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2014/2015  BA-BHAAI1000U  Banking and financial intermediaries

English Title
Banking and financial intermediaries

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Bachelor
Duration Summer
Course period Summer
Timetable Course schedule will be posted at calendar.cbs.dk
Study board
Study Board for BSc in Economics and Business Administration
Course coordinator
  • Course instructor - Dr. Gizelle Perretti, Florida Gulf Coast University
    Patricia Plackett - Department of Operations Management (OM)
Main academic disciplines
  • Finance
  • Economics, macro economics and managerial economics
Last updated on 12/11/2014
Learning objectives
At the end of the course, students should be able to:
  • Understand term structure, as well as how and why interest rates change over time.
  • Determine the value of various financial securities, and understand how those values are determined.
  • Understand and identify the role and activities of banks and financial intermediaries.
  • Analyze specific problems and issues related to banks, financial intermediaries, regulators and financial markets.
  • Determine and analyze the appropriate measures of risk and return for various financial instruments and institutions.
  • Understand the mechanics and regulation of banks and financial intermediaries.
Course prerequisites
Students must have completed and received passing grades in undergraduate economics, undergraduate accounting, undergraduate statistics and undergraduate corporate finance before enrolling in this course.
Prerequisites for registering for the exam
Number of mandatory activities: 1
Compulsory assignments (assessed approved/not approved)
Mandatory Mid-term Assignment: Students will complete a 50 multiple choice question take-home quiz that will draw from content presented during the first four class meetings. The take home quiz must be completed prior to the fifth class meeting.
4 hours written exam:
Exam ECTS 7.5
Examination form Written sit-in exam
Individual or group exam Individual
Assignment type Written assignment
Duration 4 hours
Grading scale 7-step scale
Examiner(s) Internal examiner and second internal examiner
Exam period Summer Term
Aids allowed to bring to the exam Limited aids, see the list below and the exam plan/guidelines for further information:
  • Allowed calculators
  • Allowed dictionaries
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content and structure

The purpose of the course is to highlight the role of banks and other financial intermediaries in efficient financial markets.  The course is designed to introduce students to the workings of the banking industry, regulatory agencies, monetary policy, economic conditions, and the behavior of financial intermediaries.  The course will cover financial asset valuation, characteristics of financial instruments, and money and capital markets.
The course is organized into five sections.  Section 1 provides an overview of financial intermediaries and provides in-depth coverage of interest rates.  Section 2 reviews various securities markets, most of which students may have discussed extensively in corporate finance and investments courses.  This course will review those markets from the viewpoint of a financial intermediary.  Section 3 provides in-depth coverage of banks and banking regulation.  Section 4 discusses other financial intermediaries. Section 5 examines risks faced by banks and financial intermediaries, along with methods for managing those risks.
This course will have a Preliminary Assignment and a Mid-term Assignment. The Preliminary Assignment will involve reading the first chapter of the textbook and prepare a one-page review of one of two articles. The Mandatory Mid-term Assignment will require students to complete a take-home multiple-choice quiz that will cover content presented during the first four classes.

Class Schedule

Class Topic
Class 1 Chapter 2: Determinants of Interest Rates
Chapter 3: Interest Rates and Security Valuation
Class 2 Chapter 4: The Federal Reserve System, Monetary Policy, and Interest Rates
Chapter 5: Money Markets
Class 3 Preliminary Assignment:
Chapter 7: Mortgage Markets
Chapter 10: Derivative Securities
Class 4 Chapter 10: Derivative Securities
Chapter 11: Commercial Banks
Web Activity: BIS Derivative Securities Summary and FDIC Banks Balance Sheet Information
Class 5 Mandatory Mid-term Assignment
Chapter 12: Commercial Banks’ Financial Statement Analysis
Chapter 13: Regulation of Commercial Banks
Class 6 Chapter 13: Regulation of Commercial Banks
Chapter 15: Insurance Companies
Web Activity: FDIC Insurance Fund Balances and Indicators and III Insurance Company World Rankings
Class 7 Chapter 16: Securities Firms and Investment Banks
Chapter 17: Mutual Funds and Hedge Funds
Class 8 Chapter 17: Mutual Funds and Hedge Funds
Chapter 19: Types of Risk Incurred by Financial Institutions
Web Activity: SIFMA Underwriting Activity and ICI Mutual Funds Summary
Class 9 Chapter 20: Managing Credit Risk on the Balance Sheet
Chapter 21: Managing Liquidity Risk on the Balance Sheet
Class 10 Chapter 21: Managing Liquidity Risk on the Balance Sheet
Chapter 22: Managing Interest Rate Risk and Insolvency Risk on the Balance Sheet
Class 11 Comprehensive Review
Teaching methods
Classes will be comprised of lectures along with in-class exercises and discussions.
Further Information

Preliminary Assignment: To help students get maximum value from ISUP courses, instructors provide a reading or a small number of readings or video clips to be read or viewed before the start of classes with a related task scheduled for class 3 in order to 'jump-start' the learning process.

Expected literature

The required textbook for this course is Financial Markets and Institutions, Fifth Edition, Anthony Saunders; Marcia Millon Cornett (ISBN-10: 0078034663) (ISBN-13: 9780078034664). Publisher: McGraw-Hill/Irwin. Copyright: 2012.

Last updated on 12/11/2014