A78619 International financial markets

Scuola di Economia e Management
Syllabus
Academic Year 2017/18 Second Semester

foto
Docente TitolareMarcello Esposito
E-mailmesposito@liuc.it
Office"Torre" (main tower), 7th floor
Phone0331 572205

Learning Objectives

At the end of the course student will be able to:

a)      Assess the sustainability of the financial condition of a country in a global economy;

b)      Make educated forecast on the dynamics of the exchange rates;

c)      Detect the risk of a balance payment crisis;

d)     Critically read economic reports released by investment banks;

e)      Develop the ability to detect major trends currently developing in financial markets.

Learning targets

This course aims develop the student’s ability to familiarize with the structure and processes of international monetary and financial system providing them a proper historical perspective, relevant economic principles and essential operational details. Students would also be stimulated to apply the theoretical body of knowledge acquired to some of the most relevant issues currently affecting the global financial system.

Course Content

The course consists of three parts. The first part is a short recap of the history of the international monetary and financial system needed to appreciate the "how and why" of the current structure: it will present the problem of monetary exchange (both on a domestic and international context) in different periods of the history. The second part, the core of the course, offers an updated framework of the rapidly changing international financial markets with the specific purpose of understanding what may originate a currency and financial crisis. The third part is aimed to familiarize the students with the major categories of financial instruments.

Course Delivery

Course Etiquette

In your own interest and of your colleagues, please strictly observe the following courtesy rules:

1)      Arrive in class on time; do not leave early without prior explicit instructor’s approval


2)      Keep your mobiles and laptops off; do not chat with your classmates


3)      Do not wandering in and out of the classroom

4)     Hand in assignments (if any) on time. No late submissions are allowed.

Course Evaluation

Students regularly attending* the course.

The students’ assessment for the course comprises a research paper (50%) and home assignments (25%), on a group basis, and a written test (25%), on an individual basis. The aim is to test both the team working capabilities and the individual skills. The research paper will have to be presented to the classroom and the quality of the presentation will contribute to the final grade.

Students not attending the course.

Students who failed the previous assessment, non attending the course, sitting the exam after the summer break or not fully satisfied with their grading system are offered the opportunity to take a cumulative written exam, during ordinary exam sections.

*Attending student means a student attending at least to 75% of the classes.

Syllabus

Session 1
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Course presentation

Overview of the Financial System

Readings:

Mishkin, Eakins - ch. 1 and 2

Session 2
Hours of lesson: 3
Instructor: L. Vena

Topics:

Interest Rates

  • Basics of Interest Rates
  • Term Structure
  • How to compute Present Value

Readings:

Mishkin, Eakins - ch. 3 and 5

Session 3
Hours of lesson: 3
Instructor: L. Vena

Topics:

Interest Rate Risk

  • Duration
  • Types of bonds
  • Forward and Futures

Readings:

Mishkin, Eakins - ch. 4, 5 and 23

Session 4
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Monetary Policy

  • Central Banks
  • The European Monetary Union

Readings:

Mishkin, Eakins - ch. 9 and 10

Session 5
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Financial Markets

  • The Money Market
  • The Bonds Market
  • The Stock Market

Readings:

Mishkin, Eakins - ch. 11, 12 and 13

Session 6
Hours of lesson: 3
Instructor: L. Vena

Topics:

Foreign Exchange

  • Exchange Rates
  • Spot Rates
  • Forward Rates

Readings:

Mishkin, Eakins - ch. 14

Session 7
Hours of lesson: 3
Instructor: M. Esposito

Topics:

International Financial System

  • Forex Market
  • Balance of Payments
  • Exchange Rate Regimes

Readings:

Mishkin, Eakins - ch. 14 and 15

Session 8
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Credit Risk

  • Corporate Bonds
  • Rating
  • Default Risk
  • Credit Spread

Readings:

Mishkin, Eakins - ch. 5, 12 and 22; Brealey, Myers, Allen - ch. 24

Session 9
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Credit Derivatives

  • Securitiation
  • Credit Default Swap

Readings:

TBD

Session 10
Hours of lesson: 3
Instructor: M. Esposito

Topics:

The Financial Crisis of 2007

  • The Subprime Loan Crisis
  • The Originate to Hold Model (OtH)
  • The Originate to Distribute Model (OtD)

Readings:

Mishkin, Eakins - ch. 8

Session 11
Hours of lesson: 3
Instructor: L. Vena

Topics:

Investment Vehicles

  • Mutual Funds
  • Hedge Funds
  • Exchange Traded Funds

Readings:

Mishkin, Eakins - ch. 19

Session 12
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Public Finance

  • Gross Domestic Product
  • Inflation and Deficit
  • Government Debt

Readings:

TBD

Session 13
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Sovereign Debt Risk

  • Debt Sustainability
  • Sovereign Risk
  • Fiscal Compact in EU

Readings:

TBD

Session 14
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Financial Intermediaries

  • Banks
  • From Deposit to Lending
  • Bank-based vs Market-based Models

Readings:

Mishkin, Eakins - ch. 18

Session 15
Hours of lesson: 3
Instructor: M. Esposito

Topics:

Banking Union

  • Deposit Insurance
  • Bank Resolution
  • Common Supervision

Readings:

Mishkin, Eakins - ch. 17


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