ASSIGNMENT SHEET

UNIVERSITY BUSINESS SCHOOL, PANJAB UNIVERSITY, CHANDIGARH

PROGRAM : M.B.A. - III SEMESTER
COURSE : FINANCIAL ENGINEERING
SESSION : AUGUST - NOV, 2020
FACULTY : PROF. PARMJIT KAUR

Course Objectives : This course aims at enabling the students to understand

and analyze the financial problems faced by the corporate world and to further develop
skills for the solutions to these problems with the help of innovative financial processes,
instruments and strategies.

UNIT - I

1. An Introduction to Financial Engineering PT, Ch. 1

Definition, Scope and Tools of Financial Engineering,
Financial Engineer vs. Financial Analysts

2. Factors contributing to the growth of Financial Engineering PT, Ch. 2

Environmental and intra-firm factors affecting growth

3. The knowledge base of the Financial Engineer PT, Ch. 3

Knowledge and skills required of a financial engineer

UNIT - II
4. Valuation Relationship and Applications PT, Ch.4
Cash Flows, Time Value, Sensitivity Analysis, Applications
and Spreadsheets

5. Measuring Returns PT, Ch.5

Profits Vs. Rates, Investment Horizons

6. Risk: Portfolio Considerations, Investment Horizons, Leveage PT, Ch.6

The Mathematics of Portfolio Analysis, Role of the
Investment Horizon

7. Measuring Risk: Advanced Topics PT, Ch.7

Measuring Exposures to price risk and managing risk
8. Understanding Interest Rates and Exchange Rates PT, Ch.8
The basics of debt instruments and exchange rates

9. Speculation, Arbitrage and Market Efficiency PT, Ch.9

Speculation, Arbitrage and Efficient Markets

10. The Corporate Treasurer’s Perpectine PT, Ch.10

Need for risk management, Identifying strategic exposures

UNIT - III

11. Product Development PT, Ch. 11

Products defined, Model for new product development.

12. Futures and Forwards PT, Ch. 12

Futures, Forwards and FRAs

13. Swaps PT, Ch. 13

History, Structure and Types

14. Single Period Options PT, Ch. 14

Calls and Puts, Hedging with Options

15. Multiperiod Options PT, Ch. 15

Caps, Floors, Collars, Captions, Swaptions
and Compound Options

16. Recent Debt Market Innovations PT, Ch. 17

17. Equity and Equity-Related Instruments PT, Ch. 18

Forms of Equity and Equity-Related instruments

UNIT - IV

18. Asset/Liability Management PT, Ch. 20

Evolution and foundation concepts

19. Hedging and Related Risk Management Techniques PT, Ch. 21

Hedge Ratios, Recent Improvements and costs of
Hedging

20. Corporate Restructuring and the LBO PT, Ch. 22

21. Arbitrage and Synthetic Instruments PT, Ch. 23

22. Tax-driven Deals PT, Ch. 24

Preventing a hostile takeover, Recapitalization
of the firm, Bond Swaps, White Knights and
renegotiating debt

23. Hybrid securities, credit derivatives PT, Ch. 19

PRESCRIBED TEXT (PT) :

Financial Engineering: A Complete Guide to Financial Innovation- John F. Marshall and

Vipul K. Bansal, PHI.

ADDITIONAL READINGS (AR) :

A. Risk Management & Derivatives- Rene M. Stulz, Thomson South-Western

B. Futures and Options in Risk Management - Terry J. Watsham, International
Thomson Business Press.
C. Options, Futures and other Derivatives- John C. Hull, PHI.
D. The Essence of Mergers and Acquisitions- P. S. Sudarsanam, PHI.
E. Futures Market- Sunil K Parameshwaran, Tata McGraw-Hill Publishing Co. Ltd.
F. Derivative Securities-Robert Jarrouu and Stewart Turnbull, Southern-Western
College Publishing Co.
G. Mergers and Acquisitions-J.C.Verma, Bharat Publications.
H. Derivatives-Fred D. Arditti, Harvard Business School Press.
I. Futures and Options-N.D. Vohra & B.R. Bagri, Tata McGraw-Hill Publishing
Company Ltd.
J. Financial Derivatives-V.K. Bhalla, S Chand & Co. Ltd.
K. The New Corporate Finance: Where Theory meets Practice-Donald H. Chew, Jr.,
McGraw-Hill Irwin.
L. Futures Markets: Theory and Practice- Sunil K. Parameswaran, Tata McGraw-
Hill Publishing Company Ltd.
M. Derivatives-T.V. Somanathan, Tata McGraw-Hill Publishing Company Ltd.
N. Swaps/Financial Derivatives (Vol. 1-4)-Satyajit Das, John Wiley & Sons (Asia)
Pte. Ltd.
O. Risk Management- David E. Bell & Arthur, Schleifer, Jr., Thomson Course
Technology, Vikas Publishing House.
P. WTO: Implications for Indian Economy- P.K. Vasudeva, Pearson Education.
INTERNAL ASSESSMENT BREAK-UP

Mid-Semester Test 15 marks

Written Assignments 10 marks
Class Participation 10 marks
Snap Tests 15 marks
TOTAL 50 marks