Course Outline
Daffodil International University
Faculty of Business & Entrepreneurship
BBA program
Course Code and Title : FIN 404 Financial Institution and Market
Credit : 3 credit hours
1. Course Summary
The course aims to provide a preliminary understanding of the field of financial
institutions and markets. This understanding can be quite valuable, because it helps
students know why financial markets exist, how financial institutions serve those
markets, and the various services those institutions offer.
2. Course Objectives
Students will explore the empirical and theoretical foundations upon which financial
institution practice in financial markets are based. They will examine the way in which
decision making takes place within these financial institutions in a financial market
setting. The course also aims to enable students to evaluate critically the role played by
the finance and banking profession in maintaining high quality decisions relative to the needs
of shareholders and other stakeholders in financial institution and financial market contexts.
Topics to be covered/Content of the course
Topics Content
Introduction of Financial Overview of Financial Markets (FM),
Market and Institution Types of FM, Securities traded in FM,
valuation of securities in FM,
Role of Financial Institutions (FIs) in FM,
Institutional sources and uses of Funds
Ch-1:Role of Financial Market Financial Institutions,
and Institution Role of Financial Intermediaries,
Role of Financial Institutions
Types of Financial market
Ch-2: Determination of Loanable Funds Theory,
Interest Rates Economic forces affecting interest rates,
Forecasting Interest rate
CHAPTER 3: The structure Term structure of interest rates
of interest rates
Theories of term structure of interest rates
Expectations theory
Liquidity premium theory
Market segmentation theory
The preferred habitat theory
Forward interest rates and yield curve
Determinants of the Shape of the Yield Curve and The Term
Structure,
Ch-5: Money Market Treasury Bills, calculation of Price, yield of T-bill
securities: Commercial Paper, calculation of Price, yield
NCDs, calculation of yield
Repurchase Agreements, calculation of yield
Banker’s Acceptance, calculation of yield
MID TERM
Ch- 6 & 7: Bond Market Bond Market securities,
Valuation Process,
Institutional use of bond markets
Bond market characteristics
Bond market yields
Discounted models
Bond price volatility
Callable bonds, Convertible bonds
CHAPTER 8: Mortgage Criteria Used to Measure Creditworthiness
Markets Types of residential mortgages
Valuation and risk of mortgages
Risk from Investing in Mortgages:
CHAPTER 9 & 10 : Stock The Traditional Process for Issuing New Securities,
Offerings and Investor Participants in stock market
Monitoring Stock Valuation Abuses in IPO market
and Risk Stock offerings and repurchases
Stock exchanges, Members of Stock Exchange
Stock valuation: PE method, Dividend discount model,
CAPM
Factors that affect stock prices.
Volatility of a Stock
Chapter 11: Derivative Market What is Derivative Market?
Future Contract, risk of trading futures contracts
Forward Contract
Spot vs Forward Foreign Exchange Trading.
Currency SWAP
Options
Hedging.
CHAPTER: 12,13 & 14: Sources and distribution of fund
Commercial Bank Operations, BASEL accord
Regulations, Management & Regulatory capital, Tier1,2,3
Performance. , Methods Used to Assess Interest Rate Risk
Classification of Loan: Standard, Substandard, doubtful,
SMA ,Bad loan
CHAPTER 15, 16 & 17: Sources and uses of fund of Finance company
Nonbank Operations, Mutual Finance company risk
Fund Operations, Securities Mutual Fund Operations, Categories of Mutual Fund
Operations & Insurance Securities Firm Operations
Operations. Exposure of securities firms to risk
Sources and uses of fund of Insurance company, Exposure to
risk
Pension Fund Operations
FINAL EXAM
Assessment and Evaluation
5. Assessment pattern
Final grade in this course of BBA program has been given on the basis of the performance on
class attendance, minimum three quiz/class test, minimum one assignment, minimum one
presentation, mid-term examination, and final examination as below mention evaluation strategy
6. Assessment and Evaluation
Evaluation Criteria Marks
Class Attendance 07
3 Quizzes/Class tests 15
Assignment 05
Presentation 08
Mid-term Examination 25
Semester Final Examination 40
Total 100
7. Textbook:
Financial Institutions and Markets (8th Edition) - Jeff Madura
Reference Book:
Foundations of Financial Markets and Institutions – Frank J. Fabozzi & Franco
Modigliani (latest edition)
Financial Markets and Institutions (6th Edition), Pearson Prentice Hall & Frederic
S. Miskin
Money and Capital Market: Financial Institutions and Instruments in Global
Marketplace by M. H. Marquis and P. S. Rose
