TREASURY AND FUNDS MANAGEMENT Before Mid-Term: Function of Treasury Objective of Investment Banking Bank Investment versus Advances

ances Fixed Investment o Bonds, Price of Bonds o Market Yield vs. Coupon Rate o Zero-Coupon Bonds Net Assets Value formula Value at Risk (VAR) definition and calculations o Individual stock o Portfolio stock Standard deviation o Disadvantage Types of Investments (Sukuk, T-Bills, Foreign Currency Bonds, TFCs, Open End Mutual Funds, Euro Bonds, Credit Link Notes) Currency Risk Management o Translation risk (definition and calculations) o Transaction risk o Economic risk HANDOUT=Understanding Yield Spreads (pg67, 68, 71, 72, 75) o Discount Rate o Open Market Operations o Bank Reserve Requirements (Cash Reserve Ratio, Statutory Liquidity Ratio) o Credit Policy Yield Curves o Rising o Declining o Flat o Humped Liquidity Premium (pg 69 only) Bootstrapping Spot Rate (Definition and Numerical) Crowding out effect Strategies to save tax o Tax Evasion o Tax Avoidance Yield Tax Exempt=Yield Taxable * (1-T) Mutual Funds

o Open o Closed Fees-Load (Definition and Calculations of Return) o Front End Load o Back End Load Management fees Brokerage fees Differences between Money Market and Capital Market Money Market Instruments Cash Fund Income Fund Hybrid Fund Capital Protected Fund Islamic Fund Types of Investments: o Direct o Indirect Bond Indenture Covenants o Affirmative o Negative Derivatives o Definition o Objective o Benefits o Types o Differences (Forwards and Futures) o Termination (Forwards and Futures) Current Account How to Finance? o Privatization o Issue Euro Bond o Borrow funds from IMF, ADB, WB Options Call and Put o Cap, Floor, Caller, Zero Collar o Put Call Parity Swaps (Plain Vanilla, Currency) HANDOUT=FEATURES OF DEBT SECURITIES (pg11-12) o Bonds indenture, covenants, zero coupon bonds, floating rate securities) HANDOUT=RISKS ASSOCIATED WITH INVESTING IN BONDS o Pg24 only: interest rate, yield curve, call risk, prepayment , reinvestment risks

After Mid-Term: Delta (Call and Premium) Hedging (Definition) Dynamic Hedging Beta (listed and unlisted companies) How to calculate fair value? (just headings) o Free Cash Flow o Discount Dividend Model o Residual Model o Relative Comparison Funds of Funds o Advantage and Disadvantage Purchasing Power Parity (definition) Interest Rate Parity (definition) Law of one price (definition and calculations) Identify whether currency is traded at discount or premium Fixed Investment Bonds ICH Equity Issue Behavioral Finance o Loss Aversion o Over Confidence o Anchoring Concept of Cannibalization (Seasonal Impact) Types of return (objective) o Preservation o Appreciation o Total return = dividend and capital gain Small, large and mid cap o SML and CML (definition, graph, calculations, differences) Market/global portfolio o Holding risk premium HPR Alpha=mispriced return HANDOUT=THE FOREIGNN EXCHANGE MARKET (pg226-236,238--241) o The foreign exchange market Interbank foreign exchange market Spot market Forward market Currency swap markets o The spot market Bid-ask spreads

Conditions of spread (market, bank/dealer position, trading volume, maturity of forward contracts) Cross rates Bid-ask spreads for cross rates Currency arbitrage Triangular arbitrage with bid-ask spreads o The forward market Background information on forward contracts Covered interest arbitrage HANDOUT (TFM-PARTICULARS) (first page, 246-253) (full handout) o Particulars of TFM on financial statement o Types of real estate investments Outright ownership Leveraged equity position Mortgages Aggregation vehicles o Methods to value real estate (definitions and calculations) Cost method Sales comparison method Income method Discounted after-tax CF model o Stages of venture capital investing o Venture capital investments characteristics o Calculations-NPV for a venture capital opportunity o Hedge funds