5243 - FINANCIAL MARKETS AND INSTITUTIONS

The course has four main objectives:

• to provide participants with all the relevant information for a proper understanding of the different functions performed by the financial system;
• to analyze the role played by the different types of financial institutions, their management problems and economic models;
• to understand the technical features of financial instruments, their risk-return profile and pricing techniques;
• to examine the main financial markets and understand their microstructure, issuance and trading techniques.

The course includes four main sections:

• the first section is devoted to the analysis of the financial system main functions and to its relationship with the real economy. A comparative analysis of the structure of financial systems of major developed economies is also presented;
• the second section looks more closely at the different types of financial institutions (commercial banks, investment banks, insurance companies, mutual funds, securities firms, etc.). For each of them, the attention is focused on their major activities, their economics and management problems;
• the third section is dedicated to the analysis of capital markets. For each type of market (bond markets, stock markets, etc.) the technical features of instruments, together with issuance procedures and microstructure are examined;
• finally, the fourth section focuses on derivatives markets. Once again, for each type of instruments (forward, futures, swaps and options) the attention is focused on their technical features, their price determinants and on the use of these instruments as far as hedging tools.

• F. S. MISHKIN, S. G. EAKINS, Financial Markets + Institutions, Pearson Education, 2003, Fourth Edition. 

Students can choose between the following three options:

• To take two written exams, one midway through the course (i.e. 1^st partial exam), the other at the end of the course (i.e. 2^nd partial exam). Each written exam consists of two open theory-related questions and one exercise, with 90 minutes time available. Students are not allowed to consult books and/or notes during the exam. The final mark will be based on a simple arithmetic average of the two marks. A minimum of 16 for each of the two exams is needed to get the final mark. The average will be rounded to the next integer (for example 21.5 will become 22)
• To take only a general written exam, based on the material covered during the whole course. The exam will consist of three open theory-related questions and one exercise. You will have 120 minutes time available
• If students have not taken one of the first two options, on an official exam date, students first take a short written exam, with only one exercise (30 minutes) and no theory. Right after, students take an oral exam on the whole material covered in class. Students need to get a minimum grade of 18 to get access to the oral exam. If students start the oral exam, then they cannot withdraw anymore: they have to live with whatever mark they receive