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Organisation : National Centre for Financial Education (NCFE)
Announcement : Syllabus
Examination : NCFE – NFLAT 2015 – 16 National Financial Literacy Assessment Test

Download Syllabus : http://www.syllabus.gen.in/uploads/455-NFLAT_Syllabus.pdf
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NCFE-NFLAT 2015-16 :

NFLAT Syllabus

1. Money Matters:

Smart Goals and Financial Analysis
Understand the concept of Money
Money as medium of exchange and as medium of storage
Understand the concept of Net-worth
** Know the difference between money and wealth
** Difference between Assets and Liabilities
** Understand the relation between assets and income; liabilities and expenses; and calculation of net worth
Understand importance of financial goals in personal financial planning (S.M.A.R.T. goals)

** Understand the meaning of each term in S.M.A.R.T. goals:

Specific, Measurable, Attainable, Realistic and Time bound

2. Budgeting:

Balancing the Means and the Ends
Know the different sources of income
** Understand the difference between professional income and investment income — active income and passive income
Understand your expenditures
** Understand regular and lump sum expenses
** Understand discretionary and non-discretionary expenses

Deficit:

Concept and calculation of deficit given income and expense numbers

Surplus:

Concept and calculation of surplus given the income and expense numbers
Know about savings
** Understand the need for saving
** Understand the difference between saving and investing
What is Cash-flow Statement
** Understand the structure of cash flow statement — what items are included
** Understand the purpose of a cash flow statement
** Know the different heads under the cash flow statement

Know the essence of Budget:

meaning, purpose and different heads under budget
What is Opportunity Cost
Understand the difference between instant gratification and delayed gratification

3. Understanding insurance and risk management :

The concept of insurance:

** Understand the difference between “pure risk” and “investment risks”

** Ways to manage risk:

Avoid, Reduce, Retain, Share & Transfer
** Understand the concepts of spreading the risks and sharing of losses
** Know that insurance premium is an expense
Understand various insurance products

** Know the terminology of insurance:

Indemnity, Sum assured, Premium, Risk cover,
Life insurance
** Term plan —the pure insurance

** Hybrids – combination of insurance and investment:

Endowment plan, Money back plan, Whole life plan, ULIPs and Pension plans (accumulation and distribution products)
** Critical illness

** General insurance:

Vehicle insurance, Medical insurance, Disability insurance and Property insurance
** Know the differences in the features of various products
** Know about functions and powers of IRDA, the insurance regulator in India

4. Understanding Investments :

Understand the importance of Investment
** Understand diversification as a risk mitigation tool

** Learn about liquidity:

definition, need and concept of Impact Cost
** Learn about growth of money / concept of “returns”
Learn what is Inflation
** Understand the short term and long term impact of inflation on personal finances
** Understand the concept of real rate of returns

** Understand the terms:

CPI, WPI
Understand Time Value of Money
Understanding Interest
** Simple Interest, Compound Interest, Annualized Interest
** Know the equations to calculate simple interest and compound interest
** Understanding the impact of different compounding frequencies
** Understand nominal interest and effective interest rate
** Understand the Rule of 72 and Rule of 144

5. Basics of Banking :

Know what are banks and the transaction related facilities offered by banks
Know about the types of bank accounts
** Savings account
** Current account
** Fixed deposit account or term deposit account
** Recurring Deposit account
** Special Bank Term Deposit Scheme
Compare different types of accounts
Know the eligibility criteria for opening a bank account
** Permanent Account Number (PAN) and its importance in opening of Bank accounts
Understand the features of Cheques
** Know what is account payee cheque (two parallel lines at left hand corner of a cheque)
** Signing a cheque and validity period of a cheque
** Understand the precautionary measures while using a cheque
** Understand how can we get money by depositing a cheque
Know what is Demand Draft?
** Features of Demand Draft
** Highlight the difference between Demand Draft and Cheques
Know the features of ATM
** Benefits of having an ATM card
** Know what is ATM Pin and precautions pertaining to usage of ATM cards
What is E-banking or internet banking
** Benefits of E-banking
** How to use the facility of E-banking and precautions pertaining to E-banking
What is Tele-banking
** How to register for Tele-Banking
** Precautions pertaining to Tele-Banking
Know about functions and powers of Reserve Bank of India, the banking sector regulator
Know about the spam mails and precautions one needs to take

Introduction to Stocks and bonds :

Understand what is Equity Stocks or equity shares
** Know what is face value of each share
** When are shares at a premium and at a discount
** What is dividend
** What is the market value of each share and how is it determined
** Know what is Earnings per share (EPS) and how is it calculated
** Know what is Price to Earnings Ratio (P/E ratio) and how is it calculated
Understand what are Bonds and debentures

What are different types of bonds / debentures:

Issuers, Term to maturity, Interest rate — fixed or floating, Secured / unsecured, Convertible / non-convertible, Understand credit risk and credit rating
Know about functions and powers of Securities and Exchange Board of India, the securities market regulator in India
What are stock exchanges, their main functions and stock exchanges in India
Understand what is Primary Market and Secondary Market
Understand how a company gets traded on Stock Exchanges
** Know about Initial Public Offer and how companies are listed on stock exchange

** Learn about dematerialization of shares:

Demat account and depositories in India
Learn about the screen based trading system in India
Stock market indices such as Nifty and Sensex.
Know what are the Bear and Bull Phase in Stock Market
Understand the do’s and don’ts in stock market investing

7. Investments:

The wider Spectrum
Learn about different products or asset classes for investment
Understand Mutual Funds

** Understand the different types of mutual fund in the context of structure, features, advantages and risks:

Equity funds, Debt funds, Balanced funds, Tax saving funds, Open ended funds and Closed ended fund

** Understand various facilities offered by mutual funds:

Growth plans and Dividend plans
** Know the differences between various mutual fund products and options
** Understand Net Asset Value (NAV) and calculation using simple numbers
** What is Entry Load and Exit Load
** Know the difference between direct investing and investing through mutual funds
Know what is Public Provident Fund (PPF) and understand its features
Learn about the National Savings Certificate (NSC)
Learn about Post Office Monthly Income Scheme (POIVIIS)
Compare the different fixed income investment options

Learn about investing in Real Estate:

Products available and the associated risks & rewards
Understand Ponzi schemes and unregulated products

8.Beyond Savings:

Borrowing
Know when to Borrow

** Know the parameters of Equated Monthly Installment (EMI):

Amount of Loan, Loan
Period and Rate of Interest
** Understand the concept of amortization
** Know what is the cost of borrowing and how much one should borrow (the 70-3** Rule)

Credit Cards:

Advantages, disadvantages and precautions to be taken w.r.t credit cards
Understand what are Loans

** Different types of loans:

Housing, Vehicle, Consumer, Personal and Education Loan

** Know various features of loans:

** Term, Rate of interest (fixed vs. floating), Processing charges, Secured vs. unsecured loans, Pre-termination, Termination charges, Partial pre-payment and the charges
** Understand the difference between good loans and bad loans
** Understand the concept of credit score (CIBIL score)