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FIN 3510 Financial Markets - RE-SIT EXAMINATION

APPLIES TO ACADEMIC YEAR 2015/2016

FIN 3510 Financial Markets - RE-SIT EXAMINATION


Responsible for the course
Knut Sagmo

Department
Department of Financial Economics

Term
According to study plan

ECTS Credits
7,5

Language of instruction
English

Introduction
Main theme is societies' dependency on capital markets and capital market institutions to facilitate orderly transfers of savings from surplus-spending units ('savers') to deficit-spending units. Process desynchronizes (separation) of income from consumption across time, and states of nature, as well. Firms' issuance of debt and equity is rationalized as contributing towards market completeness allowing risk-adverse investors to diversify their holdings of securities with unique, state-dependent payoffs. Investors' consumption, across time and economic states, are affected as well.

Learning outcome
Acquired knowledge
Upon completion of the course, students are required to master tasks such as:

  • In a two-period model, compute firms' optimal levels of real-investments and thus dividends (financial savings) to shareholders.
  • Calculating expected (effective) yields on debt securities and the expected return and riskiness of equity securities' returns
  • Given spot exchange and interest rates, calculate market-clearing forward rates according to international parity theorems
  • Implementation of financial futures for hedging purposes.

Acquired skills
Students, having completed the course, are required to satisfactorily conduct analytical exercises such as:
  • Estimating and explaining the impact of interest rate and exchange rate volatility on the market valuation of stocks and bonds
  • Estimating and explaining how well-diversified portfolios of financial securities reduce uncertainty regarding future payoffs and thus consumption
  • Identifying exposure to foreign exchange rate volatility
  • Identify exposed assets and determine appropriate hedging tools.

Reflection
Topics covered enable students to critically challenge some of the main paradigms of free market economics: Distributional efficiency in terms of rent sharing among participants does not follow from economic efficiency alone. Nor may informationally efficient markets allocate capital to those projects offering the highest, macro-wide rents, necessarily. Hence, could and should economic legislation play a more active role in facilitating informational efficiency and fairness in capital markets?

Prerequisites
Foundation courses from year one: BØK 3411 Finance and Managerial Accounting I, BØK 3421 Finance and Managerial Accounting II, MET 2910 Mathematics, and MET 2920 Statistics. Or equivalent courses.

Compulsory reading
Books:
Saunders, Anthony, Marcia Millon Cornett. 2012. Financial markets and institutions. 5th ed. McGraw-Hill/Irwin. 260 pages. Latest edition to be used in class.

Recommended reading
Books:
Fabozzi, Frank J., Franco Modigliani, Frank J. Jones. 2009. Foundations of financial markets and institutions. 4th ed. Pearson Education. 250

Course outline
The course consists of two integrated modules:

Module 1: Introduction to Financial Markets and Institutions
  • Supply and demand for savings: Determination of the general level of interest rates
  • Loanable funds, interest rates and security valuation

Module 2: Major Financial Markets and Securities
  • The bond market (the trading place for public and corporate debt)
  • The stock market (the trading place for corporate equity)
  • The foreign exchange market (the trading place for foreign currencies)
  • The derivatives market (forwards, futures, and options)

Computer-based tools
Excel spreadsheet models are highly recommended for problem solving. It's learning is used for submitting three mandatory work assignments.

Learning process and workload
The course consists of 45 lecture hours. Conduct of lectures and style of teaching assume that (i) attendants are prepared for the topic being lectured on, and also (ii) have fulfilled the course pre-requisites as specified above. Students are recommended to allocate studying hours as follows:

Activity
Hours
Class attendance
36
Preparing for class
120
Home Assignment problems in-class
9
Mandatory Work Assignment problems
15
Preparing for the final examination
20
Total recommended use of time
200

Mandatory coursework requirements
During the course there will be given three work assignments. The assignments are distributed electronically on It's Learning and answers to the assignment-problems must be submitted electronically. Two of the three assignments must be passed in order to sit for the fnal exam. Further administrative details are provided in class. The exam is given by the end of the lectures series.

Feedback on the assignment problems is provided in two ways:
    1. It's learning sums up and automatically returns to students their overall score upon submission of the answers.
    2. A review of the assignment problems is given during the first class-meet following each work assignment.

    Coursework requirements
    At the last re-sit exams in autumn 2015 and spring 2016, the coursework requirements are no longer mandatory.

    Examination
    A five (5) hour individual, written, closed-book exam concludes the course.
    Examination code(s)
    FIN 35101 - Written exam counts for 100% of course grade in FIN 3510 Financial Markets; 7,5 ECTS credits.

    Examination support materials
    Interest tables and BI approved exam calculator. Examination support materials at written examinations are explained under examination information in the student portal @bi. Please note use of calculator and dictionary in the section on support materials (https://at.bi.no/EN/Pages/Exa_Hjelpemidler-til-eksamen.aspx).

    Re-sit examination
    This course was lectured for the last time autumn 2014. Last re-sit examiniations will be offered autumn 2015 and spring 2016.

    Additional information

    Semester

    Oversettelser