Syllabus

Year 2020/2021, second semester, ECTS: 6, 45 hours

Code: 091EC - FINANCIAL MARKETS AND INSTITUTIONS - FINANCIAL MARKETS AND INSTITUTIONS (SECS P/11)

Main topics

- Structure and functioning of financial markets

- Interest rates: economic and financial role, determinants and structure

- Efficiency of financial markets: evidence and economic consequences

- Money markets

- Bond markets and bond evaluation

- Stock markets and stock evaluation

- Foreign currencies and international financial markets

- The economic role of financial institutions

- Financial crisis: nature and economic impact

- The role of central banks and monetary policy

- Banks: structure, role and performance

- Mutual funds

- Other intermediaries: insurance companies, pension funds and the securities' industry

- Financial risk management through derivatives

Textbook

Mishkin F.S. and Eakins S.G. (2018), Financial markets and institutions, Pearson, 9th Edition

Additionally, it is advised to constantly read and interpret specialised newspapers and autonomously extend the knowledge by reading the bibliographic references suggested by the textbook. Finally, it is useful to check the online material offered by the editor of the textbook.

ILOs

This course aims at introducing the functioning of financial markets and the role they play in an economy, with particular attention at the main financial institutions and the products and services that they trade. The course focuses mainly on international markets, however with frequent references to specific countries (Europe, US, Rest of the World), for the purpose of evidencing similarities and differences, and of underlining the importance of international relationships between markets and institutions.

Knowledge and understanding:

- knowing why financial markets and institutions exist, how they function and how they are structured and organised

- knowing the main constraints affecting the functioning of financial markets and institutions, especially towards information asymmetries and financial crisis

- knowing the main contractual features of the leading financial products and services

- knowing similarities and differences of financial markets and institutions at the international level

Applying knowledge and understanding:

- describing the main features of financial markets and institutions

- describing the mechanics and the main distortions caused by information asymmetries and financial crisis

- applying evaluation tools on financial products and services

- describing financial intermediation at the international level

Making judgments:

- evaluating differences in risk and return of the main financial instruments

- evaluating the performance of the main classes of financial intermediaries

- selecting financial markets and institutions consistently with the financial needs of families and firms

Communication skills:

- understanding and applying the technical language specific to financial markets and institutions

- expressing knowledge and critical opinions effectively on the main features of financial instruments, markets and institutions

Learning skills:

- autonomously research relevant data on financial instruments, markets and institutions

- autonomously manage and interpret financial data

Preconditions: Financial Mathematics, Macroeconomics

Propedeuticities: Accounting.

Teaching methods

Most lectures follow the traditional front-lesson approach, however encouraging the active participation of students and the joint discussion of market data and business cases. Moreover, the course involves a number of class exercises, as well as a limited number of numerical simulations and role-playing games. Finally, the lecturer will organize one or two seminars delivered by experts or operators in financial markets.

There are no differences in terms of exam, grading or teaching materials for students that choose not to attend classes. However, the latter are encouraged to get in touch with the lecturer if they need further explanations or additional readings on this course's topics.

Exam and Grading

Grading is based on a final oral exam, based on three questions (duration varies between 10 and 30 minutes, and it is the shorter the better the student is prepared):

1. topic chosen by the student

2. topic chosen by the lecturer, on an insight on the same topic or on a different topic (for non-attending students only)

3. one insight consisting in a comment to financial news, an exercise, a critical remark on links across topics of this course.

Grading follows the following criteria:

- failure: basic concepts are not understood in full or are incoherent, no proficiency in basic technical language

- range 18-21: basic concepts are sufficiently understood, the basic technical language is used with proficiency, ability to  solve simple numerical exercises

- range 22-25: good understanding of basic concepts and sufficient understanding of more advanced topics, good proficiency in basic technical language and sufficient proficiency in advanced terminology, ability to solve simple exercises, sufficient ability to link different topics of this course and to comment financial news

- range 26-28: great understanding of basic concepts and good understanding of advanced topics, great proficiency in basic technical language and good proficiency in advanced terminology, ability to solve complex numerical exercises, good ability to link different topics of this course and to interpret financial news

- range 29-30 with honors: great understanding of basic and advanced topics, great proficiency in basic and advanced technical language, ability to solve complex numerical exercises, great ability to link different topics of this course and to interpret financial news.

GRADING GRID