Major: FINANCE

FIN 640 Commercial Banking

FIN 645 Management for Financial Institutions
FIN 650 Investment Banking
FIN 670 Investment and Security Analysis
FIN 675 Corporate Finance
FIN 680 Portfolio Analysis and Management
FIN 685 Treasury and Funds Management
 Course Title: Commercial
Banking
Course Code: FIN 640
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: FIN 510 & ACC 520

Aims and Objectives:

The purpose of this course is to familiarize the students with various practical aspects of commercial banks,

their nature, significance, modus operandi, etc. It covers the different departments into which the operation

of banks are divided and the interrelationship that exists between them.

Course Outlines:

1. Introduction to Bank Management

• Banking Structure
• Bank’s Financial Statements

2. Basic Asset, Liability and Capital Decisions

• Bank’s Reserve Needs
• Bank’s Liquidity Needs
• Managing the Security Portfolio
• Acquisition and Cost of Bank Funds
• Capital Planning Adequacy and Generation
• Capital Acquisition and Management

3. Managing the Loan Portfolio

• The Bank Credit Organization
• Lending Principles and the Business
• Commercial Lending
• Consumer Lending

4. Special Markets
• Agricultural Loans
• Real Estate Loans
• Small Business Loans
• Lease Financing
RECOMMENDED TEXTBOOKS:
• “Bank Management - Text and Cases”, by Hempel, Simonson & Coleman, (4th
Edition), John Wiley & Sons, 1994.
• “Modern Banking in Theory and Practice”, by Shelagh Heffernan, John Wiley &
Sons, 1996. (Latest Edition)
 Course Title:
Management of Financial Institutions
Course Code: FIN 645
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: FIN 510

Aims and Objectives:

The objective of this course is to familiarize students with the financial sector of Pakistan. The course

covers issues related to the management of financial institutions in a changing market environment. Various

financial institutions are covered including investment banks, development finance institutions, brokerage

houses, insurance companies, and leasing and Modaraba companies. The course also deals with

institutional asset management, particularly portfolio management, and interest rate analysis including the

terms structure of interest rates.

Course Outlines:

1. The financial institutions

• The purpose of financial markets
• The central bank
• Scheduled/commercial banks
• Special development financial institutions

2. The role of financial institutions

• Financial flows in the economy
• Allocation of funds
• Efficiency of financial markets and intermediation

3. Disintermediation and securitinization

• Nominal and real rates of return
• The Fisher Effect
• Changes in nominal rates versus expected inflation changes
• Empirical evidence
• Financial innovations and the changing financial environment

4. Pakistan scenario
• State Bank of Pakistan
• State Bank of Pakistan Act
 • Functions, currency notes
• Scheduled banks of Pakistan, DFI’s

5. Capital formation and economic development

• Meaning of capital formation; importance of capital formation; reasons for
low rate of capital formation; sources of capital formation

6. Role of agriculture and industry in economic development

• Agriculture and economic development; role of industrialization; inter-
relationships between agriculture and industrial development
• DFI’s role in agri and industry development
• Special reference to ADBP, IDBP, NDFC, NIT, others
• Agriculture development finance corporation
• Investment Corporation of Pakistan (ICP)
• Banking Companies Act/Ordinance
• Banking Council (Pakistan Banking Council)

7. Advances/Loans and Financing

• Project evaluation and selection: alternative methods
• Potential difficulties
• Typical evaluation methods and analysis and their limitations

8. International Financial Institutions

• Asian Development Bank (ADB)
• Asian Development Fund (ADF)
• Islamic Development Bank (IDB)
• International Bank for Reconstruction and Development (IBRD) 66, 236
• International Development Association
• International Finance Corporation (IFC)
• International Monetary Fund (IMF)
• Multipurpose Special Fund (MPSF)

9. Islamic Modes of Financing

• Mudarba
• Musharka
• Hire-purchase

Recommended Textbooks:

• “Practice and Law of Banking in Pakistan”, published by The Institute of Bankers in

Pakistan”.
• “Financial Institutions in Pakistan”
• “Management of Commercial Banks, Financial Markets and Institutions,” by Banasal,
1993.
• “Islamic Economic Systems: Studies in Islamic Society,” by Nomani, 1994.
 Course Title: Investment
Banking
Course Code: FIN 650
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: FIN 510 & ACC 520

Aims and Objectives:

An advanced level course in finance and security analysis. The course goes deep into the concept and

application of valuation as it applies to the process of buying and selling of the portfolio theory as it applies

to the setting up of mutual funds. The regulations concerning buying and selling of securities are also

discussed.

Course Outlines:

1. Investment Banking Today

2. Global Market Integration
3. Raising Capital
4. Initial Public Offering
5. Emerging Growth Companies
6. Capital Financing
7. Leveraged Buyouts
8. Mergers and Acquisitions
9. Investment Management in an Investment Banking Firm
10. Commercial Papper
11. Innovative Instruments and Transactions
12. Tax-exempt Securities Market
13. The economies of Brokerage
14. Investment Banking

Recommended Textbooks:

• ”Inside Investment Banking”, by Block , E.,, Homewood, ILL . Dow Jones – Irwin,
1986
• “Investment Banking Handbook”, by Williamson , J. P.,, New York : Wiley, 1986.
• “Financial Institution Management: A modern perspective”, by Anthony Saunders –
Irwin.
 Course Title: Investment
and Security Analysis
Course Code: FIN 670
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: FIN 510

Aims and Objectives:

The aim of this course is to study the basic issues involved in the management of investment. Major topics

include application of basic investment theory, valuation of stocks and bonds, forecasts of trends in the

stock and bond markets, fundamental analysis and technical analysis, measuring risk and return.

Course Outlines:

1. A background for understanding investments

2. Types of Securities
3. Securities Market
4. Risk-return Concepts
5. Basics of Bonds
6. Valuation f Bonds
7. Basics of Common Stocks
8. Valuation of Common Stock
9. Economic Analysis
10. Industry Analysis
11. Company analysis and Technical Analysis
12. Investment Companies/Mutual funds
13. Futures Markets
14. Stock Market rules
15. Stock Market Indices

Recommended Books:

• Investment Analysis and Portfolio Management, by Reily, 4th Edition, 1994

• Investment Analysis and Management, by Jones, 3rd Edition, 1991
• International Investment, by Bruno Solnik, 3rd Edition, Eddison
Wesle
 Course Title: Corporate
Finance
Course Code: FIN 675
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite:

Aims and Objectives:

The aim of the course is to further develop the theoretical frameworks discussed in basic finance courses

and applies them to practical problems. The course goes deep into the liabilities and equity side of the

balance sheet and evaluates the explicit and implicit costs associated with the various modes of financing.

Acquisition and merger cases in the local environment are discussed in great detail and students are

expected to prepare proposals for them.

Course Outlines:

A-Foundations of Finance

Creation of value, investment decision, financing decision, dividend decision, financial management. The

time value of money, present values, internal rate of return or yield, bond returns, the return from a stock

investment, dividend discount models, measuring risk (standard deviation)

Market risks and valuation efficient financial markets, security portfolios, multiple
security portfolio analysis and selection, capital asset pricing model, expected return for
individual security, certain issues with the CAPM.

Multi-variable and facts valuation extended CAPM, factor models in general, arbitrage
pricing theory.

Option valuation Expiration date value of an option, valuation with one period to
expiration

Investment in assets and required returns administrative framework, methods for

evaluation, NPV versus IRR, depreciation and other refinements in cash-flow
information, what happens when capital is rationed?, Inflation and capital budgeting,
information to analyze and acquisition. Risk and real options.
Risk and real options quantifying risk and its appraisal, total risk for multiple
investments, real options in capital investments. Creating values.

Creating values foundations of value creation, measuring required market-based returns,

modification for leverage, weighted average required return, adjusted present value,
divisional required returns, a company's overall cost of capital, diversification of assets
and total risk analysis, evaluation of acquisitions.

B-Financing and dividend policies

Introduction, position, taxes and capital structure.

EBIT- EPS analysis, cash-flow ability to service debt, other methods of analysis, timing and flexibility, a

pecking order of financing, a checklist when it comes to financing.

Procedural aspects of paying dividends, dividend payout irrelevance, arguments for dividend payout mattering, financial signaling,
empirical testing and implications for payout.

Credit and collection policies, evaluating the credit applicant, vignette, inventory management and control,

uncertainty and safety stock, inventory and control, uncertainty and safety stock, inventory and the

financial manager

Public offering of securities, selling common stock through a rights issue, initial
financing, information effects.

Features of debt, types of debt financing, call feature and refunding, private placements,
preferred stock, pension fund liability.

Methods of analysis, source and use of funds, cash budgeting, proforma statements,
sustainable growth modeling.

Recommended Textbooks:

• “Financial Management and Policy”, by James C. Van Horne. (10th Edition) National
Book Foundation Chapters: 1-11, 14, 19, 20, 27
• “Principles of Corporate Finance”, by Bradlay & Myers, McGraw Hill, 1981.
 Course Title: Portfolio
Analysis and Management
Course Code: FIN 680
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: FIN 510 & FIN 670

Aims and Objectives:

The aim to this course is to develop a framework of Portfolio analysis to enable a student to identify central

issues, and complex problems. Major topics include application of modern portfolio theory, analysis of

active and passive investment strategies, measuring portfolio performance.

Course Outlines:

1. Process of investment management

2. Risk-return concepts
3. Portfolio theory/portfolio selection
4. Capital market theory
5. Efficient market theory
6. Measuring portfolio performance
7. Bond strategy (passive & active)
8. Stock strategy (passive & active)
9. Interest-rate structure
10. Interest-rate forecasting
11. Asset allocation
12. Currency risk management
13. Structuring the International Investment Process

Recommended Books:

• Portfolio Management Handbook, by Strong, 1994

• Modern Portfolio Theory on Investment Analysis, by Elton, E.J. and Gruber M.J.
New York, Wiley, 1995, 5th Edition
• Construction, Management and Protection, by Robert A. Strong, Portfolio, West
Publishing, 1993
 Course Title: Treasury
and Funds Management
Course Code: FIN 685
Credit Hours: Three (3)
Semester: Specialization for MBA
Prerequisite: ACC 520

Aims and Objectives:

The course objective is to develop on the knowledge imparted in security and portfolio analysis courses in

order to convert the students into skillful financial manager capable of handling funds and portfolios.

Special emphasis would be on market mechanics dealing with interest rates, exchange rates, trade

operations, swaps and risks. This course will also enable the students to handle bonds, convertible and

options.

Course Outlines:

1. Introduction
2. Interest Rates and Foreign Exchange Rates
3. Interaction Between the Markets
4. Two way markets: Bid and Offer Rates
5. Funds management in a two way market
6. Repos and Reverses
7. Corporate Debt Instruments
8. Non US Bonds
9. Analysis of Convertible Bonds
10. Factors Affecting Interest Rates
11. Factors Affecting Sport Exchange Rates
12. Exposure Management
13. Risks in Treasury Operations
14. Control of Treasury Operations
15. Control of Dealing
16. Operations in the Trading Room
17. Trading Game
18. Funds Management in the Exchange markets
19. Funds Management in the Money Markets
20. Currency Options
21. Interest Rate Future Contracts
22. Interest Rate Options
23. Interest Rate Swap and Agreements
Recommended Textbooks:

• Foreign Exchange and Money Markets, by Rieht & Redrignez

• Bond Markets Analysis & Strategy by Frank J. Fabozi

REFERENCE BOOKS:

• Treasury Management: International Banking Operations Alasdair Watson, and Ron

Altringham

• Money Market by Marcia Stigams