FIN 3522 Markets and Institutions
FIN 3522 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. Financial markets have grown in importance and globalized over time linking investors and institutions across borders. Digitalization and other rapid innovations in technology increase the complexity of the financial environment. This, together with the recent financial crisis, has brought into light the necessity to understand how financial markets actually work.
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 treats theoretical and empirical work on trading mechanisms and market outcomes and shows how it helps explaining actual events. The course closes with the discussion of some topical issues for financial markets (including digitalization) that transformed the way its participants interact.
Upon completion of the course students will:
- understand market structures, how and why they changed over time, their impact on price efficiency and liquidity,
- understand the connections between various market participants, their roles, and incentives,
- understand the general rules of financial markets and why they may sometimes fail.
Upon completions of the course students will acquire analytical skills that would prepare them to work involve asset management, trading, financial analysis or for graduate work in this area. Students will be able to:
- evaluate assets based on risk and return,
- employ theoretical concepts to analyse actual events taking place on financial markets,
- collect and analyse necessary financial data, e.g., from Bloomberg.
The course will bridge the theory and practice. It aims to introduce a student to actual financial markets and teach how to employ theoretical concepts in a practical setting. This will enable the student to operate in actual financial markets, e.g., as an asset manager, analyst, trader or consultant.
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Overview of the financial system. Why do we have financial markets? Consumption smoothing and risk-sharing.
- Fundamental principles of finance. Efficient market hypothesis and no arbitrage.
- Risk and return. CAPM and multifactor models.
- Different markets and instruments. Primary and secondary markets (IPOs, SEOs, rights issues). Secondary markets and liquidity.
- Interest rates.
- Different participants and their roles. Intermediation.
- Delegated portfolio management. Active vs. passive investment.
- Globalization of the financial system. Financial crises.
- Topical issues and controversies in financial markets (e.g., digitalization, high-frequency trading, electronic trading platforms).
The course will include a combination of lectures and discussions 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 student’s responsibility to obtain any information provided in class that is not included on the course homepage/itslearning or in the textbook. Homepages and/or itslearning are not designed as an alternative for who choose not to attend class.
Spreadsheets (Excel or Google Sheets) may 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.
Some discussions of current issues will be based on analytical articles from financial newspapers and magazines (e.g. Financial Times, The Economist). Students are encouraged to track financial news.
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 concerning the letter grades when the course starts.
At re-sit all exam components must, as a main rule, be retaken during the next scheduled course.
The final grade in the course will be based on the following components and weightings:
- Compulsory home assignment. (20%)
- Compulsory presentation. (10%)
- 3 hours written exam. (70%)
Specific information regarding student evaluation beyond the information given in the course description will be provided in class.
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 the 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 are outlined here.
Any violation of the honour code will be resolved 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.
Higher Education Entrance Qualification
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
BØK 3423 Finance or equivalent.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Weight: 20 Grouping: Group/Individual (3 - 6) Duration: 2 Week(s) Comment: Bloomberg Exam code: FIN35221 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: Activity Form of assessment: Presentation Weight: 10 Grouping: Group/Individual (4 - 7) Duration: 1 Semester(s) Comment: Presentation Exam code: FIN35221 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) Exam code: FIN35221 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 | 36 Hour(s) | |
Seminar groups | 6 Hour(s) | Bloomberg sessions |
Prepare for teaching | 83 Hour(s) | |
Group work / Assignments | 30 Hour(s) | |
Examination | 45 Hour(s) | Exam incl. preparations |
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.