Financial System and Capital Market Operations (Functional Electives Finance)

Paper Code: 
MBF-422
Credits: 
4.0
Contact Hours: 
40.00
Max. Marks: 
100.00
Objective: 
  • The course will consider the economic principles underlying the working of national and international financial institutions. It aims to cover the basic theory and operation of financial systems from an economist’s viewpoint. The stress is on financial instruments, markets in which they are traded, and attendant structures.
  • This course is intended to serve as a base for understanding bigger deeper issues in financial services and products, derivatives and risk, perspectives.
8.00
Unit I: 
The Financial System: An Introduction

Introduction, Components of the Formal Financial System, functions of a financial system, key elements of a well functioning financial system, financial system designs, nature and role of financial institutions and financial markets

5.00
Unit II: 
Reforms in the financial system

Valuation of Equity- one year holding period, multiple year holding period, constant growth model, multiple growth model, dividend discount models
Valuation of Bonds: Coupon Rate, Current Yield and Yield to Maturity

12.00
Unit III: 
Capital Markets

Organization and structure of markets- Primary market and secondary market, Role of Stock Exchanges in India, Dematerialization of securities and its need, Depository / Depository Participant, Brokers and their role in Capital Market, Secondary Market - Screen based versus Open Out Cry, Stock Market Indices.

11.00
Unit IV: 
Regulations for Public Issue

SEBI guidelines for public issue, IPO Process, Conventional Method versus Book Building Route (Fixed price versus price range),Public Issue versus Private Placement, Listing Eligibility Requirements.

6.00
Unit V: 
Legal Frame Work

SEBI Act, Insider Trading Regulations, Corporate Governance Guidelines, Buy Back of Shares, ESOPs, Disclosure & Investor Protection Guidelines 2000.

Essential Readings: 
  • Bharti V. Pathak, The Indian Financial System,Third Edition, Pearson, 2012.
  • M.Y. Khan, and P. K. Jain, Indian Financial System, Tata McGraw Hill,2012
  • L.M. Bhole, Indian Financial Systems and Markets, Tata McGraw Hill,2012
  • Kohn Meir, Financial Institutions and Markets, Tata McGraw Hill, 2012.
  • SEBI Manual, 2 Vols,2010, Taxman

 

References: 
  1. Business World. Business India
  2. Finance Review. Economic Times
  3. RBI and SEBI websites.
  4. NSE and BSE websites