DEPARTMENT OF ECONOMICS AND FINANCE
FINANCE 4520
FINANCIAL MARKETS AND INSTITUTIONS
MWF 10:00-10:50 a.m.
SPRING SEMESTER 2001
Instructor: Professor
Sherrill Shaffer
Office: 229 Ross Hall
Telephone: Office:
766-2173, Secretary: 766-2175, Department: 766-2178
Office Hours: M
2:30 - 4:00 p.m., T 2:30 - 4:00 p.m., or by appointment
e-mail: shaffer@uwyo.edu
Fax: 766-5090
Web site: w3.uwyo.edu/~shaffer
Course Description:
An introduction to the operation, mechanics, and structure of the
financial system in the United
States,
emphasizing its institutions, markets, and instruments. Theory is integrated with practical
aspects
of financial markets and with the management and regulation of financial
institutions.
FIN 3250, STAT 2020, COSC 1200, advanced business student.
Students will learn the basic
functions and interrelationships of the primary sectors of financial markets,
along with related analytical tools.
The material presented will contribute to preparation for a career in
the financial services industries or their regulation, and will also be
relevant to gaining a better personal understanding of financial markets and
institutions that can benefit an individual’s own future investment, saving,
and borrowing decisions.
1. Text: Frederic S. Mishkin and Stanley G.
Eakins, Financial Markets and
Institutions, Third Edition, HarperCollins College Publishers, 1999.
2. Course packet, available at bookstore.
3. Possible supplemental handouts not contained in
the course packet. These will be
distributed in class.
1. The
Wall Street Journal.
Coe Library keeps current copies on reserve. Articles from the
WSJ may occasionally
become topics for short discussions and will strengthen your practical
understanding of the concepts presented in class.
Individual exams and homework
assignments will contribute to the overall semester grade as follows:
Item Percent of final grade
Midterm exams (2) 2
x 25% = 50%
Homework
(5) 5 x 5% = 25%
Final 25%
Students will receive letter grades based
on the following scale. Individual exam
scores will not necessarily be curved.
Midsemester and final grades may be curved depending on student
performance, but the following distribution is guaranteed as a minimum:
Percent Grade
90+ A
80-89 B
70-79 C
60-69 D
<60 F
No extensions will be granted for
this course. Late assignments will be
docked as stated above. Any students
who engage in academic dishonesty will be severely penalized according to
university policy.
Exams. There will be
two midterm exams plus a non-cumulative final.
Questions will generally include a combination of multiple choice,
true/false, short answer, and numerical problems, following the format of exams
from previous semesters which are in the course packet. Financial calculators or other calculators
may be used during exams and are strongly recommended. Students may not share calculators during
exams. Midterms are scheduled in the
calendar below; the final exam is scheduled according to university policy and
will not be offered at any other time unless students have more than two final
exams in a 24-hour period (and then only after consulting the Registrar). Students should make end-of-semester travel
plans accordingly.
All students must take examinations
at the assigned times. No make-ups will
be given except in cases of extreme personal hardship, ill health, or
participation in a university-sponsored sporting event, and then only at the
discretion of the professor and only if the professor has been notified well in
advance of the examination. Such cases
must also be verified in writing (for example, by a doctor or appropriate
university official). In the rare
instance when a make-up is granted, it may follow a different format from the
original exam, such as all essay. In
any other case, a missed exam will result in a grade of zero.
Homework. Five homework
projects will be assigned, as listed in the course packet. Due dates will be announced in class for
each assignment. Assignments are due at
the beginning of class on the due date and late assignments will be penalized
as follows:
1. If
full or partial solutions are discussed in class, or graded assignments are
returned to other students, the assignment will not be accepted late and a
score of zero will be recorded. Note
that solutions may be discusses at the beginning of class on the due date.
2. If
no solutions have been presented by the professor, the late assignment will be
accepted subject to a 10 percent penalty each day it is late, including
weekends. Assignments may also be
docked if they are turned in after the beginning of class on the due date. If the professor is not available to receive
late assignments, they must be turned in at the departmental office and stamped
with the date.
3. No
late assignments will be accepted after May 4, 2001.
Extra
Credit. At the professor's discretion, one or more additional homework
assignments or other projects may be offered for extra credit. Any extra credit assignments will be
announced in class.
Attendance Policy:
Attendance is expected at all class meetings, and students are expected
to be prepared to discuss the
assigned
reading in each class. Consistent and
significant contributions to class discussions may be
awarded
up to three percentage points extra credit, as added to the overall semester
grade, at the
professor’s
discretion. Consistent absence from
class may result in a deduction of up to three
percentage
points from the overall semester grade, at the professor’s discretion.
All
students must take examinations at the assigned times. No make-ups will be given except in
cases of
extreme personal hardship, will health, or participation in a
university-sponsored sporting
event,
and then only at the discretion of the professor and only if the professor has
been notified
well in
advance of the examination. Such cases
must also be verified in writing (for example, by a
doctor
or appropriate university official.) In
the rare instance when a make-up is granted, it may
follow a different format
from the original exam, such as all essay.
In any other case, a missed exam will result in a grade of zero.
Academic Dishonesty:
UNIREG 802, Revision 2, defines academic dishonesty as “an act attempted
or performed which
misrepresents
one’s involvement in an academic task in any way, or permits another student to
misrepresent
the latter’s involvement by assisting the misrepresentation.” Academic dishonesty
will not
be tolerated in this class; any instances will be referred to the university’s
established
procedure
for judging such cases, with severe penalties assessed as found
appropriate.
Group Work Guidelines:
All exams and homework
assignments in this class must be done individually. There will be
no group projects.
Disclaimer:
Subsequent changes may be made to any aspect or detail of
this Syllabus if and when necessary.
Any changes will be
announced in class as soon as practical.
In particular, because certain topics
may require more or
less time than indicated on the schedule, the schedule of reading assignments
is only approximate and
may be revised from time to time as announced in class by the professor.
Also, the number of
homework assignments may be adjusted upward or downward during the
semester as announced
in class by the professor; if such adjustments are made, the professor will
announce in class how
the semester grading will be affected by those changes. Midterm exam
dates are not expected
to be revised.
Course Schedule and Assignments:
Week Date Topics,
Readings, and Exams. (All "Case
Studies" in the textbook are optional.)
1 1/17- Syllabus;
Chapter 1. Overview of course.
1/19 Chapter 2. Overview of the financial system.
2 1/22- Chapter 3. (skip “Duration” on pp.
67-74). Homework. Brief review of basic analytical tools:
interest rates and present value.
1/26 Chapter 4. (Skip the “Practicing
Financial Institution Manager” on pp. 115-118
and the Appendix on pp. 121-126.) Risk-return tradeoffs, diversification.
3 1/29- Chapter 5. (Skip pp. 151-153.) Yield
curves and risk premia.
2/2 Chapter
6. Information aggregation in
capital markets. Homework.
4 2/5- Chapter 7. The Federal Reserve.
2/7 Chapter 8.
Monetary policy.
2/9 Review
Session
5 2/12- First Midterm Exam
2/16 Chapter 10. Capital markets.
6 2/19- Capital
markets, continued.
2/23 Chapter 12 The foreign exchange
market. Homework
7 2/26- Chapter 14. Financial structure and informational problems. Optional: pp. 415-418.
3/2 Chapter
15. Bank Management. Homework.
8 3/5- Chapter 16. The banking industry.
3/9
9 3/12- Spring Break
3/16
10 3/19- Chapter 17. Thrift Institutions.
3/21 Chapter 18. Bank Regulation
3/23 Review
Session
11 3/26- Second Midterm
3/30 Chapter 19.
Insurance companies & pension funds.
12 4/2- Chapter 20. Finance companies .
4/6 Chapter 21. Securities markets and firms.
13 4/9- Chapter 21. Mutual Funds.
4/11 Chapter 23. Financial derivatives: forwards and futures. Homework
4/13 Easter Break
14 4/16- Chapter 24. Financial derivatives: options and swaps.
4/20
15 4/23- Chapter 22. Risk management in financial firms.
4/27
16 4/30- Miscellaneous
topics.
4/4 Last
Class Review session
17 5/11 Final Exam (10:15-12:15)