EXC 3670 Financial Markets and Institutions
EXC 3670 Financial Markets and Institutions
Financial markets evolve from interactions of the market participants within the boundaries of market institutions. The objective of this course is to provide an in-depth overview of how financial markets work and how they are used by the different participants: Corporations and governments seeking to raise funds supplied by private and institutional investors in search of return on savings. Understanding the mechanisms by which securities are traded and implications of efficient and liquid markets for bonds, stocks, foreign exchange, and derivatives, are key learning objectives.
The course addresses the following United Nations Sustainable Development Goals (UN SDGs), which make understanding the functioning of financial markets essential for improving the welfare in the economy:
- Reduced inequalities: Financial markets aim at redistributing resources from the ones that are in excess of funds to the ones that are in need of funds in order to invest them in innovative and viable projects. This risk sharing and redistribution helps to reduce inequality by providing greater opportunities to those with less resources but good ideas.
- No poverty: The reduction of inequality facilitated by financial markets aids to reduce and prevent poverty among the ones who are in need of funds.
- Decent work and economic growth: Ultimately, the efficient redistribution of resources facilitated by financial markets leads to higher economic growth and reduction of unemployment in the economy.
Having completed the course, students should know how:
- Time-varying forces of supply and demand for capital emanate and evolve
- Trading and valuation of financial assets takes place
- Various participants are likely to behave in financial markets
- Financial institutions accommodate market participant different needs
- Financial institutions manage risk
Having completed the course, students are expected to master:
- An applied analysis of supply and demand conditions in order to predict market movements of interest rates, security prices, and exchange rates
- An applied analysis of expected trading behavior of important market participants
- An applied analysis of expected actions by financial institutions in lieu of market movements of financial securities. Interest and foreign exchange rates
Theoretical and practical knowledge acquired prepares students for entering financial markets as a junior trading and managing financial assets and/or performing analytical work.
- Introduction to Financial Markets
- Interest Rate Determination and Security Valuation
- Bond and Mortgage Markets
- Stock and Foreign Exchange Markets
- Derivative Securities Markets
- Financial Institution Risk Management
The course consists of 12 weekly 2-hour lectures on theory and practical applications and 12 1-hour weekly asynchronous tasks in the form of solving problem set of exercises and quizzes. After solving the quizzes, students are required to view and comprehend the corresponding solution videos in order to compare their answers. Numerical examples from lecture notes, textbook appendices, and home assignments (distributed on Its Learning) are used extensively in class.
Three classes (nine lecture hours) are allocated to learning how to access and extract data from the professional Bloomberg database platform. Spreadsheets (Excel software) will be used for applications and examples during the Bloomberg lectures. It is thus highly recommended that students familiarize themselves with using Excel. The Bloomberg sessions will emphasize downloading data into Excel spreadsheets and subsequent use of the data for analysis.
Information regarding aspects of student evaluations will be provided in class. It is expected that students obtain this information. Although attendance is not mandatory, it is students' responsibility to obtain any information provided in class, but not included in the course-room (Its Learning), or in the textbook. Of course, students are at all times expected to be familiar with material distributed on Its Learning. In terms of information, material posted on Its Learning does not substitute for not attending class on a regular basis.
This is a course with ordinary assessment. All exams must be passed to get a grade in this course. Each exam component is graded by using a letter grade scale. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the course.
This course has two exam components:
- A mid-term exam (weight 30%) and
- A final exam (weight 70%).
Both exams are individual, in-class, closed-book. Students who fail the mid-term may take the final exam. Both exams must be passed in order to pass the course. More information is provided in class.
Higher Education Entrance Qualification
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this
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: 1 Hour(s) Comment: All exams must be passed to obtain a final grade in the course. Exam code: EXC 36702 Grading scale: ECTS Resit: Examination every semester |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: All exams must be passed to obtain a final grade in the course. Exam code: EXC 36703 Grading scale: ECTS Resit: Examination every semester |
All exams must be passed to get a grade in this course.
| Activity | Duration | Comment |
|---|---|---|
Teaching | 24 Hour(s) | Two hours weekly sessions of lectures. |
Seminar groups | 12 Hour(s) | One hour weekly session with asynchronous tasks in the form of solving problem set of exercises and quizzes. |
Teaching | 9 Hour(s) | Three sessions of three hours - Bloomberg sessions. |
Prepare for teaching | 45 Hour(s) | Reading text-book chapters prior to scheduled lecture. |
Student's own work with learning resources | 60 Hour(s) | Independent studies (textbook material, examples from lectures, and home-assignment problems). |
Examination | 50 Hour(s) | Reviewing course material in preparation for the midterm exam (30%) and the final exam (70%). |
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.