Introductory description

This module is a master level course designed to analyse financial products, markets and organizations.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

Introduction to Financial System
Interest Rates and Term Structures
Federal Reserve and Monetary Policy
Money Markets and Bond Markets
Mortgage Markets
Equity Markets
Derivative Markets
Commercial Banking
Mutual Funds and Hedge Fund

Learning outcomes

By the end of the module, students should be able to:

• Working knowledge of financial markets and instruments - especially mechanics and motivations of different markets, e.g., equity, fixed-income, derivatives,and mortgage markets.
• Understanding of financial systems, such as banking and financial intermediaries.
• Understanding of the role of Federal Reserve and the impact of monetary policy on interest rates.
• Understanding of the trading and portfolios by institutional investors such as mutual funds and hedge funds.
• Demonstrate the mechanics in details of instruments, such as stock, bond (government and corporate, nominal and real), option, futures, swaps, and structured-products (mortgage-backed securities).
• Recognise the contribution of financial intermediaries to the financial wealth of our society and their impact on recent 2007-2009 credit crisis.
• Understand the risk and return profiles of various investments made by mutual funds and hedge funds.
• Analyse the relation between federal funds rate and other various interest rates.

Indicative reading list

Madura, J, 2013. Financial Markets and Institutions, 11th Ed., South-Western College Publishing.
Saunders, A. and M. M. Cornett, 2015. Financial Markets and Institutions, 6th Ed., McGraw-Hill Higher Education.
Fabozzi, F. J., ed., 2008. Handbook of Finance, Financial Markets and Instruments. Vol. 1. John Wiley & Sons.
Chacko, G., V. Dessain, P. Hecht, and A. Sjoman, 2006. Financial Instruments and Markets: A Casebook, 1st Ed., John Wiley & Sons.
Mishkin, F. S. and S. G. Eakins, 2006. Financial markets and institutions. Pearson Education.

Subject specific skills

Students should be able to be equipped with the following skills from this module:
Understanding distinctive features of four major different financial markets such as equity, fixed-income, derivatives, mortgages-related.
Appraisal of distinctive roles and motivations for the different financial markets.
Grasping of mechanics of various market instruments, and risks embedded in them.
Understanding of the role of financial intermediaries in our economy.
Understanding of the relation between Federal Reserve's monetary policy and the
behaviour of financial markets.
Evaluation the way of risk management by mutual funds and hedge funds.

Transferable skills

Students should be able to be equipped with the following skills from this module:
Critical appraisal of what is happening in current financial markets.
Understanding how to read and analyse the numbers in the prices and rates for different securities.
Understanding of the logic and intuition behind the market instruments and products.
Appraise the impact of events on the market movements.