This course is about the financial institutions, markets, and instruments that compose today's global financial markets and the risks associated with them. Students will gain a thorough understanding of how financial institutions are managed, how funds are raised, how financial instruments are priced, how risks are managed, and why financial institutions and markets are prone to failure.
This course is intended to help you understand the role of financial institutions and markets play in the business environment that you will face in the future. It also helps you to develop a series of applications of principles from finance and economics that explore the connection between financial markets, financial institutions and the economy. On the financial markets side, we will learn the term structure of interest rates, stocks, principals of derivatives, and currencies. On the institutions side, we will learn commercial banks, investment banks, insurance companies, mutual funds, the Federal Reserve Systems and their role of in the economy
| Week | Topics |
|---|---|
| 1 | Introduction & Syllabus |
| 2 | Ch. 1 - Why study financial markets and Institutions & Ch. 2 - Overview of the financial system; Why study financial markets? Why study financial institutions? Function and Overview of the financial markets; Structure of financial markets: Function of financial intermediaries (page 41-76) |
| 3 | Ch. 3 - What Do Interest Rates Mean and What Is Their Role in Valuation? Measuring interest rates: Distinction between real and nominal interest rates; Distinction between interest rates and returns. (page 77- 104) |
| 4 | Ch. 4 - Why Do Interest Rates Change?: Determinants of asset demand; Supply and demand in the bond market; Changes in Equilibrium Interest Rates |
| 5 | Ch. 5 - Risk and Term Structure: Risk Structure of interest rates: Term Structure of interest rates (page 107-128) |
| 6 | Ch. 7 - Why Do Financial Institutions Exist?: Transaction Costs; Asymmetric Information; Moral Hazard (175-205) |
| 7 | Ch. 11 - Money Market: The Money Markets Defined; Why do need money markets? The Purpose of the Money Markets. (page 285-307) |
| 8 | Review for Midterm Exam |
| 9 | Midterm exam |
| 10 | Ch. 12 - Bond Market; Purpose of the Capital Market; Capital Market Participants (page 308-332) |
| 11 | Ch. 13 - Stock Market; Investing in Stocks; Computing the Price of Common Stock (333-353) |
| 12 | Ch. 15 - The foreign exchange market (page 375-395) |
| 13 | Ch. 21 - Insurance and Pension Funds, Insurance Companies: Fundamentals of insurance: Types of Insurance and Pensions (540-569) |
| 14 | Project presentations & Review for the Final Exam |
| Method | Qty | % Each |
|---|---|---|
| Midterm Exam(s) | 1 | 35 |
| Project | 1 | 20 |
| Final Exam | 1 | 35 |
| Attendance | 10 |
Financial Markets and Institutions ~ Mishkin & Eakins (10-th edition)