ITC

Objectives

Having read this course, the students are expected to have a better understanding of financial markets (e.g., the New York Stock Exchange, Nasdaq, the treasury market, the foreign exchange market), financial instruments (e.g., stocks, bonds, options, futures, swaps) and financial institutions (e.g., commercial and investment banks, brokerage houses and mutual funds).

Knowledge

Explain theoretical background of various fundamentals of financial markets, institutions and the instruments that allow (and restrict) the shifting of cash flows, their timings and the risks involved therein. Also to learn about why and how financial markets, institutions and instruments are regulated.

Cognitive Skills

To enable students to have an improved understanding of various mechanics in the areas of money and bond markets, foreign exchange, derivatives and stock markets, commercial banks and mutual funds industry, based on real life applications.

Interpersonal Skills & Responsibility

Recognize the value judgment process and diversity of opinion regarding issues across individuals to develop and strengthen the mind-sets towards mutual understanding, tolerance and ideas sharing.

Draw upon the resiliency of human approach and adopt a productive and supportive attitude in solution of problems in various functional areas of financial markets and commercial banks.

Numerical & Communication Skills

Put forward individual opinions and observations about theoretical and contemporary issues towards financial institutions and the markets. Learn about calculations of interest rates, duration, and return on futures, swaps and options, along with return on bonds and stocks. This also entails a detailed analysis about the performance of financial institutions like commercial banks and mutual funds in the industry.

Outlines

Topics

A. Financial Markets: Introduction & Overview

- Reasons to study financial markets

- Overview of financial markets and institutions

- Globalization of financial market & institutions

- Role of financial intermediaries

(Ch 1)

B. Determinants of Interest Rates

- Interest rate fundamentals

- Theories of interest rates

- Determinants of interest rates

- Term Structure of interest rates

- Forecasting interest rates

(Ch 2)

C. Interest Rates and Security Valuation

- Interest rate measures

- Bond Valuation

- Equity Valuation

- Impact of different factors on security values

- Duration

- Features of duration

- Economic meanings of Duration.

(Ch 3)

D. Money and Bond Markets

- Money and Bond Markets: Overview

- Yields on Money Market Securities

- Money and Bond Market Securities

- Money and Bond Market Participants Comparison of Bond Market Securities

(Ch 5, 6)

E. Stock Markets

- The Stock Markets: Overview

- Stock Market Securities

- Primary and Secondary Stock Markets

- Stock Market Participants

- Other Issues

(Ch 8)

F. Foreign Exchange Markets

- Foreign Exchange markets and risk

- Background and History of Foreign exchange Foreign Exchange rate and transactions

- Interaction of interest rates, exchange rates and inflation

(Ch 9)

G. Derivative Securities Markets

- Derivative Securities: Overview

- Forwards and Futures

- Options and Swaps

- Regulation of Futures and Options Markets

- Caps, Floors, and Collars

(Ch 10)

H. Commercial Banks: Industry Overview

- Commercial Banks and Financial Institutions

- Assets and liabilities of commercial banks

- Industry Performance

- Size, Structure, and Technological changes

- Global issues

(Ch 11)

I. Commercial Banks’ Financial Statements and Analysis (FSA)

- Financial statements of commercial banks

- Assets and Liabilities

- Core Deposits and Purchase Funds

- Off-balance sheet activities

- FSA, using a return on equity framework

(Ch 12)

J. Mutual Funds and Hedge Funds

- Size, Structure, and Composition of the Industry

- Types of Mutual Funds

- Mutual Fund Prospectuses and Objectives

- Mutual Fund costs

- Global Issues

- Hedge Funds

(Ch 17)

K. Pension Funds