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LECTURER DETAILS:
Elma Agic Sabeta, MBA, PhD candidate email: elma.agic@ssst.edu.ba
COURSE DESCRIPTION & LEARNING OUTCOMES: This course teaches students about the organization of financial systems, focusing on banking, and the interaction between financial systems and the macro-economy. In particular, this course examines financial instruments (stocks, bonds, etc.), financial institutions (primarily banks), and financial markets and their regulation. Investigation of monetary changes effects on price, output and level of employment is undertaken. The mechanisms and objectives of monetary policy are also examined. Final lectures include basic interpretation and evaluation of financial performance of companies. Due to fact that book covers U.S. and developed financial markets mostly, lectures contain descriptions of local financial market specifics.
Upon completion of this course, students will be able to: 1. Describe financial markets and the primary financial instruments 2. Explain the theoretical foundations of financial intermediation versus direct finance. 3. Demonstrate an understanding of interest rates structure. 4. Identify the key means by which the economy can affect interest rates. 5. Explain the theoretical foundations and importance of stock market efficiency. 6. Articulate an understanding of current monetary policy and the impact it has on the economy. 7. Perform basic financial evaluation of company performance.
Interest rates and rates of return affect all of our lives on a daily basis. When you take out a student loan or invest in the stock or bond markets, those rates determine the rate at which wealth accumulates and is made available for future investment. What macroeconomic variables determine these rates of return? How does the Central Bank affect interest rates? What is money and how does it influence the economy? How does the riskiness of asset markets influence rates of return and portfolio allocation, the decision of which assets investors buy? What is risk?
PREREQUISITES:
A good grounding in the basic tools for this class are provided in the prerequisites: Microeconomics, Macroeconomics, Mathematics.
REQUIRED MATERIALS:
Money, Banking, and Financial Markets, Thomas Lloyd,1st Edition, 2006, Cengage. Analyses for Financial Management, Robert C. Higgins, 5th Edition, 1998, (2 Chapters copies will be provided to students), Irwin McGraw Hill Reading of materials strongly recommended prior to specific class topic. This will allow students to understand the lecture better and ask questions. Students should have a financial calculator and should bring them to class starting with Week 3.
OUTSIDE READING:
Financial Times, Wall Street Journal, Economist highly recommended in order to get used on reading financial news and apply the knowledge from class. Current topics will be discussed in class.
QUIZZES (20%):
Two announced quizzes will be given during the course of the semester. They will be administered during the regular class time. Each quiz will count 10% in determining your overall grade. Exercises available at the following link: http://websites.swlearning.com/cgiwadsworth/course_products_wp.pl?fid=M20b&flag=student&product_isbn_issn=9780324176735&disc ipline_number=413 Additional Quizzes available in XTRA (Student Companion site) .
COURSE OUTLINE Part I: Money and Financial System 1. Money, Banking, and Financial Markets: An Overview. 2. Money: Its Nature, Functions, and Evolution. Part II: Financial Markets, Institutions, and Interest Rates. 3. Financial Markets and Instruments. 4. Financial Intermediation. 5. Interest Rate Determination. 6. The Term Structure and Risk Structure of Interest Rates. 7. The Stock Market. 8. The Foreign Exchange Market. Part III: Banking: Structure, Regulation, and Deposit Insurance. 9. Commercial Banking. 10. The Banking Industry: Its Evolution, Structure and Regulation. 11. The Economics of Banking Regulation and Deposit Insurance. Part IV: Central Banking, the Federal Reserve, and Financial Crisis. 12. The Federal Reserve System: Its Structure and Functions. 13. The European Central Bank. 14. The Deposit Expansion Process: The Simple Analytics. 17. Role of Central Banks and Banking Supervisory authorities in the time of Financial Crisis Part V: Central Banking Policy and Economic Activity. 18. The Tools of Federal Reserve Policy/Currency Board Principle in Bosnia. 19. Conducting Monetary Policy: Ultimate Goals and Intermediate Targets. 20. The Aggregate Demand-Aggregate Supply Model. 25. Inflation Targeting
Part VI: COMPANIES FINANCIAL PERFORMANCE 1. Interpreting Financial Statements 2. Evaluating Financial Performance
Week
1 2 3 4 5
Date
Feb 24 Feb 26 Mar 3 Mar 5 Mar 10 Mar 12 Mar 17 Mar 19 Mar 24 Mar 26 Mar 27 Mar 31 Apr 2 Apr 7 Apr 9 Apr 14 Apr 16 Apr 17 Apr 21 Apr 23 Apr 28 Apr 30 May 5 May 7 May 12 May 14 May 15 May 19 May 21 May 26 May 28 June 4 June 6 June 9 Syllabus
Reading
Chapter1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12
6 7 8
9 10 11 12
Chapter 1-11 Chapter 13 Chapter 14 Chapter 17 Chapter 18 Chapter 19 Chapter 20 Chapter 25 Higgins 1 Higgins 2
13 14 15 16 to be determined
Tutorials Review Session Exam preparation study time Final Exam All Chapters
All chapters