FIN 3522 Financial Markets

FIN 3522 Financial Markets

Course code: 
FIN 3522
Department: 
Finance
Credits: 
7.5
Course coordinator: 
Dagfinn Rime
Product category: 
Bachelor
Portfolio: 
Bachelor of Finance - Programme Courses
Semester: 
2020 Spring
Active status: 
Active
Teaching language: 
English
Course type: 
One semester
Introduction

Financial markets are instrumental to the workings of the economy. However, these markets do not exists 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, measured e.g by volume traded or the share of the total output of the economy. This, together with the recent financial crisis, has brought into light the importance how financial markets actually work.

The objective of this course is to provide an introduction to the workings of modern financial markets. There are many different "players" using these markets. On the one hand, corporations, governments, and other institutions use the financial markets to raise funds (i.e. borrow money) for capital investments. On the other hand, these funds are provided by private and institutional investors (by buying securities issued by corporations, or depositing money with banks, etc.).  Banks and other financial institutions (e.g. pension or mutual funds, etc.) act as intermediaries between investors and borrowers. Globalization has made financial markets to a cross-border, international, arena. 

More specifically, the course focuses on the mechanisms by which securities are traded in modern financial markets and the implications of trading mechanisms for the efficiency and liquidity of markets. It covers all major asset classes (money markets, equities, FX and bonds) and treats theoretical work on trading mechanisms and market outcomes, related empirical work and the application of microstructure analysis to practical trading scenarios. It closes with a focus on some topical issues for financial markets, including how digitalization has transformed financial markets.

Learning outcomes - Knowledge

The students will acquire a good understanding of how different financial markets work, and who are the most active market participants. 

  • Understand the importance of different market participants supply and demand for financial instruments.
  • Understand market structures, how they has changed over time, and their impact on price efficiency and liquidity
Learning outcomes - Skills

The students will acquire skills that prepare them to work which would involve trading, portfolio management or trade quality evaluation or for graduate work in this area. 

  • Know how to calculate variables that measure market quality, e.g. measure for liquidity like relative bid-ask spreads
  • Be able to collect necessary financial data, e.g from Bloomberg.
     
General Competence

The course will build on other, more theoretical courses, and aim to make the theory relevant in a practical setting. This will enable the student to operate in actual financial markets, e.g. in role as trader, asset manager or analyst.

Course content
  1. Introduction to financial markets: Fundamental principles of finance. Different markets and instruments.
  2. Why do we have financial markets? Consumption smoothing (Fisher-model) and risk-sharing.
  3. Market participants: Governments, firms, funds, asset managers, banks, central banks, regulators, etc. International participants.
  4. Interest rates: Loanable funds equilibrium
  5. Delegated portfolio management. Active vs. passive investment
  6. Generic market structures (secondary markets)
  7. Market prices/Market liquidity
  8. Financial crises
  9. Topical issues and controversies in financial markets : Digitalization, High frequency trading, electronic trading platforms.
Teaching and learning activities

The course will include a combination of lectures and presentations of actual events.  

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/It's learning or in the text book. Homepages and/or itslearning are not designed for the purpose of students who choose not to attend class.

Spreadsheets (Excel or Google Sheets) will be used for certain practical applications and examples. It is recommended that students become familiar with their use. It will be explained how to use the Bloomberg terminal to collect and analyse financial data. Actual trading platforms, like the OANDA, may be utilized for familiarizing students with actual trading.

This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course. You will find detailed information about the point system and the cut off points with reference to the letter grades when the course start.

At re-sit all exam components must, as a main rule, be retaken during next scheduled course.

The final grade in the course will be based on the following components and weightings:

  • Compulsory home assignment. (20%)
  • Compulsory presentation to be discussed in class (10%)
  • 3 hours written exam. (70%)

Specific information regarding student evaluation beyond the information given in the course description will be provided in class.

Software tools
Software defined under the section "Teaching and learning activities".
Additional information

Honour Code

Academic honesty and trust are important to all of us as individuals, and represent values that are encouraged and promoted by the honour code system. This is a most significant university tradition. Students are responsible for familiarizing themselves with the ideals of the honour code system, to which the faculty are also deeply committed. The expected behaviour and honour code is outlined here.

Any violation of the honour code will be dealt with in accordance with BI’s procedures for cheating. These issues are a serious matter to everyone associated with the programs at BI and are at the heart of the honour code and academic integrity. If you have any questions about your responsibilities under the honour code, please ask.

Qualifications

Higher Education Entrance Qualification.

Required prerequisite knowledge

BØK 3423 Finance or equivalent.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
FIN35221
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
20No 2 Week(s)Group/Individual (3 - 6) Bloomberg
Exam category:
Activity
Form of assessment:
Presentation and discussion
Exam code:
FIN35221
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
10No 2 Week(s)Group/Individual (3 - 6) Meeting / Presentation
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
FIN35221
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
70Yes3 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual
Exams:
Exam category:Submission
Form of assessment:Written submission
Weight:20
Invigilation:No
Grouping (size):Group/Individual (3-6)
Support materials:
Duration: 2 Week(s)
Comment: Bloomberg
Exam code:FIN35221
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Activity
Form of assessment:Presentation and discussion
Weight:10
Invigilation:No
Grouping (size):Group/Individual (3-6)
Support materials:
Duration: 2 Week(s)
Comment: Meeting / Presentation
Exam code: FIN35221
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:70
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:3 Hour(s)
Comment:
Exam code:FIN35221
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Type of Assessment: 
Continuous assessment
Grading scale: 
ECTS
Total weight: 
100
Student workload
ActivityDurationComment
Teaching on Campus
36 Hour(s)
Other in classroom
6 Hour(s)
Bloomberg sessions
Prepare for teaching
83 Hour(s)
Group work / Assignments
30 Hour(s)
Examination
45 Hour(s)
Exam incl. preparations
Sum workload: 
200

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.