BAFI 1002-Course Guide 2017 Sem - 1 PDF

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Course Guide

BAFI 1002 FINANCIAL MARKETS Semester 1 2017 City Campus Course Coordinator Dr Obaid Awan

Email: [email protected]

Teaching Staff Contact Details Mr Vineet Tawani (Lecturer) Mr Danny Moosa (Lecturer) Ms Shiao-Hua Kwong (Tutor) Ms Roksana Hematizadeh (Tutor) Ms Aysha Akter (Tutor) Mr Thompson Nguyen (Tutor) Ms Giang(Eri) Nguyen (Tutor)

Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected] Email: [email protected]

You are requested to ensure that you are correctly enrolled in this course by checking that it appears on your enrolment confirmation. If the course code does not appear, you will not have a result recorded for this course. Please see the School’s student administration officer at once if you are not correctly enrolled in this course.

A.

COURSE IDENTIFICATION

Course code: Course name: Duration: Credit points: Pre-requisites: Co-requisites: B.

BAFI 1002 Financial Markets One Semester 12 None but completion of Macroeconomics 1 is desirable None

COURSE DESCRIPTION

Financial Markets is a first year course that introduces students to the financial markets environment in which business organisations operate. The course presents an overview of the financial system and its various financial markets, instruments and institutions. Students investigate the nature and role of the main financial markets within the domestic and global environment. Within this framework, the course is practically-based and enables students to distil and critically analyse problems in real-life treasury dealing situations using live data. Students collaborate in small teams during those simulation sessions and report on their treasury dealing activities. C.

CAPABILITY LINKAGES

Financial Markets has no formal prerequisites but for a better understanding, it is desirable for students to have completed Macroeconomics 1. This course provides the necessary background to study more advanced analytical finance courses. Consequently, it is useful for students studying courses including: BAFI 1026 Risk Management; BAFI 1018 International Finance; BAFI 1024 Introduction to Futures and Options; BAFI 1045 Investments; BAFI 1046 Empirical Studies in Equity Markets; ECON 1086 International Trade; JUST 1037 Law of Investments and Financial Markets. D.

COURSE DELIVERY

Teacher guided contact hours: 3 hours per week or equivalent. This typically includes twohour lecture or dealing and one hour tutorial or dealing per week. Students are expected to spend at least 1-2 hours of self-directed learning for every 1 hour of teacher guided contact or equivalent. Staff student consultation The course lecturers will be available for individual student consultation during specified consultations hours (will be notified via myRMIT) or otherwise by appointment. Students are encouraged to communicate with the lecturer via email whenever possible, convenient and appropriate to the type of assistance being sought, and to post questions regarding the course material on the Discussion Board in myRMIT. Please mention in the subject title of your emails – BAFI 1002. 3

E.

OVERVIEW OF LEARNING ACTIVITIES

To achieve the objectives of the course you must participate in various learning activities: - Attendance at, and note taking during, scheduled lectures. - Reading of, and note taking from, distributed material and prescribed text. - Completion of distributed tutorial/feedback questions. - Attendance at, and participation during, dealing sessions and tutorials. - Participation in individual learning activities including regular access to MyRMIT. F.

COURSE CAPABILITIES

Enabling knowledge and skills and the corresponding capabilities and learning activities include: Capability

Yes/No

Distil, scope and critically analyse problems.

Yes

Support lifelong learning

Yes

Use the technical tools and language of the field.

Yes

Recognise the uncertainty of business decision-making

Yes

Approach problems with intellectual openness and curiosity

Yes

Communicate effectively

Yes

Collaborate effectively

Yes

Research

Yes

Reflect

Yes

Work to the ethical standards of the profession

Yes

Reflect upon their actions as engaged citizens in the context of local diversity and multiculturalism, increasing globalisation, and the university’s commitment to awareness of global sustainability and indigenous issues.

Yes

Apply your knowledge of global economic, political and financial systems to work effectively in international settings

Yes

Reflect upon your actions as an engaged citizen

Yes

Support lifelong learning

Yes

G.

LEARNING OUTCOMES

The learning outcomes of this course include: Identify the nature and key components of financial systems domestically and globally to apply in diverse contexts. 4

Identify the nature, role and determinants of the structure and level of interest rates in economics and financial contexts. Demonstrate the basic financial mathematics applied to the pricing of money and capital market instruments. Analyze the characteristics and functions of the main financial intermediaries operating in financial systems in a global context. Assess the operations of the foreign exchange market including the nature and determinants of exchange rates and relevant investment strategies. Explore the main features of equity and derivatives markets from investors’ perspective. Work collaboratively in teams and communicate effectively during group treasury dealing activities. Consolidate the key components that constitute the activity in financial markets and what drives a live dealing room environment.

H.

ASSESSMENT COMPONENTS

Assessment in this course consists of the following three (3) components: Mid-Semester Test Group Assignment (Market view presentation 10% + Report 20%) Final Examination

20% 30% 50%

To pass the subject students need to obtain an overall mark of 50 over 100, there is no hurdle on the final examination. Assessment components Capabilities Addressed Dealing Session assignment

Mid-Semester Test

Distil, scope and critically analyse problems Use the technical tools and language of the field Recognise the uncertainty of business decision-making Approach problems with intellectual openness and curiosity Communicate and collaborate effectively Research and Reflect Reflect upon their actions as engaged citizens in the context of local diversity and multiculturalism, increasing globalization, and the university’s commitment to awareness of global sustainability and indigenous issues. Work to the ethical standards of the profession Support lifelong learning Distil, scope and critically analyse problems Use the technical tools and language of the field Recognise the uncertainty of business decision-making Approach problems with intellectual openness and curiosity 5

Final Examination

Distil, scope and critically analyse problems Use the technical tools and language of the field Recognise the uncertainty of business decision-making Approach problems with intellectual openness and curiosity Communicate effectively Support lifelong learning

TUTORIALS Students are required to prepare their tutorial questions before coming to the tutorial. Students should bring their solutions to tutorials, and be prepared to participate in the tutorial discussion. Students must have a calculator at all times. DEALING SESSIONS What are the dealing sessions? The dealing sessions are simulation exercises during which students are formed into small groups and, acting as banks or corporations, conduct simulated treasury dealing activities – dealing in money market instruments and foreign exchange. Each student will attend two dealing sessions two practice sessions. The first practice session will last for approximately 2 hours, where the aim is to introduce the basic concepts of trading games and to allow students to get familiar with the simulated trading environment. The second practice session and dealing sessions would last for 3 hours To conduct trading, students will be organised into teams of 3 students. Where? All practice session and dealing sessions will be held in the Treasury Training Facility in building 80 (SAB) room level 4 room 12 and 14. When? The practice session and dealing sessions will be held during the following weeks: Session MM Practice Session (2 hours) MM Dealing Session (3 hours)

Topic Money Market (MM) Money Market (MM)

Week 4 5

FX Practice Session (3 hours)

Foreign Exchange Market (FX)

9

FX Dealing Session (3 hours)

Foreign Exchange Market (FX)

10

The practice session and dealing sessions will be held at least 5 - 6 different times during each of the weeks in which the sessions are to be held. However, you must attend the same session the same time each week. In order to attend these sessions, you MUST REGISTER YOUR PREFERENCES PRIOR TO THE START OF THE SESSIONS. REGISTRATION FOR THE SESSIONS WILL BE OPEN A FEW WEEKS BEFORE THE FIRST DEALING SESSION. You will be provided with further details on the registration process later in the semester. 6

ATTENDANCE TO ALL DEALING SESSIONS IS COMPULSORY AND FAILURE TO ATTEND WILL RESULT IN PENALTIES IN THE GROUP ASSIGNMENT GROUP ASSIGNMENT (30%) Following the FX Dealing Sessions, students will submit a Dealing Session Report based on their team’s research and dealing room activities during this last session. This Dealing Session Report will be a group assignment to be prepared by each team. Students must attend all their team dealing sessions and they must contribute to the team’s report in order to receive marks for this assignment. As part of the preparation for their foreign exchange dealing session and report, each group of students will have to present their assessment of the foreign exchange market (market view). Market view presentation: 10% of the total mark will be based on this part. The market view is an integral part of the report and preparing and presenting the view before the dealing session is essential. The Market view presentation will be held during the dealing sessions in week 9. Submission of the completed report The FX Dealing Session Report is due by 5.00 pm on Friday of Week 12. Once finalised, all reports must be uploaded by the students on the Turnitin website. Only reports that have been loaded on the website will be marked by the academic staff. The goal is to minimise PLAGIARISM (see section I). Instructions regarding Turnitin will be provided later in the semester. Note that Turnitin upload is not a formal submission of the assessment but rather a test of how much of your work is plagiarised. Our advice is to upload your work into Turnitin at least two days before Friday of week 12 as it may take up to 48 hours to get an adequate response from the server. You must correct all the plagiarised section until it reaches the green colour—which is the acceptable level of plagiarism for this course. Once you have reached the green colour, your work is ready for the final submission for our assessment. The report must have the prescribed cover sheet and the following details: -

Students names and student numbers of those who have contributed to the report FX Dealing Session attended Team name Details of the course

You are also required to include a signed equity of contribution statement on the front cover of your final report which states how much contribution you and your team members have made to the final report as a percentage, with the intention to eliminate any ‘free-riding’ 7

issues. Your report mark will be calculated based on this percentage. Please use the following template for equity of contribution (you must sign this on the hard copy of your final report): Student name

Student number

% contribution

Signature

Final mark (tutors only)

Your final mark will then be calculated as the report mark multiplied by your contribution divided by the highest team member’s contribution. Note that if equal contribution has been made by a group of 3 for example, the percentages should be listed as “33.3%”. An example of how the equity of contribution applies is as follows: Student A has made the majority of contribution with 60% of the report being contributed, whereas Student B has made a less significant contribution with 30% of the report being contributed to, and Student C has made very little contribution with only 10%. The group has received 16/20 for the final report. Thus the following table is completed and marks will be calculated as the following (see next page):

Student name

Student number

% contribution

Signature

Final mark (tutors only)

Student A

S1234567

60%

Student B

S2345678

30%

Student C

S3456789

10%

*Student A’s signature* *Student B’s signature* *Student C’s signature*

60%/60% * 16 = 16/20 30%/60% * 16 = 8/20 10% / 60% * 16 = 1.6/20

Please note that submitting a signed equity of contribution is compulsory with your report. Groups who fail to submit an equity of contribution will receive an overall mark of 0 for their final report, NO EXCEPTIONS will be made to this rule. Penalties for late submission: Unless extension has been granted by the course coordinator or the Special Consideration Unit, late submission of assignment the mark awarded will be reduced by 10% for each day (or part of a day) it is late. Assignments that are late by 7 days or more will not be marked and will be awarded zero marks. Note: Extensions to submission deadlines beyond 7 days are allowed only as a result of a successful application for Special Consideration

8

MID-SEMESTER TEST (20%) The mid-semester test is worth 20% of the total assessment for this course. The test will be held in week 7 of the semester. More details about the test shall be provided in due course. FINAL EXAMINATION (50%) The Final Examination will be a 2-hour closed book examination. The examination will be held at the time and place indicated on the RMIT Examination Timetable. No other examination times will be available. Please note that dictionaries are not permitted in tests or examinations without the prior written permission of the School of Economics, Finance and Marketing. Note that No formula sheet will be provided or allowed in the examination room. Students will need calculator with the function “to the power of”. Non-programmable calculators, without the capacity to store text, may be used during the examination. Programmable calculators may not be used. The structure of the final exam will be discussed in class. I.

ACADEMIC MISCONDUCT

Plagiarism: the presentation of the work, idea or creation of another person as though it is your own. It is a form of cheating and is a very serious academic offence that may lead to expulsion from the University. Plagiarised material can be drawn from, and presented in, written, graphic and visual form, including electronic data, and oral presentations. Plagiarism occurs when the origin of the material used is not appropriately cited. Plagiarism can occur in oral and written presentations and is not acceptable. The use of another person’s work or ideas must be acknowledged. Failure to do so may result in charges of academic misconduct, which carry a range of penalties including cancellation of results and exclusion from the course. Please refer to University Regulation 6.1.1 on Student Discipline. Examples of plagiarism include: • Copying sentences or paragraphs word-for-word from one or more sources, whether published or unpublished, which could include but is not limited to books, journals, reports, theses, websites, conference papers, course notes, etc. without proper citation; • Closely paraphrasing sentences, paragraphs, ideas or themes without proper citation; • Piecing together text from one or more sources and adding only linking sentences; • Copying or submitting whole or parts of computer files without acknowledging their source; • Copying designs or works of art and submitting them as your original work; • Copying a whole or any part of another student's work; and 9

• Submitting work as your own that someone else has done for you. Enabling Plagiarism: the act of assisting or allowing another person to plagiarise or to copy your own work. J.

APPEAL AGAINST RESULTS

(This outlines the method used by the School of Economics, Finance and Marketing to implement the standard RMIT procedures for dealing with appeals against results as given in the RMIT Procedures Manual section 7.32.1.1.) Before any formal appeal against the result in a subject is lodged, RMIT procedures require that the following informal steps have been taken. As a first step you must make an appointment to view your paper with the examiner. If after discussion of your results with the lecturer you are dissatisfied with your result it is possible for you to appeal against your assessment. To lodge an appeal you must apply in writing to the Head of the School of Economics, Finance and Marketing. According to RMIT procedures your appeal must be based on one of the following grounds: Inequitable assessment when compared to other students. Situations where non-academic factors have effected assessment. Faulty administration or faulty conduct of the assessment. Inadequate allowance for special consideration in assessment (note that appeals may be made in relation to special consideration only if appellant has previously and correctly applied for special consideration). Any other reasonable grounds deemed acceptable by the Appeals Committee. Appeals which are not based on these grounds may be automatically rejected. NOTE THAT WANTING A HIGHER GRADE IS IN ITSELF NOT SUFFICIENT GROUNDS FOR APPEAL. Once your appeal letter has been received the exam will be remarked by an independent examiner. You will be notified of the result by mail. When a large number of appeals are received priority will be given to students appealing against a fail as the result of the appeal will effect their next semester’s enrolment. If your appeal is unsuccessful and you are still dissatisfied you must then appeal to the Business Portfolio by writing to the Portfolio Executive Officer. Before taking this step it is advisable to contact the Student Union and speak to a Students Rights Officer. All appeals must be made in writing within two weeks of the official publication of results. If your appeal to the School is unsuccessful do not make a second appeal to the School for that subject. It will not be considered. All second appeals must be forwarded to the Portfolio as described above.

10

K.

STUDY SCHEDULE Week

Topic

Lecture

Test

Activity

Course Guide Discussion 1

Topic 1: Introduction to Financial Markets

2 3

Topic 2: Interest Rates Topic 3: Money Markets

4

Topic 4: Debt Markets

6 7 8

Money Markets Dealing Session (3 hour session) Topic 5 A: Foreign Exchange Topic 5 B: Foreign Exchange Topic 6: Equity Markets

9