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FIN 6246 Advanced Money and Capital Markets Muma College of Business University of South Florida Spring 2020 Professor: Jared Williams Class: BSN 2201, Wednesday 6:30-10:15 PM Office: BSN 3106A, Monday 2:30-4:30 PM E-mail: [email protected] Course Materials: The required textbook is Financial Markets and Institutions, 9th Ed., by Frederic S. Mishkin and Stanley G. Eakins. A companion website (www.pearsonhighered.com/mishkin_eakins) for the textbook offers supplementary materials and helpful links, including three Web-only chapters: Ch.25 Financial Crises in Emerging Market Economies, Ch.26 Savings Associations and Credit Unions, and Ch.27 Finance Companies. We do not plan to cover any Web chapters, although you may find the materials useful. You need a financial calculator (e.g., Texas Instruments BAII PLUS) to assist you in time value of money calculations, especially during an exam. Two other items are optional. One is Study Guide to accompany the textbook (ISBN: 9780133427073). The Guide provides summaries, exercises, self-tests, and answers to the exercise and self-tests. The other is a subscription to either the Financial Times or the Wall Street Journal. These papers publish relevant articles or information on financial markets and institutions, some of which we may refer to in class. Slides for all covered chapters are available in Canvas. General Comments: This course provides a comprehensive overview of money and capital markets. The emphasis is on the basic concepts and workings of financial markets (the money, bond, stock, mortgage, and foreign exchange markets) and financial institutions (commercial banks, mutual funds, pension funds, insurance companies, investment banks, security brokers and dealers, and private equity firms). There are roughly three segments. In the first, we review the fundamentals of financial system and interest rates. In the second, we cover financial markets and regulations. In the third, we examine financial institutions and risk management. The learning objective is that you will acquire a good understanding of the covered materials and their link to real-world applications, and you will be better prepared for career opportunities in, or interactions with, the financial services industry. This course makes no assumption of your prior knowledge on the subjects of financial markets and institutions.

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To do well, you must keep up with weekly class sessions by promptly reviewing the covered chapters and working on the Practice Questions prepared for the chapters. The Practice Questions (one set for each covered chapter) are available in Canvas. It is also important that you practice the assigned end-of-chapter Quantitative Problems (see page 5). Their solutions are also available in Canvas.

Exams: We will have three exams (see the schedule). Each exam will have up to 50 multiple-choice, qualitative as well as quantitative questions. The questions will be similar or related to those appeared in class, in the assigned end-of-chapter Quantitative Problems, or in the Practice Questions. The second or third exam is not designed to be cumulative, meaning either one will test only the chapters completed after the prior exam. All exams are “almost closed-book” in that you may bring one 8½" by 11" sheet of paper, both sides of which may contain whatever you deem useful (but the material must be hand-written). You may also use scientific and financial calculators. However, no other notes, books, or digital devices (smartphones, tablets, computers, and calculator with strong memory functions, etc.) are permitted. Requests for a makeup exam will be denied unless the student has a clearly valid reason – a university-sanctioned excusable absence with a proof – for example, an illness certified by a medical doctor. In any event, I must have consented to a request in advance (except for an emergency). At the sole discretion of the instructor, a makeup exam may differ substantially from the original in format or content, or both. Regarding nonuniversity-sanctioned reasons for missing an exam: you must inform me prior to the exam of the reason of your absence. At my sole discretion, if I believe the absence to be legitimate, and if I give you advance permission, you can miss one of the first two exams and have your final exam score count as the missing exam score (so that the final exam is essentially double-weighted at 66.7%).

Grade: I assign plus/minus grades. Your course grade is based on your three exam scores as follows: Minimum (Exam 1, Exam 2, Exam 3) .......................... 20% Median (Exam 1, Exam 2, Exam 3) ............................... 40% Maximum (Exam 1, Exam 2, Exam 3) .......................... 40% In other words, your lowest exam score is weighted 20%, and your highest two exam scores are weighted 40% each. If your numerical score is 90 or higher, your grade will be no worse than A- (e.g., 87 to 89 B+, 90 to 92 A–, 93 to 100 A). Likewise, if your numerical score is 80 or higher, your grade will be no worse than B-. Your final course grades may be adjusted upwards (but never downwards) if the exams turn out to be difficult and I feel a curve is warranted.

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University Policy Notes: Per university policy on religious holidays, students who anticipate being absent from class due to a major religious observance must provide a written notice of the date(s) and event(s) to the instructor by the second meeting. Students in need of academic accommodations for a disability may consult with the Students with Disabilities Services to arrange appropriate accommodations. Students are required to give reasonable notice prior to requesting an accommodation. You are encouraged to take notes in this course. If you wish to record lectures, please ask permission before doing so. You do not have permission to sell or to profit in any manner from the use of the notes or recordings. In the event of an emergency, it may be necessary for USF to suspend normal operations. During this time, USF may opt to continue delivery of instruction through methods that include but are not limited to: Canvas, Elluminate, Skype, and email messaging and/or an alternate schedule. It is the responsibility of the student to monitor the Canvas site for each class for course specific communication, and the main USF, College, and department websites, emails, and MoBull messages for important general information. About Me: I graduated in 2009 with a PhD (finance) from Northwestern University. Prior to joining USF, I taught finance at Penn State and Notre Dame. My research interests are in the general area of behavioral finance.

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Schedule (subject to change) Date

Topics

Chapters

2/12

Introduction

1

Overview of Financial System

2

Interest Rates

3

Interest Rate Changes

4

Risk and Term Structures of Interest Rates

5

2/19 2/26

Selected Quantitative Problems 3/04

Exam 1

3/11

Roles of Financial Institutions

7

Financial Crises and Economic Impacts

8

Money Markets

11

3/18

No class (spring break)

3/25

Bond Market

12

Stock Market

13

Mortgage Markets

14

Foreign Exchange Market

15

4/1

Selected Quantitative Problems 4/8

Exam 2

4/15

Management of Financial Institutions

17

Financial Regulation

18

Banking Industry

19

Mutual Fund Industry

20

Insurance Companies and Pension Funds

21

Investment Banks, Securities, and VC Firms

22

Risk Management in Financial Institutions

23

4/22

4/29

Selected Quantitative Problems 5/6

Exam 3

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Selected End-of-Chapter Quantitative Problems (subject to change) Chapter 1 2 3 4 5 7 8 11 12 13 14 15 17 18 19 20 21 22 23

Page from

63 87 115

271 295 316 337 361 413

502 556 576

Quantitative Problems none none 1, 2, 6, 11, 13, 14 4, 5 1, 2, 3, 15 none none 2, 3, 5, 11, 12 1, 2, 6, 7, 11, 12, 14 4, 5, 6, 7, 9, 16 1, 2, 5, 11 1, 6, 8, 9, 12 1, 3 none none 4, 5 none 8 6, 7, 12

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Academic Integrity Academic integrity is the foundation of the University of South Florida System’s commitment to the academic honesty and personal integrity of its university community. Academic integrity is grounded in certain fundamental values, which include honesty, respect, and fairness. Broadly defined, academic honesty is the completion of all academic endeavors and claims of scholarly knowledge as representative of one’s own efforts. The final decision on an academic integrity violation and related academic sanction at any USF System institution shall affect and be applied to the academic status of the student throughout the USF System, unless otherwise determined by the independently accredited institution. The process for faculty reporting of academic misconduct, as well as the student’s options for appeal, are outlined in detail in USF System Regulation 3.027. Disruption to Academic Progress Disruptive students in the academic setting hinder the educational process. Disruption of the academic process is defined as the act, words, or general conduct of a student in a classroom or other academic environment which in the reasonable estimation of the instructor: (a) directs attention away from the academic matters at hand, such as noisy distractions, persistent, disrespectful or abusive interruption of lecture, exam, academic discussion, or general University operations, or (b) presents a danger to the health, safety, or well-being of self or other persons. Disability Access Students with disabilities are responsible for registering with Students with Disabilities Services (SDS) (SVC 1133) in order to receive academic accommodations. SDS encourages students to notify instructors of accommodation needs at least five (5) business days prior to needing the accommodation. A letter from SDS must accompany this request. Sexual Misconduct / Sexual Harassment USF is committed to providing an environment free from sex discrimination, including sexual harassment and sexual violence (USF System Policy 0-004). The USF Center for Victim is a confidential resource where you can talk about incidents of sexual harassment and gender-based crimes including sexual assault, stalking, and domestic/relationship violence. This confidential resource can help you without having to report your situation to either the Office of Student Rights and Responsibilities (OSSR) or the Office of Diversity, Inclusion, and Equal Opportunity (DIEO), unless you request that they make a report. Please be aware that in compliance with Title IX and under the USF System Policy, educators must report incidents of sexual harassment and gender-based crimes including sexual assault, stalking, and domestic/relationship violence. If you disclose any of these situations in class, in papers, or to me personally, I am required to report it to OSSR or DIEO for investigation. Contact the USF Center for Victim Advocacy and Violence Prevention: (813) 974-5757. Religious Observances All students have a right to expect that the University will reasonably accommodate their religious observances, practices and beliefs (USF System Policy 10-045). The USF System, through its faculty, will make every attempt to schedule required classes and examinations in view of customarily observed religious holidays of those religious groups or communities comprising the USF System’s constituency. Students are expected to attend classes and take examinations as determined by the USF System. No student shall be compelled to attend class or sit for an examination at a day or time prohibited by his or her religious belief. However,

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students should review the course requirements and meeting days and times to avoid foreseeable conflicts, as excessive absences in a given term may prevent a student from completing the academic requirements of a specific course. Students are expected to notify their instructors at the beginning of each academic term if they intend to be absent for a class or announced examination, in accordance with this Policy. Statement of Academic Continuity In the event of an emergency, it may be necessary for USF to suspend normal operations. During this time, USF may opt to continue delivery of instruction through methods that include, but are not limited to: Learning Management System, online conferencing, email messaging, and/or an alternate schedule. It is the responsibility of the student to monitor the Learning Management System for each class for course-specific communication, and the main USF, College, and Department websites, emails, and MoBull messages for important general information (USF System Policy 6-010). For additional guidance on emergency protective actions and hazards that affect the University, please visit www.usf.edu/em

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