FINA 5400 OFFICE HOURS
FINANCIAL MARKETS BA 155G
AND INSTITUTIONS Tuesday and Wednesday
Fall 2005 5:00 pm - 6:00 pm
DR. STEVE COLE
Phone: (940) 565-3075
Fax: (940) 565-4234
Internet: cscole@unt.edu
I. TEXTS:
Financial Markets Rates and Flows, 6th Edition, James C. Van Horne, Prentice Hall, Inc., 2001.
Bond Markets, Analysis and Strategies, 4th Edition, Frank J. Fabozzi, Prentice Hall, Inc., 2000.
When Genius Failed, Lowenstein, Random House Publishing
II. OTHER READINGS:
Other readings in the class will consist of handouts that will be provided by me . The textbooks are very good, but I expect you to be familiar with current world and national developments and how such events will impact financial markets and institutions. Applying your knowledge to real world events develops your critical thinking skills thus helping you learn about financial institutions and markets. During the semester, the book entitled When Genius Failed should be read. It will be covered on the final exam.
III. CATALOG DESCRIPTION:
The determination of interest rates, their term structure, and the relationship with inflation. Management of interest rate risk. Financial instruments and their characteristics. Monetary policy, the Federal Reserve System, and regulation. Introduction to the international financial system.
IV. PREREQUISITES:
FINA 5170; ECON 1100 or 5000 or equivalent; MSCI 5180 or equivalent; ACCT 2030 or 5020 or equivalent; MATH 1190 or equivalent.
V. COURSE OBJECTIVE:
The objective of FINA 5400 is to expose the student to the characteristics of financial markets. Attention will be paid to differences and similarities between segments of the financial marketplace. Included in this study will be the identification of the different financial markets and the institutions that participate in these markets. Because the financial marketplace is where financial instruments are priced, consideration will be paid to the component parts of a financial instruments price as determined by the market. Particular emphasis will be placed on debt instrument including their characteristics and pricing. Also, the valuation and application of financial derivatives that are derived from debt instruments will be examined in this course. These objectives will be met through a program of readings, lecture, discussion, and individual study.
VI. EXAMS :
There will be two semester exams and a comprehensive final. The exams will be a mix of objective questions, consisting of multiple choice and true/false question, and subjective questions, which will be made up of short answer questions including problems. The material covered in class will be weighted most heavily on exams. However, material assigned in the book and on handout sheets which is not covered in class will also be covered on the exams.
FINA 5400 is a graduate level course; therefore, responses to exam questions are expected to reflect that level of academic training. While accurate information in responses is requisite to scoring well on the exam, the student is also expected to demonstrate communicative and grammatical skills commensurate with a Master's candidate.
For exam purposes, each student must have access to a dependable calculator. The calculator must have a either a X√y key or a 1/X key together with a yx key. A calculator with a numeric memory is also helpful in solving finance problems.
You may use a calculator of your choice on each of the exams. I will use a Texas Instruments BA-II plus in class. At this point in your finance education you should have acquired and gained familiarity with a financial calculator. There are a number of good calculators on the market including the BA-II plus. All these financial calculators have N, I, PV, PMT, and FV functions.
Students may use one 8½X11 reference sheet (both sides) in solving the exams. It is intended that this reference sheet be a study enhancement; therefore, each student must prepare his/her own reference sheet for each exam. Copies of reference sheets are not allowed.
VII. COURSE GRADES:
Course grades will be based on 400 possible points as follows:
First exam – 100 points
Second exam - 100 points
Final exam - 100 points
WSJ quizzes - 100 points
Total points possible 400 points
It will take at least 360 points for an A, 320 for a B, 280 for a C, and 240 for a D. The above scale may be revised downward at my discretion. I will comply with University policy in awarding a grade of incomplete (I). Please see Grading System in the graduate catalog. Due to the sensitive nature of grade information, course grades will be distributed through normal university channels with no exceptions.
VIII. THE AMERICANS WITH DISABILITIES ACT:
The College of Business Administration of the University of North Texas complies with the Americans With Disabilities Act in making reasonable accommodation for qualified students with disability. If you have an established disability as defined in the Americans With Disabilities Act and would like to request accommodation, please see me as soon as possible. My office hours and office number are shown on this syllabus.
IX. GENERAL INFORMATION:
Any student caught cheating or attempting to cheat on the exams will incur two penalties: (1) the student will receive a grade of F for this class; (2) I will attempt to have the student removed from the University with the reason for the removal noted on the student's transcript.
This is a graduate-level finance course and demands a high level of commitment by the student. I am human and I will make errors. When this happens, please bring it to my attention. I promise you that I will come to class prepared. I expect each student to do likewise.
I do not have an attendance policy; however, I do expect regular punctual attendance in accordance with University policy. Thus, consistent tardiness will not be tolerated because it is in violation of this policy and is disruptive to the class. Furthermore, class handouts will be distributed at the beginning of class. It is disruptive to halt a lecture to redistribute handout materials to tardy students. In addition, class handouts will only be distributed once. Any copies of missed handouts must be obtained from fellow classmates. I will not provide handouts after the class in which they were initially distributed.
Once class has begun, students are expected to remain in their seats as a courtesy to the rest of the class. If you find it necessary to leave class prior to dismissal please do so at scheduled breaks. Any exceptions to this policy should be discussed with the instructor prior to class if at all possible.
I will assume that each student is familiar with the contents of this syllabus.
No matter how well I prepare as an instructor and how hard I work to stimulate interest in the subject, learning is still a personal thing. Upper-level and graduate Finance courses are quite rigorous by nature. Start working hard to put in the time and effort necessary to absorb and learn the material. I sincerely hope that each of you enjoy the semester and feel that it was a worthwhile experience.
X. CLASS DATES AND ASSIGNMENTS:
This is a proposed outline and it may be strayed from depending on the pace of the class. However, only material covered in class prior to an exam will be included on the exam.
Aug 31 Introduction to Financial Markets and Institutions. VH Chapter 1.
Sep 7 Introduction to Financial Markets and Institutions. (Cont.)
Prices & Yields for Bonds and Money Market Instruments. VH Chapter 4, F Chapters 2 & 3.
Sep 14 Prices & Yields (Cont.)
Sep 21 Inflation and Returns. VH Chapter 5.
Sep 28 The Term Structure of Interest Rates. VH Chapter 6, F Chapters 5 & 6.
Oct 5 FIRST EXAM
Oct 12 Price Volatility, Coupon Rate, and Maturity. VH Chapter 7, F Chapter 4.
Oct 19 Default and Liquidity Risk. VH Chapter 8, F pgs. 7-8, pgs. 88-96, pgs. 149-155.
Oct 26 Derivative Securities: Mortgage-Backed Securities. VH Chapter 13, F Chapters 10, 11, 12, & 15.
Nov 2 Derivative Securities: Mortgage-Backed Securities (Cont.)
Nov 9 Derivative Securities: Interest-Rate Futures and Forward Contracts. VH Chapter 9, F Chapter 21.
Nov 16 SECOND EXAM
Nov 23 Derivative Securities: Options. VH Chapter 10, F Chapter 22.
Nov 30 Movie Night:
The Stock Exchange
The Trillion Dollar Bet: The Story of Long Term Capital Management
Dec 7 Slack and Review
Dec 14 FINAL EXAM
VH - Van Horne, F-Fabozzi
NOTE: Other than exam dates, the above schedule may be changed at the discretion of the instructor. I will reschedule an exam only for University related activities approved in advance by the College Dean.