Security-specific determinants

Security-specific determinants

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Management of Financial Institutions (FIN 255)

Unit 2: Determinants of Interest Rates

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of security-specific determinants.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• Determinants of interest rates for individual securities: Inflation, real risk-free rate, default or credit risk, liquidity risk
• Special provision or covenants
• Term to maturity

Detailed Microsyllabus

1. Security-specific factors

   1. Inflation and real risk-free return.
   2. Credit and liquidity risk.
   3. Maturity.

2. Contractual provisions

   1. Covenants and special terms.
   2. Identify how features affect required return.
   3. Avoid assuming a premium can be observed separately without evidence.

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Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 86–88.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.