DISCUSSION ON FIN (FIN-603)

1. Mishkin, F.S. The Economics of Money, Banking and Financial Markets

Chapter – 4: Understanding Interest Rate:

a. Explain four (4) types of Credit Market Instruments.
b. YTM for Simple Loan, Fixed Payment Loan, Coupon Bond, Discount
Bond and Perpetuity. Look at Text Book examples (applications).
c. Distinction between Interest Rates and Return.
d. Distinction between Real and Nominal Interest Rate.
e. Questions: 2, 4, 5, 6, 7, 14, 15, 16, 17, 19.

Approximate YTM (Short-cut method)

Ct + Pp−Pm
Annual Coupon+ Annual Capital Gain/ Lo s s n
YTM = =
Average Investment Pp+ Pm
2

Ct = Annual Coupon Payment

Pp = Par Value of the Bond
n = No. of years to maturity
Pm= Current Market Price

2. Mishkin and Eakins. Financial Markets and Institutions.

Chapter – 7: Banking and the Management of Financial Institutions.

a. Study the whole chapter attentively along with the extra reading
materials (ALM in Banks).
b. Questions: 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15.

Chapter – 11: Money Markets Defined, Purpose of MM, Participants, Money Market
Instruments and their Comparisons.

Chapter – 12: Purpose of Capital Markets, Capital Market Trading, Types of Bonds
(Govt., Municipal, Corporate Bonds), Bond Terminology.

Chapter – 13: Stock Market, Common Stock Vs. Preferred Stock, Pricing of Stocks

Central Banking: Separate Reading Materials

Chapter – 10: Monetary Policy: Defined, Tools and Goals