research process; Approaches to research; Paradigm shifts – positivist Vs interpretivist philosophies;
Management research – concept, nature, and value in business decision making; Applying scientific
thinking to management problems; Ethical concerns in research.

Qualitative research: Concept, Features, assumptions, Common practices in qualitative research,

Methods of qualitative research: Case study, Ethnography, Grounded theory and phenomenological study
(A short introduction only), Building trustworthiness and credibility in qualitative research, Strength of
qualitative research.

Unit 2: Literature searching and Theoretical Framework LH 10

Concept, purposes, Kinds and writing a literature survey; Literature search through the Internet; Relation
of literature to research. Theoretical framework; Theory and research; Research approaches – deduction
and induction; Research problem; Identification of research problem in business. Research questions,
hypothesis formulation and role of hypothesis in research.

Unit 3: Research Design LH 5

Concept, Features Types – descriptive, developmental, case studies, causal-comparative, experimental,
cross-sectional and longitudinal. Basic principles of research design and criteria of a good research
design.

Unit 4: Measurement, Scaling and Sampling LH 12

Variables and their types; Nature of measurement; Scale construction for attitude measurement; Scales
commonly used in business research; Validity and reliability of measurement; Sources of measurement
problems; Concept of population, sample and sampling, Factors affecting the size of the sample, The
 sampling process; Types of samples – probability and non-probability sampling; Sampling and non-
sampling errors.

Unit 5: Data Collection and Analysis LH 20

Types of data: primary and secondary, value of secondary data to business research, Primary data,
Methods of collecting primary data : Questionnaires – design, components and principles of
questionnaire writing, pilot testing and questionnaire administration; The research interviews – face-to-
face and telephone interviews, computer assisted interviewing; Observation – concept and methods –
participative and non-participative; Data analysis – organizing and preparing data;
Presenting data in tables, graphs and charts; Pre-conditions and the use of statistical techniques:–
descriptive: (Mean, Median, Mode and standard deviation) and inferential statistics (Measures of
correlation, statistical significance, basic forecasting tools, regression, one way ANOVA and chi-square
test); Statistical testing of hypothesis; Methods of collecting and analyzing qualitative data. Role of
computers in different phases of research. Qualitative data analysis- content , thematic and narrative.

Unit 6: Research Proposal and Report Writing LH 8

Topic selection; Research proposal – purpose, types and structure; Writing research reports – the reporting
process, Contents of the research report, and style of writing; Typing and layout of the research report;
Citations and references by using APA format; Essentials of a good research report.

Basic Books
Prem P.R., Fundamentals of Business Research Methods, Kathmandu.: Buddha Academic Enterprises.
Adhikari, D. R. & Pandey, D. L. Research Methodology for Management, Kathmandu: Asmita Books Publishers
& Distributors (p) Ltd.

Reference Books
William G. Z., Business Research Methods, New Delhi: Thomson India.
Alan Bryman & Emma Bell. Business Research Methods, New Delhi: Oxford University Press.
Cooper, D. R., Schindler, P. S. & Sharma, J. K. Business Research Methods, New Delhi: McGraw Hill
Education (India).
 FIN 250: Fundamentals of Corporate Finance

Nature of the Course: Concentration Full Marks: 100

Lecture Hours: 150 Pass Marks: 35

Course Objective
The objective of this course is to provide students an understanding of the basic concepts and theories of
corporate finance and develop skills to analyze issues in corporate finance for sound financing decisions in
businesses.

Course Description
This course familiarizes students the fundamentals of corporate finance and provides them required skills to
analyze and manage financing aspects of business decisions. This course deals with introduction to corporate
finance, financial markets and institutions, interest rates, short-term financing, common stock and investment
banking process, long-term debt and preferred stock financing, capital structure and leverage, financial planning
and forecasting, derivatives and risk management, multinational corporation and merger and acquisition.

Course Details
Unit 1: Introduction to Corporate Finance LH 10 Corporate finance and financial manager; Financial
manager’s responsibilities; Managerial actions to maximize shareholder wealth; Corporate finance and
other functional areas; The agency problem: stockholders versus managers and stockholders versus
creditors; Corporate social responsibilities; and Corporate governance.

Unit 2: Financial Markets and Institutions LH 5

The capital allocation process; Financial markets; Types of financial markets; Financial institutions; The
stock market; Stock market and returns; and Stock market efficiency.

Unit 3: Interest Rate LH 10

The cost of money; Interest rates levels; Determinants of market interest rates; Term structure of interest
rates; Shape of yield curve; Using the yield curve to estimate future interest rates; Macro-economic
factors influencing interest rates; and Interest rate and business decision.

Unit 4: Short-Term Financing LH 20

Nature of short-term financing; Advantages and disadvantages; Sources of short-term financing: accruals,
accounts payable (trade credit), commercial paper, short-term bank loans – line of credit, revolving credit
arrangement, transaction loans; The cost of bank loan; Choosing a bank; Comparison of cost of trade
credit, commercial paper and short-term bank loan; Use of security in short-term financing: inventory
financing and accounts receivable financing.

Unit 5: Common Stock and Investment Banking Process LH 15

Features of common stock; Legal rights and privileges of common stockholders; Advantages and
disadvantages; The market for common stock; Methods of selling securities: public offering, rights
offering and private placement; Analysis of rights offering and effect of rights offering on shareholders’
wealth; and The investment banking process.
Unit 6: Long-Term Debt and Preferred Stock Financing LH 10
Debt instruments: term loan and bonds; Debt contract features; Loan repayment schedules; Types of
bonds; Bond innovations; Advantages and disadvantages; Preferred stock: features, types, advantages and
disadvantages.
Unit 7: Capital Structure and Leverage LH 10
Capital structure and financial structure; Determining the optimal capital structure: EBIT−EPS analysis of
the effect of financial leverage, EPS indifference analysis; The effect of capital structure on stock prices
and the cost of capital; Capital structure and value of the firm; Operating leverage, financial leverage and
total leverage.

Unit 8: Financial Planning and Forecasting LH 15

Strategic planning; Operating plans and the financial plan; Sales forecast; The Additional Fund Needed
(AFN) Equation; Forecasted financial statements; Using regression to improve forecasts; and Analyzing
the effects of changes in ratios.

Unit 9: Derivatives and Risk Management LH 15

Reasons for managing risk; Introduction to derivatives, Options: Option types and markets; Factors
affecting the value of a call option; Exercise value versus option price; Forward and futures contracts;
Other types of derivatives: swaps, structured notes, inverse floaters; Using derivatives to reduce risk; Risk
management and risk management approaches.

Unit 10: Multinational Corporate Finance LH 20

Nature of multinational corporations; Reasons for companies going global; Multinational versus domestic
financial management; Exchange rates quotations; Cross rates; Interbank foreign currency quotations;
Trading in foreign exchange rates: spot rates and forward rates; Interest rate parity; Purchasing power
parity; Inflation, interest rates, and exchange rates; International money and capital markets; International
capital budgeting; and International capital structure.
Unit 11: Merger and Acquisition LH 10
Rationale for mergers; Types of mergers; Level of merger activity; Hostile versus friendly takeovers;
Merger analysis; Role of investment bankers; Corporate alliances; and Private equity investments.

Project Work LH 10
After the completion of fourth year concentration classes the students shall have to prepare and submit a project
work in the area they have specialized. The subject teachers have to discuss with students on possible topics of
the project work, availability and sources of literature, availability of data, data collection methods, appropriate
tools of data analysis, etc relevant to the subject within 10 lecture hours.

Basic Text
Brigham, E. F., & Houston, J. F. Fundamentals of financial management. Delhi: Cenage Learning.
Weston, J. F., Scott B., & Brigham, E. F. Essentials of managerial finance. New York: Harcourt Brace College
Publishers.

References
Van Horne, J. C., & Wachowicz, J. M. Fundamentals of financial management. Prentice- Hall India Ltd.
Ross, S. A., Westerfield, R. W. & Jordan, B. D. Fundamentals of corporate finance. New York: McGraw-Hill
Irwin.
Gitman, L. J. Principles of managerial finance. Delhi: Pearson Education.
Paudel, R. B., Baral K. J., Gautam R. R., & Rana S. B. Fundamentals of corporate finance. Kathmandu: Asmita
Books Publishers and Distributors.
 FIN 252: Foundations of Financial Markets and Institutions
Full Marks: 100
Lecture Hours: 150 Pass Marks: 35

Course Objective
The course aims to lay the foundation of students on financial institutions and markets by imparting the
fundamentals concepts and theories of financial markets and institutions. By the end of this course, the student
will understand the functioning of financial institutions such as depository and non-depository financial
institutions, the role of the central bank, and the markets for government and corporate securities.

Course Description
Financial institutions and markets are important components of market economy. Students studying finance
courses must be familiar with the purpose and functions of the financial institutions and the markets. Therefore,
this course deals with fundamental aspects of financial institutions and markets as they operate in an economy.
This course covers the fundamentals concepts and theories of financial markets and assets, depository and non-
depository financial institutions, central banking and monetary policy, assets price and interest rates,
organization and structure of markets, government securities markets, markets for corporate securities, mortgage
and assets backed securities, and risk in financial institutions.

Course Details
Unit 1: Introduction LH 10
Overview of financial assets: concept of financial assets, debt versus equity instruments, the price of
financial assets and risk, financial assets versus tangible assets, the role of financial assets; Financial
markets: concepts and role of financial markets, classification of financial markets, market participants,
globalization of financial markets, classification of global financial markets, motivation for foreign
market and Euromarkets; The role of the government in financial markets: justification for regulation,
forms of regulation; and Financial innovation: categorization of financial innovations, and motivation for
financial innovation.

Unit 2: Financial Institutions, Financial Intermediaries and Asset Management Firms LH 7

Financial institutions: services provided by financial institutions; Role of financial intermediaries;
Overview of asset/liability management for financial institutions; Concerns of regulators; Asset
management firms; and Hedge funds.

Unit 3: Depository Institutions LH 8

Asset/liability problems of depository institutions; Commercial banks – services, bank funding, capital
requirement for banks; Savings and loan associations—assets, funding, and regulation; Savings banks;
Credit unions; and Classification of depository institutions in Nepal.

Unit 4: The Central Bank and Monetary Policy LH 10

The central bank and its purposes; Instruments of monetary policy; Different kinds of money; Money and
monetary aggregate; The money multiplier—the expansion of the money supply; The impact of interest
on money supply; and The money supply process in an open economy; Monetary policy: concept and
goals of monetary policy, trade-offs and conflicts among policies, goals and types of targets, and Nepal
Rastra Bank and monetary policy of Nepal.
Unit 5: Insurance Companies LH 15
Meaning; Types of insurance; Insurance company versus types of products; Fundamentals of the
insurance industry; Regulation of insurance industry; Structure of insurance companies; Forms of
insurance companies—stock and mutual; Individual versus group insurance; Types of life insurance;
General account and separate account products; Participating policies; Insurance company investment
strategies; Changes in insurance industry; Evolutions of insurance, investment and retirement products;
Insurance industry in Nepal; and Regulation and supervision mechanism in Nepal.

Unit 6: Investment Companies and Pension Funds LH 15

Types of investment companies—open-end funds, closed-end funds; unit trusts; Funds sales charges and
annual operating expenses; Multiple shares classes; Economic motivation for funds; Types of funds by
investment objectives; The concept of family of funds; Investment vehicles for mutual funds; Mutual fund
costs; Taxation of mutual funds; Regulation of funds; Structures of a funds; Recent changes in mutual funds;
Alternatives to mutual funds—exchange traded funds; Mutual funds versus exchange traded funds; Investment
companies in Nepal; Concept of pension funds; Types of pension plans—defined-benefit plan, defined-
contribution plan, and hybrid pensions plans; and Practices of pension plan in Nepal.

Unit 7: Determinants of Asset Prices and Interest Rates LH 15

Properties of financial assets; Principles of pricing of financial assets; Price volatility of financial assets;
The theories of interest rates—Fisher's classical theory, the loanable funds theory, and the liquidity
preference theory; The determinants of the structure of interest rates; The yield curve and the term
structure; Forward rates; and Determinants of the shape of the term structure.

Unit 8: Organization and Structure of Markets LH 10

Primary markets: the traditional process for issuing new securities, regulation of the primary market,
variation in the understanding of process, and private placement of securities; Secondary markets:
functions of secondary markets; Perfect markets; Roles of brokers and dealers in real market; Market
efficiency; Electronic trading; and Primary and secondary markets in Nepal.

Unit 9: Market for Government Securities LH 10

Markets for treasury securities: types of treasury securities, the primary markets—auction cycles,
determination of the results of an auction, primary dealers, submission of bids; Secondary market;
stripped treasury securities; Municipal securities markets: types and features of municipal securities,
municipal bond ratings, the primary and secondary markets for municipal securities, and yields on
municipal bonds; and Government securities and markets in Nepal.

Unit 10: Markets for Common Stock LH 10

Trading mechanics; Transaction costs; Trading arrangement for retail and institutional investors; Basic
functioning of stock markets; Stock market indicators; Pricing efficiency of the stock markets; Exchange
market structures; Stock market and over-the-counter markets; Off-exchange markets; and Common stock
market in Nepal.

Unit 11: Market for Corporate Senior Securities LH 10

Concept of corporate senior securities; Credit risk; Commercial paper—concept, issuers of commercial
paper; Medium term notes; Banks loans; Corporate bonds: overview of concept and features, bonds with
special features, corporate bond credit rating; Eurobond market; Preferred stock: features, adjustable-rate
preferred stock; Negotiable CDs; and Bankers acceptance.
Unit 12: The Mortgage and Asset-backed Securities Markets LH 10
Concept of mortgage and mortgage markets; Mortgage origination; Types of mortgage; Investment risks;
Concept of mortgage-backed securities; Agency pass-through securities; Collateralized mortgage
obligations; Accrual bonds; Stripped mortgage-backed securities; Asset-backed securities markets:
concept of asset-backed securities and securities markets, creation of an asset backed security, collateral
types and securitization structure, non-mortgage types of ABS, credit risks associated with investing in
ABS, securitization and the impact on financial markets.

Unit 13: Risks of Financial Institutions LH 10

Concept of risk; Types of risk: interest rate risk, market risk, credit risk, off-balance-sheet risk, foreign
exchange risk, sovereign risk, technology and operational risks, liquidity risk, insolvency risk and other
risks.

Project Work LH 10
After the completion of fourth year concentration classes the students shall have to prepare and submit a project
work in the area they have specialized. The subject teachers have to discuss with students on possible topics of the
project work, availability and sources of literature, availability of data, data collection methods, appropriate tools
of data analysis, etc relevant to the subject within 10 lecture hours.

Text and Reference Books

Fabozzi, F. J., Modigliani, F., Jones, F. J., & Ferri, M. Foundations of financial markets and institutions. Delhi:
Dorling Kindersley (India) Pvt. Ltd.
Saunders, A. & Cornett, M. M. Financial markets and institutions. New York: McGraw Hill Irwin.
Meir, K. Financial institutions and markets. Delhi: Oxford University Press India.
Madura, J. Financial institutions and markets Delhi: Cengage Learning India Private Limited.
Klob, R. & Rodriguez, R. J. Financial institutions and markets. Cambridge: Blackwell Publishers Inc.
Shrestha, M. K. , Bhandari, D. B. & Joshi, P. R. Foundation of Financial Institutions & Markets. Kathmandu:
Asmita Books Publishers & Distributors (P) Ltd.
Bhattarai, J., & Ghimire, S. R. Financial markets and institutions. Kathmandu: K. P. Pustak Bhandar.
Bhole, L. M. & Mahakud, J. Financial institutions and markets. Delhi: Tata McGraw Hill Education Pvt. Ltd.
 FIN 253: Fundamentals of Investment

Full Marks: 100

Lecture Hours: 150 Pass Marks: 35

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

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

Course Details
Unit 1: Investment Environment LH 10
Meaning and types of investment; Types of investors; Investment process; Investment vehicles; Making
investment plan: steps in investing, considering personal taxes, investing over the life cycle, investing in
different economic environment; Meeting liquidity needs: investing in short-term vehicles; Investment
environment in Nepal; and Ethics in investing.

Unit 2: Markets and Transactions LH 15

Meaning of securities markets; Types of securities markets: primary market and secondary market, broker
and dealer market, alternative trading system, general market conditions; Globalization of securities
markets: importance, investing in foreign securities, risk in international investing; Trading hours and
regulations of securities markets: trading hours, regulations; and Types of securities transactions: long
purchase, margin trading and short-selling.

Unit 3: Investment Information and Securities Transactions LH 15

Introduction to online investing; Pros and cons of using internet as an investment tool; Types and sources
of investment information: types of information, sources of information; Market averages and indexes:
Dow Jones averages, S & P indexes, Nepse indexes; Bond market indicators; Making securities
transactions – the role of the stock brokers; Types of orders; Online transactions; Transaction costs; and
Investor protection.

Unit 4: Return and Risk LH 10

The concept of return: components of return, importance of return, level of return, historical return, time
value of money and return; Measuring return: real, risk-free and required returns, holding period return,
the internal rate of return; Finding growth rates; The meaning of risk; Sources of risk; risk of a single
asset: standard deviation, coefficient of variation; Assessing risk; and Combining risk and return.
Unit 5: Modern Portfolio LH 15
Concept of portfolio; Portfolio objectives; Portfolio return and standard deviation; Correlation and
diversification; International diversification; The Capital Assets Pricing Model (CAPM): components of
risk, beta, estimating return using CAPM, the Security Market Line; Traditional approach of portfolio
management; Modern portfolio theory: the efficient frontier, portfolio beta, the risk return tradeoff; and
Reconciling traditional approach and modern portfolio theory.

Unit 6: Common Stock Fundamentals LH 8

Pros and cons of stock ownership; Buying and selling of common stocks: reading the quotes, transaction
costs, common stock values; Types of stocks and stock dividends; and Investment strategies.

Unit 7: Common Stock Analysis and Valuation LH 15

Concept of fundamental analysis and technical analysis; Security analysis – principles and approaches;
Economic analysis: economic analysis and business cycle, key economic factors, developing an economic
outlook; Industry analysis: key issues, industry growth cycle, developing an industry outlook; Financial
ratios – liquidity ratios, activity ratios, leverage ratios, profitability ratios, ROA-ROE interaction,
common stock ratios; The valuation process; Stock valuation models: the dividend valuation model, other
approaches to valuation – dividend-and-earnings approach, price/earnings approaches; Concept of market
efficiency and behavioral finance.

Unit 8: Fixed Income Securities LH 10

Meaning and types of fixed income securities; Features of a bond; Bond market performance; Bond’s
exposure to risk; Bond ratings; The market for debt securities: Treasury bonds, agency bonds, municipal
bonds, corporate bonds; Specialty issues: convertible securities, zero coupon bonds, mortgage-backed
securities, assets-backed securities, junk bonds; Global bond market; and Nepalese bond market.

Unit 9: Bond Valuation LH 12

The behavior of market interest rates; The term structure of interest rates and yield curve; The pricing of
bonds; Measures of yield and return: current yield, yield to maturity, yield to call, expected return;
Duration and immunization: the concept of duration – measuring duration, bond duration and price
volatility; Uses of bond duration measures; and bond investment strategies.

Unit 10: Mutual Fund LH 10

The mutual fund concept; Advantages and drawbacks of mutual fund ownership; Organization and
functioning of mutual funds; Open-end and closed-end funds; Exchange-traded funds; Important
considerations in investing mutual funds; Other types of investment companies; Types of funds and
services: types of funds, investors services; Investing in mutual funds; Investing in closed-end funds;
Measuring performance; and Mutual funds in Nepal.

Unit 11: Managing Portfolios LH 10

Constructing a portfolio; Evaluating the performance of individual investments; and Measuring the
performance of investment vehicles; Assessing portfolio performance; Comparison of return with overall
market measures: Sharpe’s measure; Treynor’s measure, Jenson’s measure; Portfolio revision and
Timing transactions.
Unit 12: Derivative Securities LH 10
Basic features of put and call options; Advantages and disadvantages of puts and calls; Option markets;
Stock option provisions; Put and call transactions; Other types of options: stock-index option, option in
exchange-traded funds, interest rate options, currency options; Future market; Market structure; Trading
in future market; Trading commodities; and Financial Futures.

Project Work LH 10
After the completion of fourth year concentration classes the students shall have to prepare and submit a project
work in the area they have specialized. The subject teachers have to discuss with students on possible topics of the
project work, availability and sources of literature, availability of data, data collection methods, appropriate tools
of data analysis, etc relevant to the subject within 10 lecture hours.

Text and Reference Books

Gitman, L. J. & Joehnk, M. D. Fundamentals of investing. New Delhi: Dorling Kindersley India.
Bodie, Z., Kane, A. & Marcus, A. J. Essentials of Investment. New York: Irwin McGraw-Hill.
Alexander, G. J., Sharpe, W. F. & Jeffery V. B. Fundamentals of Investments. Delhi: Pearson Education.
Reilly, F. K. Investment analysis and portfolio management. Singapore: South-Western/ Cengage Learning.