| 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.
|
| Examination |
|
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.
|
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