Fin 4303 - Financial Institutions-1_ruben_fuentes

BLUE HILL COLLEGE FIN 4303 – FINANCIAL INSTITUTIONS Course Description An examination of commercial banks and other financial intermediaries, in their relationship to the money and capital markets and to their interaction in the channelling of saving into investment. A wide array of financial instruments are described, these instruments are used for investing, funding operations, and controlling various types of financial risk. This course helps students to see each kind of security as a response to the needs of the borrowers, lenders, and investors, who manage assets and liabilities in a word of constantly changing interest rates, assets prices, regulatory constraints, and international competition and opportunities. This course also devotes a considerable amount of time explaining how the world’s key financial institutions manage their assets and liabilities and how innovative instruments support that management. Course Objectives • To understand the different types of financial instruments and how they are used by financial institutions for investing, funding operations, and controlling various types of financial risk. • To understand the relationships between, financial institutions, money, capital markets, and the economy. • Provide the students with the necessary sense of institutional structure and the analytical tools that they will need to understand how innovations and industry changes influence and shape the future of financial institutions. Text Supplementary Materials • Frederic S. Mishkin and Stanley G Eakins (2003). Financial Markets and Institutions (4th Ed.). Pearson Education. • To highlight current issues in Financial Institutions, additional readings will be assigned throughout the course Prerequisites Principles of Accounting, FIN 3403, Statistics, and Mathematics, In addition to these prerequisites, students are strongly encouraged to work with a computer (especially spreadsheets) in doing their homework. Evaluating and Grading • Exams: Midterm 1 and Final 2 are non-cumulative and cover the chapters indicated on the schedule as well as the additional assigned readings. Examination will be a combination of multiple choice, short answer, essay questions, and problems. Exams will be given only on the scheduled date; there will be no make-up exams. • Homework: At the end of each class, and if applicable, the instructor will assign problems or cases. Homework will be reviewed and collected at the beginning of the following class. There will be point penalties for late home works. • Class Participation: This part of the evaluation is based on the judgment of the instructor upon active class participation. Active class participation constitutes

involvement in class discussions (remember it is the quality of the discussions that counts, not the quantity) and experiments, regular class attendance, and punctuality. Students must be prepared for class and are required to read the assigned material before class. Students with perfect attendance will receive 50 points of the 100 points assigned to class participation. Academic Integrity Students are responsible to know and observe the requirements of the 6C5-4.001 Honour Code, Academic Irregularities, and Students´ Academic Grievances (FAU Undergraduate Catalogue, p. 274). Violation of this code will result in severe penalties ranging from a grade of “F” on any involved work up to a grade of “F” in the course, or even the student’s dismissal from the university. Course Schedule Topic

Chapter

Date

•

Course Introduction

• •

Why Study Financial Markets and Institution? Overview of the Financial System

1 2

9

• • • • •

Understanding Interest Rates The behaviour of Interest Rates

3 4

14

5 The risk and Term Structure of Interest Rates Structure of Central bank and the Federal Reserve 6 System.

16

•

21

• • • •

Conduct of Monetary Policy: Tools, Goals, and 7 8 Targets. The Money Markets 9 The Capital markets 10 The Efficient Market Hypothesis Midterm 1

• •

The Mortgage Market The foreign Exchange Market

11 12

30

• • • • • •

The International Financial System Theory of Financial Structure The Banking Firm and Bank management Commercial Banking Industry: Structure Saving Associations and Credit Unions Banking Regulation

13 14

August 4

15 16

6

17 18

11

•

Insurance Companies and Pension Funds

19 20

13

July 7

23 28

• • • •

Venture Capital Firms, Finance Companies Investment Bank, Brokerage Firms and Mutual 21 Funds 22 Risk Management in Financial Institutions 23 Hedging with financial derivatives

• •

Class Review Final 2

18

20 25 27