Economics Department
Queens College
BUS351 Financial Markets
Spring 2006
BUS 351: (prerequisite: BUS241, highly recommended: MATH131)
Professor: Leanne Ussher
Email: leanne.ussher@qc.cuny.edu
Lectures: T/Th 3:05 - 4:20 pm, PH 154 [Evening T/Th 5:00 - 6:15 pm]
Office Hours: Tuesday 12:30 -1:30pm & 4:30-4:55 pm (PH 300-O),
other times by appointment
Description:
This course surveys money, capital, foreign exchange and derivative markets. Emphasis
is on key financial market participants, the role of financial intermediaries, the structure
of financial markets, and the price discovery process. In pricing instruments we will not
only use risk and return analysis but also give students an appreciation of market liquidity
– thus distinguishing between investing versus trading. Students will learn the jargon of
financial markets, gain insight into how financial instruments are created and traded, and
appreciate the ethical and regulatory issues that are inherent in formalized exchange.
Mathematical tools and economic concepts will be analyzed over the semester to help
students organize their thinking about financial assets and markets. To aid understanding
students will simulate trading in classroom experiments, be required to keep topical with
current events by reading the Wall Street Journal, find and analyze financial data, and
write market reports from both a macro and micro financial perspective.
Prerequisite:
Corporate Finance BUS 241 must have already been taken with a passing grade. Please
review your knowledge of present value and future value calculations covered in
BUS241. Students who have not taken this course, or do not have permission from the
instructor will be dropped from the class.
Required Text:
Saunders, Anthony & Marcia Millon Cornett (2007) Financial Markets and Institutions:
An Introduction to the Risk Management Approach McGraw Hill third edition.
ISBN 0073041696
Available at the QC Bookstore and on reserve at the Library.
Website: http://www.mhhe.com/sc3e
Here you can find power point slides, test yourself with multiple choice questions,
practice implementing financial concepts with the Interactive FinSims exercises, and find
data.
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From time to time there will be other required reading material to supplement the text
book. These readings will be available in Blackboard.
Required Group Subscription to the Wall Street Journal:
Students will be required to regularly read the Wall Street Journal. Group subscriptions
can be made with delivery to one of the group members to PH-310. Each group will be
responsible for newspaper collection. A possible distribution would be for each member
to take one day of the week to look through the journal. Subscribers will also have online
access.
Suggested Text:
– Prepared by William Lepley (2004) Study Guide for use with Financial Markets
and Institutions, 2nd Edition, ISBN 0072824573
Available at the QC Bookstore and on reserve at the Library.
Second hand Purchases can be found online e.g. http://www.fetchbook.info
–
Larry Harris (2003) Trading and Exchanges: Market Mircostructure for
Practitioners, Oxford University Press.
On special reserve at the library.
Harris (2003) is a great book if you want to immerse yourself into the mechanics
of the financial markets. It’s a good investment if you want a career in this field.
On Reserve:
Readings on reserve at the Rosenthal library will be listed at http://www.reserve.qc.edu
password: uss351
Blackboard:
Check Blackboard regularly by logging onto Blackboard through the CUNY portal.
http://www.cuny.edu
The syllabus, course documents, lecture notes, important announcements, your
assignment questions, practice quizzes, and grades will be posted on the Blackboard
website. You are responsible for checking Blackboard for information.
Every student must update their Blackboard contact email!
Without the correct email you will not receive class email notices.
For questions on the homework assignment or questions prior to the exams you may
make use of the “Discussion Board.” Post your questions here so that I, or other students,
can publicly answer them for all students to see.
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Blackboard Chapter Quizzes:
In past years I gave in-class quizzes that would go towards the grade. This year quizzes
will be purely voluntary and a random selection will be available on Blackboard. You
should take these quizzes as part of your preparation for the midterm and final exams. A
selection of similar (but not identical) questions will appear in the class exams. You
should read and summarize the relevant chapter in the text before taking the quizzes on
Blackboard. A summary each chapter will better prepare you for the Blackboard quiz and
for the midterm and final in-class exams which will be cumulative. These quizzes can
only be taken once and will contribute to extra credit for those students who are
borderline in their final grades.
Course Requirements:
The course grade will be based on 7 components. The assessment weights are as follows:
1.
2.
3.
4.
5.
6.
7.
Attendance and Group/Individual Class Participation: 5%
Group Financial Press Journal: 5%
Mid-Term Exam: 20%
Bond Market Assignment (Macro): 20%
Stock Market Assignment (Micro): 20%
Final Exam on the entire course: 30%
Extra Credit for Blackboard Quizzes.
Financial Press Journal:
Students will be arranged in 6 groups in the first week of classes and each group will
represent a type of financial market participant.






Central Bank and Regulatory Authorities
Government: Federal, State and Local
Households and Small Businesses (non-financial)
Non-Financial Corporations
Financial Corporations/Institutions
Foreigners
Each group will be required to maintain a journal/folder of weekly news articles relevant
to that week’s class lecture, relevant to the bond assignment, and/or relevant to the
group’s persona. Assessment of these journals will be weighted towards quality not
quantity of articles. At the end of the semester the folder of selected articles (nicely
organized and not more than 20) will be submitted. Each article must have its full citation
(publisher and publication date). In addition, a selection of 6 articles should be separated
out that highlight one particular topic in the text book and are relevant to the group’s
persona. These 6 should be on the same topic but at different publication dates over the
semester. The group will write a one page summary of these 6 articles connecting their
relevance to the group persona and a topic in one chapter of the text book that was
covered in class.
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The group as a whole will be a given a grade that reflects the relevance of all the articles
to class material and the group’s persona, the reasoning for the selection of 6 articles on
the same topic, and the crafting of the summary to highlight specific points made in the
textbook and in class.
The primary resource for articles will come from your subscription to the Wall Street
Journal, however articles from other financial press sources (such as the Economist or
Financial Times) and business news on the web are also welcomed. Students are
encouraged to take the current events they learn in the Journal, connect them to basic
course principles, and share their ideas in class discussion. This will be a weekly feature
of class, lasting an average of 5 to 10 minutes. Group and individual participation counts
towards the course grade
Assignments:
There will be 2 assignments, the first a Bond Market Report on Treasury yield curve and
the “quality yield spread” which compares the interest rates paid by different issuers. This
topic is commonly talked about in the Wall Street Journal and you should clip articles
that might be relevant and include them in your report. The second assignment will be a
paper trail of a Stock Market Portfolio. Each report requires the collection and assessment
of financial data. Each assignment should use the Harvard system of referencing - details
on the correct use of bibliographic referencing will be noted in Blackboard under
Assignments. While students can join together in teams to talk about the assignment and
the manner in which they should analyze the data using Excel, the final written product
should be each student’s own composition. Plagiarism from either external sources or
other students could lead to a failing grade for this component. Before handing in your
assignment you should buddy up with another class mate and swap the first draft with
each other for editorial comments in Word. The first draft with the editor’s name and his
comments should be submitted via Blackboard 1 week before the assignment is due.
This represents extra credit for the editor, but nothing for the author. If you find this
easier to do by hand, photocopies of the draft hard copies with editorial comments can be
submitted directly to me.
Each final assignment must be both submitted via the digital drop box in Blackboard and
as a printed hard copy handed to the Professor in class. A signed statement (attached and
available from Blackboard) admitting no plagiarism must be attached to the front of the
hard copy otherwise the assignment will not be considered submitted. Points will be
deducted for lateness.
Examinations:
There will be a mid-term and cumulative final exam. Examination questions will be
multiple choice, and short and long answer questions. Exam questions will be based on
the assignments and topics emphasized in class. Questions will be similar to those
offered in the Study Guide on reserve in the library, and from the questions that exist in
the Blackboard Quizzes. The best preparation for the exams is to read and summarize the
text chapters, take notes during class, and practice quiz questions on Blackboard.
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Other important course policies:
1. Come to class prepared by reading the relevant chapter. Make a detailed
summary of the chapter’s key points. Since the final exam is on the entire course
you will use these summaries of each chapter in preparation for the exam.
2. Be sure to take all the quizzes on Blackboard. Try to improve quiz questions and
answers post submission. Any problems in answering these questions should alert
you to which topics to focus on in the text. You must read (and summarize) the
relevant chapters in the text to pass the quiz. Students who just read the power
point lecture notes will find that they do not have sufficient detail to answer the
quiz questions.
3. Keep abreast of current financial news by reading the Wall Street Journal. Be
selective, you don’t need to read every article, just those that are relevant to the
class and to your own interests. Mark and clip the articles that are relevant - even
if you don’t read them now you can read them later when you actually need them
for the assignment or for the summary. By that time a better article might be
available and you can throw this article out. Cut and paste articles onto letter size
paper, add citation, and kept together. Have one (rotating) group member be in
charge of keeping this journal neat
4. Teamwork is encouraged. Each group should coordinate on how they will collect
articles from the Journal and how they should make decisions on what is relevant
and what isn’t. Take your assignment editorial job seriously. The more effort you
put into correcting another person’s work the more you will understand what you
have to do yourself to improve your own paper. This isn’t a competition. All good
papers that are original will be given high marks. Your contribution to this editing
process will rank high in my estimation of how much you have learned in class.
5. A make-up exam is only given in cases of documented severe personal
emergency.
6. Any form of cheating will be severely punished. Anyone caught cheating during
an exam will be given failing grade for the exam without any exceptions.
Assignment papers with obvious traces of cheating (identical elaborate mistakes
for instance) will be severely punished. Plagiarism is also considered cheating and
has severe penalties. All suspected cases of academic misconduct will be
reported to the department, the Vice President for Student Affairs, and the judicial
hearing officer.
7. If you miss a class, you are responsible to get a copy of the notes from your
classmates.
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Each class period includes required readings from the text book. Dates in the course
outline are approximate and subject to change. Additional readings* to the text book
chapters are available on Blackboard.
Course Calendar:
Jan 26
What are financial markets? (*Hoover 2001)
Chapter 1
Jan 31 & Feb 2
Market Trading and Price Formation (*Bernstein 1987)
Determination of Interest Rates
Chapter 2
Feb 7 & 9
Interest Rates and Security Valuation
Chapter 3
Feb 14 & 16
Central Banking
Chapter 4
Feb 21 & 23
Monetary Policy and Money Markets
Chapters 4 & 5
Feb 28 & Mar 2
Bond Markets
Chapter 6
Mar 7 & Mar 9
Bond Markets & Revision
Chapter 6
Mar 14 & Mar 16
Mid-term Exam (Chapters 1-6) Mar 14th
Stock Markets
Chapter 8
Mar 21 & 23
Stock Markets
Chapter 8
Assignment 1 Bond Market Report Due March 21st
Video: Dot Con Mar 23rd
Mar 28 & 30
Stock Options
Chapter 10
Assignment 2 Set Up Portfolio Mar 31st
Apr 4 & 6
Derivatives
Chapter 10
Apr 11
Spring Recess (Apr 12-23)
Foreign Exchange
Chapter 9
May 2 & 4
Foreign Exchange
Chapter 9
Assignment 2 Stock Market Report Due May 4th
May 9 & 11
TBA
Group Journal and Summary Due
May 16
Exam Review
Final Exam (Chapters 1-10 excluding Chapter 7)
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DEFINITION OF PLAGIARISM
Plagiarism involves using the work of another person and
presenting it as one’s own. To avoid plagiarism the source of
each quotation or piece of borrowed material must be clearly
acknowledged directly following the text and in the bibliography
at the end of the paper, otherwise any of the following acts
constitutes plagiarism:
(a)
copying out part(s) of any document, audio-visual material,
or computer-based material;
(b)
using or extracting another person’s concepts, experimental
results, or conclusions;
(c)
summarizing another person’s work;
(d)
in an assignment where there was collaborative preparatory
work, submitting substantially the same final version of any
material as another student.
Encouraging or assisting another person to commit plagiarism is a
form of improper collusion and may attract the same penalties.
STATEMENT TO BE SIGNED BY STUDENT:
1.
I have read the definition of plagiarism that appears above.
2.
In my report I have carefully acknowledged the source of any material which is
not my own work.
3.
I am aware that the penalties for plagiarism can be very severe.
................................. .......................................
.................................
(signature)
(name)
(last four digits of student number)
THIS PAGE MUST BE COMPLETED AND ATTACHED TO THE HARD COPY
OF EACH ASSIGNMENT. COPIES AVAILABLE ON BLACKBOARD
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