DEPARTMENT OF ECONOMICS AND FINANCE
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
Web site: w3.uwyo.edu/~shaffer
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%
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:
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 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.
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.
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.
9 3/12- Spring Break
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.
15 4/23- Chapter 22. Risk management in financial firms.
16 4/30- Miscellaneous topics.
4/4 Last Class Review session
17 5/11 Final Exam (10:15-12:15)