INSTITUTE OF MANAGEMENT TECHNOLOGY, GHAZIABAD

Elective courses for the batch 2012 14 (Track - II: Finance & Banking)

COMMERCIAL BANKING This course creates knowledge about the statutory and operational aspects of primary and subsidiary functions of commercial banks. Additionally, it will help students understand the mechanism of designing and delivery of asset and liabilities, banking products, and Financial Inclusion. The course will also enable students to develop skills in Credit Risk, Market Risk and Operational Risk assessment, Basel II norms, loan pricing techniques, and products also comes within the preview of this course. NPA Management. Some amount of exposure to marketing concepts in banking business and marketing of 3rd party

DERIVATIVES MANAGEMENT: FUTURES, OPTIONS, RISKS Unpredictable movements in exchange rates, interest rates, and commodity prices can affect not only a firm's market value, but also whether the firm will survive or not. The global financial crises in the late 1980s and late 1990s have definitely convinced many firms that financial derivatives should play an important role in a firm's overall strategic development and risk management practices. During the two financial crises, a number of firms that did not have sound risk management practices were put out of business by adverse price movements. In fact, lapses in risk control often can lead to huge financial losses to a company. On the other hand, sound risk management practices can increase the market value of the firm. Derivative contracts are one of key instruments used by firms to hedge their price risks. The purpose of this course is to offer a step-by-step approach to understanding financial derivatives for ensuring sound risk management strategy for a company. The course will focus on: Understanding the mechanics of financial derivative contracts. Learning how these contracts are priced in OTC and exchange traded markets. Learning how to use these instruments for hedging price risks.

FINANCIAL ECONOMETRICS The course is a gateway to econometric modelling and applications in finance. Financial econometric is a tool to help in understanding and analysing the finance better. The subject eases the processing of the financial information for various decision making purposes. Of late, modern tools and techniques have become necessary to know the complex financial products and their behaviour in the markets. This is an elective but necessary to study for the students of Finance and Banking. The course encompasses the basic tenets of regression, problem of nonstationarity, unit root tests, univariate time series modelling, modelling volatility and multivariate time series. The course would also include the application of the concepts for the better understanding of the financial markets. The students enrolled in this course are expected to have already attended basic quantitative course and business research methods.

FIXED INCOME SECURITIES This course aims to provide technical knowledge of the Fixed Income Securities in the context of Indian as well as global markets. At the end of the course, the students are supposed to make investment decisions in the fixed income securities market and understand their impact on managerial decisions. The paper mixes theory, practical, and application of the theories using modern/contemporary tools in Microsoft Excel. It shall inter alia cover the nature of Fixed Income Securities, fixed Income Securities Market, important variables in Debt Market, Interest rates, inflation, exchange rates, mortgage backed securities and CMOs, asset backed securities, Bond Analysis and Risk Measurement, Bond Valuation, Yield Measures, Spot Rate and Forward Rate, Valuation of Bonds without Embedded Options, Valuing MBS and ABS, Credit Analysis, and Bond Portfolio Management.

PROJECT APPRAISAL AND FINANCING This course is expected to enable students to understand mechanism of project appraisal in various stages, explore new and innovative sources of financing projects in the present day world. It is essential for Finance and Banking Track because it gives them exposure to a wide range of financing techniques for core sector projects which are important constituents of our economy. Major topics to be covered are: Projects with Different Lives, NPV v/s IRR Methods, MIRR, Projecting the Cash Flow Statements, Project Risk Appraisal. The students enrolled in this course are assumed to have successfully completed Corporate Finance-I in their first year.

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT The course aims at providing insights into the understanding how an investment professional would analyze the risk and return of different securities available for investment and allocate funds to create an optimal portfolio. This course is an essential course in Finance in Banking Track, as this course is an extension and application of Risk and Return Chapter from Corporate Finance. Major topics include estimation of capital market parameters, trade-off between risk and return, optimal portfolio selection, equilibrium asset pricing models, fundamental analysis and technical analysis and delegated portfolio management. In addition, the course will examine the role and performance of portfolio managers and mutual funds and how to evaluate whether these are value adding to investors. The students enrolled in this course are assumed that they read thoroughly Financial Accounting for Managers and Corporate Finance-I courses and have successfully completed the same.

FINANCIAL SERVICES India has emerged a strong economy in recent years. Corporate India has started playing important roles in Global Markets as well, a few international acquisitions of the recent past are well known. Financial services are the most happening place as corporations avail these in multiple ways. Hence, a basic knowledge is required for every student pursuing a management course. This course is essential for Finance and Banking Track as these students would be responsible for designing the services. It is essential for Sales, Marketing and Business Development track as these students would generally be marketing these services. Major topics to be covered are: Leasing, Hire Purchase, Venture Capital, Factoring, Structured finance and Insurance Services. The students enrolled in this course are assumed to have successfully completed Corporate Finance-I and Corporate Finance-II in their first year.

FINANCIAL STATEMENT ANALYSIS AND BUSINESS VALUATION Amongst the most preferred of all electives, this course is designed to use financial statement information in a variety of business analysis and valuation contexts. During this course, we use, analyze and highlight the content of financial statements for determining earnings quality in the backdrop of GAAP for equity and business valuation. We also make an attempt to integrate accounting concepts and principles with concepts of finance, and strategize for the corporate finance issues in a practical and innovative way. The course acquires relevance since financial statements are to be read and interpreted by all managers at various stages of their careers.

FINANCIAL VALUATION OF INFORMATION TECHNOLOGY State-of-the-practice in software engineering economics often focuses exclusively on cost issues and technical considerations for decision-making. Value-based software engineering (VBSE) expands the cost focus by also considering benefits, opportunities, and risks. Of central importance in this context is valuation, the process for determining the economic value of a product, service, or a process. Uncertainty is a major challenge in the valuation of software assets and projects. This course analyzes significance and specialty of IT project valuation, the relationship between IT project valuation and three periods which include initial period, construction period and operation and maintenance period of IT project. There are several approaches to Valuation of Technology. The business oriented methods have as their rational SHARE-HOLDER VALUE. The analysis is done before the decision to buy or to build. The critical question is: will the acquisition of technical ability enhance shareholder value? Naturally, in all forecasts or prognosis there is an element of RISK. This risk must be taken into account in business decision making. The course introduces perspectives, concepts and methods to be used in Valuation of Technology. This course will attempt to develop the skill of, and impart knowledge to, students to be able to a) Assess whether the economics of an information technology system are attractive b) Determine the financial attractiveness of a new IT project to be taken up by an organization c) Assess market valuation of a technology company

INTERNATIONAL FINANCIAL MANAGEMENT This course aims at providing an insight into the operations and functioning of international capital and foreign exchange markets, as well as providing a conceptual framework for financial decision making in the multinational enterprises. This course will provide an understanding of foreign exchange risk and hedging techniques used by MNCs and equip students with techniques of financial management in the context of companies engaged in global business. This is an essential course in the Finance and Banking Track, particularly for PGDM-IB students, as well Strategic Management Track. Major topics include the functioning of the international monetary system, international capital budgeting, FDI and the emergence of the Indian MNCs, international sources of debt and equity financing, designing a strategy to source equity globally, ADRs/GDRs and listing of shares abroad, External Commercial Borrowing norms in India, management of foreign currency risk and interest rate risk, cost of global equity and debt financing, global WACC and the optimal capital structure for the multinational enterprise, short-term treasury management and international transfer pricing. The pre-requisites for this course would be successful completion of the core courses on Financial Accounting for Managers and Corporate Finance.

MERGERS, ACQUISITIONS AND CORPORATE RESTRUCTURING The course aims to help the participants appreciate the various perspectives of organic and inorganic growth choices, the valuation involved thereto and the strategic dimension of the decision. The course acquires relevance particularly since the wave of M & As in India has continued unabated. From studying the types of mergers, theories of mergers and methods of valuation, we also cover JVs, leveraged buyouts, ESOPs, takeovers etc. International mergers and acquisitions are also given its due weightage during the course.

INFRASTRUCTURE AND REAL ESTATE FINANCING Physical infrastructure of the country is a cause of concern for sustenance of this growth. Hence investment in Indian infrastructure has caught the attention of the entire globe. Real Estate constitutes about one third of any economy. The importance of both these sectors of economy is emphasized. It is essential for Finance and Banking Track because this course is to enable students to get a holistic view of Indian infrastructure and real estate sectors, to estimate the need of investment required and to explore innovative financing options. Major topics to be covered are Public Private Partnerships, Structured Finance Applications, Sector-wise regulatory issues; Roads, Railways, Aviation, Ports, Pipelines, Telecommunication and Power including funds requirement for them, Real Estate valuation, Housing Finance. The students enrolled in this course are assumed to have successfully completed Corporate Finance-I in their first year. Knowledge of modeling tools would be a definite advantage to the students.

WORKING CAPITAL MANAGEMENT Working Capital Management is the process of planning and controlling the level and mix of the current assets of the firm as well as financing these assets. Specifically, working capital management requires financial managers to decide what quantities of cash, accounts receivable, inventories and other liquid assets the firm will hold at any point in time. In addition, financial managers must decide how the current assets are to be financed. Financing choices include the mix of current as well as long-term liabilities. The distinguishing feature of working capital decisions is that the planning horizon is relatively short. In the management of working capital, the firm is faced with two key questions: 1. Given the level of sales and the relevant cost considerations, what are the optimal amounts of current assets a firm should choose to maintain? 2. Given these optimal amounts, what is the most economical way to finance these current asset investments?

To produce the best possible returns, firms should keep no unproductive assets, and should finance with the cheapest available sources of funds. Students will learn to manage assets such as cash, accounts receivables, inventories and also short term liabilities. They will be able to find answers to questions like: How should the firm manage its cash? To whom should the firm grant credit? How much inventory should the firm keep? The course focuses on the most advantageous ways of addressing the problems in the management of working capital. The topics that will be covered are Working Capital Policies, Receivables Management, Cash Management, Inventory Management and Assessment and Financing of Working Capital. Revision of Financial Reporting and Analysis, and Corporate Finance courses will come in very handy during the tenure of this elective.

TREASURY ANALYTICS Learning goals: This course aims at providing the detailed application of various tools in finance to manage the different types of risk associated with financial assets and a comprehensive understanding of how to manage treasury affairs with a detailed look at the various financial markets and instruments that can be traded. Learning outcomes: After this coursethe participants will be able to: Understand the overall risk measurement framework Recognize the types of risk associated with the financial assets. Quantify the risk Identify and execute the best method to hedge the risk associated with the financial assets. Design the OTC derivative instrument with its valuations

Course content: Explanation of the Treasury Function in an Organisation, Participants in the Clearing/Non Clearing areas in the Derivative Market, Valuation of the OTC Derivative Instruments , Valuations of Equity and Equity Index Options using Black Scholes Model, Binomial Tree Method and Taylors Series Method. KMV Model, Merton Model, Zero Rates, Forward Rates, Forward Rate Agreements (FRAs), Valuations of FRAs, Swaps Interest Rate swap, Cross Currency swap, commodity swap, variance swap and correlation swap, Valuations of Swaps using bond pricing and FRA methods, Introduction to the Credit Derivatives Market: . CLO, CBO, CDO etc, SPVs, CDS, Players in the CDS market, Interpretation of CDS Spreads/Index, Valuations of CDS, Total Return Swap, Caps, Floors, Collars, Captions, Swaptions, Copula Functions, Fixed Income Securities in the US Market, Money Market and Capital Market Securities, Valuation of Treasury Bills, Bonds, Notes, Market Risk Value At Risk: Methods of calculating VaR Historical, Parametric VAR, Simulation, Monte Carlo Simulation, Bootstrap VAR, Liquidity VAR, Credit VAR , Stress Testing. Delta, Gamma and Vega hedged portfolio, Asset Liability Management, Understanding Balance Sheets from ALM perspective, Gap Management, Duration Gap Analysis, Duration and Convexity Matching, Portfolio Immunization, Earnings at Risk, Cash Flow at Risk Relevance to the track: This course is necessary in order to apply the various hedging tools to manage the risk associated with different class of financial assets which the student studied in corporate finance, SAPM and Derivarive courses. Prerequisites for the course: The participants are supposed to have the basic knowledge of financial derivatives and basic mathematics.