1.

Loanable Funds Theory of Interest: This interests in another, typically by acquiring

theory suggests that interest rates are assets or establishing business operations.
determined by the supply and demand for 10. Components of Reserve Assets: Reserve
loanable funds. Savers provide funds, assets include foreign currency reserves,
creating supply, while borrowers create gold, special drawing rights (SDRs), and
demand. Interest rates adjust to balance IMF reserves. They are held by a country's
these. central bank to manage currency stability
2. Comments on Interest Rates: Interest rates and facilitate international trade.
reflect the cost of borrowing money and the 11. Exchange Rate: An exchange rate is the
reward for saving. They are influenced by price of one country's currency in terms of
central bank policies, inflation, and another's. It fluctuates based on factors like
economic conditions. Higher rates typically interest rates, inflation, political stability,
curb inflation but can slow economic and economic performance.
growth. 12. Primary Income: Primary income includes
3. Term Structure of Interest Rates: This earnings from owning assets abroad, such as
refers to the relationship between interest dividends and interest, and compensation
rates and the maturity of debt. A normal received by residents from non-residents for
yield curve slopes upward, indicating higher work performed.
interest rates for longer-term investments 13. Punishment of Banking Offences:
due to risks like inflation. Banking offences can result in penalties
4. Indicators of Performance of Depository including fines, imprisonment, loss of
Institutions: Key indicators include return banking licenses, and other regulatory
on assets (ROA), return on equity (ROE), actions depending on the severity and
net interest margin (NIM), and non- jurisdiction.
performing loans (NPL) ratios, which assess 14. Functions of NEPSE: The Nepal Stock
profitability, efficiency, and risk Exchange (NEPSE) facilitates the trading of
management. securities, provides a platform for raising
5. Products of Depository Institutions: capital, ensures market transparency, and
Depository institutions offer products such promotes investor education and protection.
as savings accounts, checking accounts, 15. Criteria for Selecting a Suitable Broker:
certificates of deposit (CDs), loans, Criteria include the broker's reputation,
mortgages, credit cards, and safe deposit regulatory compliance, fee structure,
boxes. customer service, trading platform quality,
6. Social Welfare Funds: These are funds set and the range of services offered.
aside by governments or organizations to 16. Market Capitalization: Market
provide financial assistance to individuals or capitalization is the total value of a
groups in need, aiming to improve social company's outstanding shares of stock,
welfare and reduce economic inequality. calculated by multiplying the share price by
7. Types of Mutual Funds: Mutual funds the number of shares outstanding. It reflects
include equity funds, bond funds, money the company's size and market value.
market funds, index funds, balanced funds, 17. Functions of Credit Rating Agencies:
and sector funds, each with different Credit rating agencies assess the
investment strategies and risk profiles. creditworthiness of issuers of debt securities,
8. Application and Allotment Process of providing ratings that indicate the risk level
Securities in Nepal: Investors apply for of default. They help investors make
securities through a designated process. informed decisions.
Allotment is often based on a lottery system 18. Roles of CDSC: The Central Depository
due to high demand, with regulatory System and Clearing (CDSC) in Nepal
oversight to ensure fairness. facilitates the electronic settlement of
9. Foreign Direct Investment (FDI): FDI securities transactions, maintains investor
involves investment by a company or accounts, and ensures the safety and
individual in one country into business efficiency of the market.
19. Underwriting: Underwriting is the process
by which financial institutions assess the
risk of a transaction, like issuing new
securities, and guarantee to buy the
securities if not sold to the public.
20. Types of Bank Assets: Bank assets include
loans, securities, cash reserves, and physical
assets like buildings. These assets generate
income and provide liquidity and security
for the bank.
21. Financial Assets and Financial Markets:
Financial assets are intangible assets like
stocks, bonds, and bank deposits, traded in
financial markets where buyers and sellers
exchange these assets, facilitating capital
flow.
22. Ancillary Financial Services: These
services support primary financial activities
and include investment advisory, portfolio
management, financial planning, insurance,
and brokerage services.
23. Types of Stockbrokers: Stockbrokers
include full-service brokers offering
comprehensive services, discount brokers
providing low-cost trades with limited
advice, and online brokers facilitating self-
directed trading through digital platforms.