EXC 3670 Financial Markets and Institutions
EXC 3670 Financial Markets and Institutions
Financial markets are instrumental to the workings of the economy. However, these markets do not exist in a vacuum, but evolve from the interactions of market participants within the boundaries of market institutions. The importance of financial markets have grown over time, if measured by volume traded or the share of the total output of the economy. This and the recent financial crisis have brought into light the importance how financial markets actually work.
The objective of this course is to provide an in-depth introduction into the workings of modern financial markets. There are many different players using these markets. On one hand, corporations, governments, and other institutions use the financial markets to raise funds (issue equity and debt) for capital investments. On the other hand, these funds are provided by private and institutional investors as well as intermediaries, banks, pension, mutual funds, etc.
More specifically, the course focuses on the mechanisms by which securities are issued and traded in modern financial markets and the implications for the efficiency and liquidity of markets. It covers all major asset classes (money markets, bonds, equities, FX, and derivatives), with a special emphaisis on interaction between financial analysis and institutional characteristics.
The students will acquire a good understanding of how different financial markets work. More specifically, the students will develop understanding with respect to the following topics:
- Sources for demand and supply of capital to financial markets
- Trading of financial assets
- Participants in financial markets
- Major financial assets and institutions relevant to all households
- During the acquisition of the above mentioned knowledge the students will acquire skills that prepare them for work involving security trading, portfolio management or trade quality evaluation and for graduate work in this area.
- The acquired theoretical and practical knowledge provided by the course should enable the student to operate in actual financial markets, e.g. as a trader, a asset manager or an analyst.
- Introduction to financial markets
- The financial system
- Interest Rate Detemination and Security Valuation
- Money and Bond Markets
- Stock and Foreign Exchange Markets
- Risk Management with Financial Derivatives: Hedging with Futures Contracts
- Risk Management in Financial Institutions: Liquidity Risk
- Risk Management in Financial Institutions: Interest Rate and Solvency Risk
The course's lecture hours will combine lectures and plenary tutorials where solutions to exercises will be explained and practical examples will be presented. This course will also help develop analytical skills using Bloomberg, real-life data.
Specific information regarding any aspect of student evaluation will be provided in class. It is the student's responsibility to obtain this information. Please note that whilst attendance is not compulsory, it is the students responsibility to obtain any information provided in class that is not included on the course homepage/itslearning or in the text book. Homepages and/or itslearning are not designed for the purpose of students who choose not to attend class. At the same time, all students are expected to familiarize themselves with all information provided through itslearning in a timely manner.
Spreadsheets (Excel) will be used for certain practical applications and examples, in paricular, during the Bloomberg sessions. It is recommended that students become familiar with Excel. In class, it will be explained how to use financial data in Excel.
This course has two exams: A mid-term exam (weight 30%) and a final exam (weight 70%). Both exams are individual, in-class, closed-book, and are graded on a scale from 0 - 100 points. Students who fail the mid-term may still sit for the final exam and may thus obtain a passing grade. More information is provided in class at the start of the semester.
At re-sit it is required that all exam components (mid-term and final) are retaken during the next scheduled course.
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The specialisation requires two years of university education in Business Administration or equivalent.
EXC 2910 Mathematics, EXC 2904 Statistics, EXC, 2110 Basic Financial Management, or equivalent.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 30 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: Midterm exam counting 30% towards the final grade, and replaces previous two home-assignments. Exam code: EXC36701 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Final exam may be taken independent of performance on the mid-term exam. Exam code: EXC36701 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
| Activity | Duration | Comment |
|---|---|---|
Teaching | 45 Hour(s) | Lectures including Bloomberg sessions. |
Prepare for teaching | 80 Hour(s) | |
Group work / Assignments | 30 Hour(s) | |
Student's own work with learning resources | 45 Hour(s) |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.