Class History: Financial Markets & Institutions (Spring 2019)
Course: Financial Markets & Institutions (Spring 2019)
Regular classes: 21
Extra classes: 5
Total classes: 26
Class time: Monday 1:00 PM (Room: 901) and Wednesday 12:30 PM (Room: 901).
Class 1
January 16, Room 901, Time: 12:40 – 13:40
An overview of the Finance major and the course.
Class 2
January 21, Room 901, Time: 12:40 – 13:45
Time value of money. Impact of interest rate on TVM. Interest rate and bid-ask spread. Various proxies for measuring risks in finance. Measuring interest rate risk unsung maturity gap.
Class 3
January 23, Room 901, Time: 12:45 – 14:00
Money and its functions. Types of financial markets: money vs. capital market, primary vs. secondary markets, and organized vs. Over the Counter markets. Direct vs. indirect investment. Role of financial institutions. Impact of asymmetric information.
Class 4
January 28, Room 901, Time: 12:45 – 14:00
Various types of financial instruments. Money market instruments: Treasury bill, Repo. Capital market instruments: treasury bond, treasury bill, corporate bond, debenture, preferred stock, common stock.
Class 5
January 30, Room 902, Time: 12:40 – 13:55
Derivative instruments: Forward contract, futures contract, options (put, call, American, and European). Mortgage instruments: constant payment mortgage, constant amortization mortgage, graduated payment mortgage, shared appreciation mortgage, variable rate mortgage.
Class 6
February 4, Room 901, Time: 13:00 – 14:00
Hedging, arbitrage, and speculation. Term structure of the interest rate. Demand and supply of loanable funds (household, government, and business demand). Factors that affects the supply of loanable funds.
Class 7
February 6, Room 902, Time: 13:00 – 14:10
Sources of loanable funds. Factors that affect the interest rate. Fisher effect.
Class 8
February 11, Room 901, Time: 13:00 – 14:00
Factors that affect the interest rate. Demand of loanable funds (business, foreign, household, municipal, and government demand).
Class 9
February 13, Room 902, Time: 12:55 – 14:10
Time value of money and interest rate related mathematical problems. Simple interest rate (math); compound interest rate (math). Simple vs. compound interest rate (math). Finding the effective rate (policy 1 vs. policy 2) (math). Future value of an annuity.
Class 10
February 18, Room 902, Time: 13:15 – 14:45
Future value. Designing a pension fund for unlimited years (math). Designating a pension fund for limited years (math).
Midterm Exam
March 2, Room B2-304/305, Time 12:00 PM
Syllabus: Chapter 1, 2, 3.
Class 11
March 13, Room 901, Time: 13:05 – 14:40
Real estate and mortgage. Price change pattern of various properties: gold, real estate, cars. Parties involved in a mortgage. Underwriting process in brief. Closing process in brief.
Class 12
March 18, Room 901, Time: 13:00 – 14:05
What is a mortgage? Types of mortgage based on default risk. Conventional mortgage, insured conventional mortgage, and FHA insured mortgage. Classification of mortgage based on payment structure. Fixed rate mortgages: constant payment, constant amortization, and graduated payment mortgage.
Class 13
March 20, Room 901, Time: 13:00 – 14:15
Adjustable rate mortgages: PLAM, ARM, and shared appreciation mortgage.
Class 14
March 27, Room 902, Time: 13:00 – 14:20
Note and its clauses. Deeds. Titie assurance and various methods of title assurance.
Class 15 (Extra)
March 20, Room 902, Time: 14:45 – 15:20
Insurance policies related to mortgage loans. The underwriting process.
Class 16
April 1, Room 902, Time: 13:00 – 14:30
The closing process. SAM example. Investment planning service: Risk, return, and constraints analysis. Investment management service. Active vs. passive management strategy. Asset allocation, investment analysis, and portfolio construction.
Class 17
April 3, Room 902, Time: 12:40 – 14:00
Investment trading services. Brokers vs. dealers. Sell side and buy side firms. Investment information services. Data vendors, research providers, and credit rating agencies. The IPO mechanisms. Price movement of newly-listed stocks in the first phase.
Class 18, Class 19 (Extra)
April 8, Room 902,
Time: 13:00 – 14:00 (Class 18); 14:00 - 14:40 (Class 19)
Front office, middle office, and back office. Leadership positions and staff in a typical sell side firm. What is index? Uses of index. Unweighted index. Price weighted index. Value weighted index.
Class 20
April 10, Room 902, Time: 12:30 – 13:45
DJIA, S&P 500, and S&P 100. Bond market indices. Comparison of indices over time. DSEX, DSE-30, and DSES. Circuit filter and circuit breaker in DSE.
Class 21, Class 22 (Extra)
April 15, Room 901,
Time: 13:00 – 14:00 (Class 21); 14:00 - 14:50 (Class 22)
What is EMH? Example of EMH with NPV. Overreaction and relayed response. Sources of efficiency: rational expectations, deviation from rationality, arbitrage, and following institutional investors. Types of efficiency. Empirical evidences of market efficiency.
Class 23
April 17, Room 902, Time: 12:30 – 14:00
Behavioral finance. Prospect theory and disposition effect. Why do investors sometimes make irrational decisions?
Announcement: Presentation on April 25.
Class 24
April 24, Room 901, Time: 13:15 – 14:30
Impact of human behavior on asset pricing. Regulations -- what is it? Types of regulations in the financial industry.
Class test (Quiz).
Class 25 (Extra), Class 26 (Extra)
April 24, Room 901,
Time:
15:15 – 16:30 (Class 25)
16:30 - 17:45 (Class 26)
Presentation.
Final Exam
May 4, Room 601
Time 14:00 - 16:00
Syllabus: Chapter 4, 5, 6, 7, 8.