This paper discusses the basics of Financial Management with an objective of making individuals without any Finance background. The readers will be able to understand the basics of financial planning, Instruments available in financial markets and personal financial planning.
At the end of the course, students should be able to:
Unit I (3 weeks)
Introduction to financial management: Evolution, objective and interface of financial management with other functional areas.
Concept of Time Value of money: role of time value of money in finance, computation of present values and future values, single cash flow, multiple cash flow streams, annuities, growing annuities, perpetuities, growing perpetuities, the frequency of compounding and discounting etc.
Long term financial decisions: Concept of cost of capital, factors affecting cost of capital, overall cost of capital, weighted average cost of capital.
Long term investment decisions: Capital Budgeting- introduction and importance of capital budgeting decisions, techniques of capital budgeting- NPV, IRR, NPV vs IRR, sources of positive NPV and selection of appropriate technique.
Prasanna Chandra, “Financial Management: Theory and Practice”, 9th ed, McGraw Hill. [Chapters – 1, 2, 6, 11, 13, 14, 17 & 18]
Unit II (3 weeks)
Introduction to financial Markets: Introduction and functions of financial market, study of Indian financial market. Types of financial markets: money market, capital market- Primary and secondary market, forex market, debt market.
Instruments of financial market: Call money market, T-Bills, Commercial bills, commercial papers and certificate of deposits, Government (G-Sec/ Gilt- edged) securities, sovereign gold bonds.
Trading in Stock Market: Eligibility, De-mat account, Trading mechanism, Settlement, major stock exchange- NSE, BSE, OTCEI; various stock market indices- SENSEX and NIFTY. Overview of Derivative trading.
Saunders Anthony and Cornett Marcia, “Financial Markets and Institutions A modern Perspective”, Mc Graw Hill [chapters- 1, 2, 5, 6 & 8]
Bhole L M. and Mahakud, Jitendra. “Financial Institutions and Markets Structure, Growth and Innovations” Mc Graw Hill [chapters- 16, 17, 18 & 19]
Unit III (3 weeks)
Banking operations: Kinds of banking companies- commercial banks, private sectors banks, public sector banks, development banks, investment banks, Licensing of banks in India, concept of RTGS, NEFT, IMPS, Core banking solutions and RBI
Other financial intermediaries: Non- banking financial companies- types, role and functions, Provident funds, pension funds- objective and functions, Real assets: land and house property, Mutual funds, Insurance etc.
Bhole L M. and Mahakud, Jitendra. “Financial Institutions and Markets Structure, Growth and Innovations” Mc Graw Hill [chapters- 6, 8, 10, 11, 12 & 13]
Unit IV (3 weeks)
Personal Finance: Setting short and long-term financial goals; Personal Budgeting, Regular Saving Schemes; Individual Tax Planning; Superannuation planning; Wealth protection and Management; Estate planning; Succession Planning;
This unit will be discussed based on the concepts developed in previous three units along with the then prevailing investment instruments and tax policy of the country. So concurrent materials based on citizenship and country of investment should be discussed.