Financial Markets and Institutions

2019/2020

Academic Year

ENG

Instruction in English

4

ECTS credits

Delivered at:

Department of Finance

Course type:

Compulsory course

When:

1 year, 1, 2 module

Instructor

Vukovic, Darko

Course Syllabus

Abstract

The knowledge, skills and competences acquired in the course of studying this discipline, will be useful for specialists in finance and banking and exchange business in solving various problems of the administrative, analytical, research, settlement and economic nature. Also, this knowledge will be useful for financial concepts and application of analytical tools to the elaboration of financial strategies. The course is based on the active learning technologies, mostly at case studies. Teaching and learning methods include lectures, tutorials, seminars, case studies, group work, home assignments (individual and group projects). The written examination (80 minutes, close-booked) containing tests, problems and case analysis is a mandatory part of the learning process.

Learning Objectives

• Course is aimed at study of the fundamentals of financial markets and financial instruments, the features of the formation of modern financial markets, on the practical application of financial instruments, the types of financial institutions and their roles and functions in the financial markets.

Expected Learning Outcomes

• Students should know: • the structure and objectives of the financial market; • the structure of financial market and the contents of financial assets; • basic concepts, functions and tools of the financial market: securities, currency, loans, precious metals and precious stones; • understand the challenges of uncertain environment of financial markets, assess them and take appropriate financial and investment decisions.
• Students should be able to: • properly evaluate investment risks; • build relationships with various financial institutions and intermediaries; • evaluate the investment as a financial asset and use the various tools of the financial market; • use strong financial-analytical skills and apply them to solve investment problems; • plan and perform an independent research project in the area of financial markets and istruments.
• Students should acquire skills in: • basics of legal support in the functioning of the financial market; • methods of control over the financial situation of the issuer; • skills for using the various tools in the financial market. • capability of an innovative, open and ethical mindset • capability to evaluate risks of financial decision.

Course Contents

• Introduction to the financial market and institution
  Overview of Financial Markets. Overview of Financial Institutions. Globalization of Financial Markets and Institutions.
• The interest rate and the mechanism for its determination
  Loanable Funds Theory. Movement of Interest Rates Over Time. Determinants of Interest Rates for Individual Securities.
• Money Markets
  Money Markets Instruments. Yields on Money Market Securities. Money Market Participants. International Aspects of Money Markets.
• Bond and mortgage markets
  Bond Market Securities. Bond Market Participants. International Aspects of Bond Markets. Mortgages and Mortgage-Backed Securities. Primary Mortgage Market. Secondary Mortgage Markets. Participants in the Mortgage Markets. International Trends in Securitization.
• Stock Markets
  Stock Market Securities. Primary and Secondary Stock Markets. Stock Market Participants. International Aspects of Stock Markets.
• Foreign exchange markets
  Foreign Exchange Markets and Risk. Foreign Exchange Rates and Transactions. The conversion arbitrage. Spot and forward transactions of foreign exchange. The interest arbitration.
• Derivative securities markets
  Forwards and Futures. Options. Regulation of Futures and Options Markets. Swaps. Caps, Floors, and Collars. International Aspects of Derivative Securities Markets.
• Financial players: commercial banks, savings institutions, credit unions and finance companies
  Commercial Banks as a Sector of the Financial Institutions. Industry. Industry Performance. Savings Institutions. Credit Unions. Finance Companies.
• Financial players: insurance companies, securities firms, investment banks, mutual funds, hedge funds, pension funds
  Life Insurance Companies. Property–Casualty Insurance Companies. Securities Firm and Investment Bank. Mutual Funds and Hedge Funds. Pension Funds.
• Financial institutions and risks
  Credit Risk. Liquidity Risk. Interest Rate Risk. Market Risk. Off-Balance-Sheet Risk. Foreign Exchange Risk . Country or Sovereign Risk . Technology and Operational Risk. Insolvency Risk. Other Risks and Interaction Among Risks.

Assessment Elements

• Homework
• In-class activities
• Written assignment
• Final examination

Interim Assessment

• Interim assessment (2 module)
  0.4 * Final examination + 0.27 * Homework + 0.06 * In-class activities + 0.27 * Written assignment

Bibliography

Recommended Core Bibliography

• Alexander, G. J., Sharpe, W. F., & Bailey, J. V. (2012). Fundamentals of investments. Slovenia, Europe: Prentice Hall. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.C1BEBDC4
• Fabozzi, F. J., Modigliani, F., & Ferri, M. G. (2012). Foundations of financial markets and institutions. Slovenia, Europe: Prentice Hall. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.91C13170

Recommended Additional Bibliography

• Mishkin, F. S., Matthews, K., & Giuliodori, M. (2013). The Economics of Money, Banking and Financial Markets (Vol. European ed). Harlow, England: Pearson. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1417913