Isenberg School of Management
University of Massachusetts-Amherst
FINANCE 403: Capital Markets and Institutions
Fall 2014
Instructor:
E-mail:
Office:
Phone:
Fax:
Class Time:
Office Hours:
Prof. Bing Liang
bliang@isenberg.umass.edu
Room 308B SOM
545-3180
545-3858
2:30-3:45 PM, T, TH
4:00-5:00 PM, T, TH
Course Objective
The primary objective of FINANCE 403 is to provide students with the basics of the
financial institutions, instruments, markets and the public policies. The course materials
cover various areas such as interest rates, money markets, fixed income securities
markets, stock markets, commercial banks, insurance companies, securities firms,
investment banks, pension funds, mutual funds and hedge funds, financial statement
analysis and risk management of the financial institutions. FINANCE 403 is the first
course in financial markets and institutions and is also a useful preparation for other
advanced finance courses in the future. FINOPMGT 301 and 304 are the prerequisite for
this course. Students are also expected to have working knowledge of algebra, statistics,
and Microsoft Excel.
Course Materials
1.
2.
3.
Textbook: McGraw Hill Create: Capital Markets and Institutions (based on
Financial Markets and Institutions: A Modern Perspective, by Saunders and
Cornett, 5th Edition, Irwin/McGraw-Hill, 2012.)
Lecture notes and case materials will be posted on Blackboard.
The Wall Street Journal.
Cases
There will be two cases. These cases are real-world related and are useful for students to
analyze multiple concepts covered throughout the chapters. Cases should be conducted by
groups and will be discussed in class. The case reports must be typed.
Homeworks
There will be five homework assignments consisting of various questions/problems.
These questions/problems are very useful in helping you understand the materials covered
and consolidate the knowledge obtained in class. Note the end-of-chapter problems have
two parts: conceptual questions (Q) and quantitative problems (P). You are required to
turn in these problems individually. Late problem sets will be accepted but with
penalties of 50%, 80%, and 90% for being one, two, and three days late,
respectively.
Exams
There will be three exams: one final and two midterm exams. The final exam will be on
Dec. 4. The final exam is not comprehensive. No makeup exam is allowed. Please mark
your calendar for these exams.
Class Participation
I encourage you to ask questions and share your insights in class as much as possible.
You and your classmates will benefit from your participation. We will frequently discuss
the current market events and class materials. Class participation can contribute to your
grade marginally.
Grade Distribution
Problem Sets
Projects
Exams
30%
20%
50% (final 20% and midterm 15%)
The course grade is determined according to the following scale (plus and minus could be
given):
A: 90 or above
B: 80-89
C: 70-79
D: 60-69
F: below 60
2
Course Outline
Week
Date
Topic
Chapter
Week 1
Sept. 2
Introduction
1
Week 1
Sept. 4
Interest Rates
2
Week 2
Sept. 9
Interest Rates
2
Week 2
Sept. 11
The Federal Reserve System
4
Week 3
Sept. 16
Money Markets
HW#1 Due (Ch1: Q1, 2, 10;
Ch2: Q1, 5; P2, 5, 9, 18;
Ch4: Q2, 8, 13; P2, 4, 7)
5
Week 3
Sept. 18
Bond Markets
6
Week 4
Sept. 23
Bond Markets
6
Week 4
Sept. 25
Midterm Exam I
Week 5
Sept. 30
Mortgage Markets
7
Week 5
Oct. 2
Stock Markets
8
Week 6
Oct. 7
Stock Markets
HW#2 Due (Ch5: Q1, 4, 5; P5, 9, 11, 12;
Ch6: Q1, 3, 7; P3, 5, 7, 10;
Ch7: Q3, 5, 7; P2, 5, 10)
8
Week 7
Oct. 9
Commercial Banks
11
Week 7
Oct. 16
Other Lending Institutions
Project 1 Due
14
Week 8
Oct. 21
Insurance Companies
15
Week 8
Oct. 23
Securities Firms and Investment Banks
HW#3 Due
(Ch.8: Q1, 3, 6; P2, 3, 5;
Ch11: Q9, 13, 25;
Ch14: Q3, 9, 18, 25;
16
3
Ch15: Q2, 3, 16; P1, 3, 6)
Week 9
Oct. 28
Securities Firms and Investment Banks
Week 9
Oct. 30
Midterm Exam II
16
Week 10 Nov. 4
Mutual Funds
17
Week 10 Nov. 6
Hedge Funds
17
Week 11 Nov. 12
Hedge Funds
17
Week 11 Nov. 13
HW#4 Due (Ch16: Q4, 7, 13; P1, 2, 5;
Ch17: Q3, 6, 11; P1, 2, 3)
Week 12 Nov. 18
Pension Funds
18
Week 13 Nov. 20
Risk Analysis
19
Week 13 Nov. 25
Project 2 Due
Week 14 Dec. 2
Credit Risk
HW#5 Due (Ch18: Q3, 10; P4, 5, 6;
Ch19: Q4, 7, 9; P2, 3, 5;
Ch20: Q1, 5; P2, 3)
Week 14 Dec. 4
Final Exam (in class)
4
20