FINA 4000 (Fall 2012) Steuer
Financial Institutions and Markets (3 hours)
Course Syllabus
- Instructor
- Ralph E. Steuer
- 450/451 Brooks (office)
- 706-542-3782 (tel)
- rsteuer@uga.edu (be careful, without prior approval, anything that
arrives as an attachment will not be opened)
- Office Hours
- No office hours on quiz or exam days. Otherwise, Mondays and Wednesdays
11:10am to 12:10pm, any time my door is open, or by appointment.
- Course Catalog Description
- The operations and functions of domestic and international finance
markets and institutions. The determinants of bond prices and the
level and structure of interest rates. Techniques for measuring
and managing risk in financial markets.
- Learning Objectives
- To understand the importance of a financial system and its institutions
and markets to an economy, with emphases on the importance of
a nation's central bank, monetary policy, interest rates, commercial
banking, and how financial institutions manage risk.
- Prerequisites
- FINA 3000 Financial Management
- MSIT 3000 Statistical Analysis for Business (or STAT 3000)
- Attention to Detail
- In addition to the big picture, this course
involves the internalization of a considerable amount of detail
so as to be fluent with the many fine points of economics and finance that
constitute the course. There will be international issues as well.
- Attendance Policy
- Attendance will be taken fairly regularly and will be part of your
final grade. You start with 100 points. You lose 5 points each time
attendance is taken and you are not there. To be considered for
missing a class for reasons outside your control, you must send me
an email in advance or at the time of the missed class outlining the
circumstances.
- Course Requirements
- You are responsible
for all material, announcements, assignments, presentations,
quizzes, and exams given in class. Students are expected to
have all readings and assignments completed before class. Problems
from the text will be assigned but not graded. Also, the course will
involve insights about the current economic situation and financial crisis
that are too new to be in the book.
- Policy on Missed Quizzes or Exams
- If you miss a quiz or an exam, you will take a score 5 points lower than
lowest score of anyone who sat for the quiz or exam. In any event, it is always
best to contact me immediately.
- Final Grades
- Although it does not have to be the case, in my courses, typical
final grade distributions often turn out to be roughly 25% A's,
50% B's, and 25% C's or lower.
- Computers and Communication Devices
- Unless by prior approval, all computers and communication devices
are to be in the "off" position during class.
- Required Text
- Kidwell, D.S., D.W. Blackwell, D.A. Whidbee and R.W. Sias (2011).
Financial Institutions, Markets, and Money (11th Edition),
ISBN 13: 978-0-470-56108-9, John Wiley & Sons.
- Supplementary Readings
- Daily reading of The Financial Times, Business Day section of
The New York Times, or Money & Investing
section of The Wall Street Journal is advised.
- Topical Outline
- An Overview of Financial Markets and Institutions
- Surplus and deficit spending units
- Financial claims
- Direct and indirect financing
- Changes in balance sheets as a result of financial intermediations
- Intermediation services
- Types of financial intermediaries and instruments
- Money markets vs. capital markets
- Book Chapter 1
- The Federal Reserve and Its Powers
- History of the Federal Reserve System
- Structure of the Federal Reserve System
- Federal Open Market Committee
- Regulatory powers
- Fed balance sheet
- Discount window
- How changes in reserve requirements affect the money supply
- Book Chapter 2
- The Fed and Interest Rates
- Money supply measures
- Excess reserves and the fed funds rate
- Supply-demand graphs and the equilibrium interest rate
- Importance of the fed funds rate
- Objectives of monetary policy
- Stability of the financial system
- Book Chapter 3
- Comments about Foreign Central Banks
- European Central Bank
- Other foreign central banks
- The Level of Interest Rates
- Loanable funds theory of interest
- Fisher equation and inflation effects
- Difficulties in forecasting interest rates
- Book Chapter 4
- Bond Prices and Interest Rate Risk
- Formulas
- Par, premium, and discount bonds
- Reinvestment risk and different yield measures
- Bond price volitility, convexity, duration
- Book Chapter 5
- The Structure of Interest Rates
- Term structure formula
- Expectation, market segmentation, preferred-habitat theories
- Effect of yield curves on financial intermediaries
- Default risk and bond ratings
- Tax treatments
- Book Chapter 6
- Money Markets
- Treasury-bill pricing and auction mechanics
- Federal agency debt
- Repo transaction mechanics
- Commercial paper, negotiable CDs, banker's acceptances
- Book Chapter 7
- Bond and Mortgage Markets
- Bond market instruments
- After-tax yields
- Secondary markets for bonds
- Fixed vs. adjustable rate mortgages
- Pass-through securities
- Tranches
- Book Chapters 8, 9
- Possible Special Topics if Time Allows
- Student loans
- Fiduciary responsibilities
- Islamic banking
- Capital injections
- Maybe others to be announced
- Commercial Bank Operations
- Sources and uses of bank fuuds
- Base-rate loan pricing
- Financing international trade
- Correspondent banking and trust departments
- Off-balance exposures
- Bank profitability and the management of interest-rate, liquidity, credit risks
- From parts of Chapters 12, 13, 14
- Quiz and Exam Schedule
- Quiz I (Wednesday September 12)
- 1st Mid-Term (Wednesday September 19)
- Quiz II (Wednesday October 17)
- 2nd Mid-Term (Wednesday October 31)
- Quiz III (Monday December 3)
- Final (as per University Final Exam Schedule)
- Grade Determination
- 1st Mid-Term 150 points
- 2nd Mid-Term 150 points
- Quizzes 150 points
- Attendance 100 points
- Final Exam 200 points
- There may be some other activity in the 10-50 point range, in which case the total would be increased
accordingly.
- Academic Honesty
- As a University of Georgia student, you have agreed to abide by the University's academic
honesty policy, "A Culture of Honesty," and the Student Honor Code. All academic work
must meet the standards described in "A Culture of Honesty" found at www.uga.edu/honesty.
Lack of knowledge of the academic honesty policy is not a
reasonable explanation for a violation. Questions related to course assignments and the
academic honesty policy should be directed to the instructor.
- Course Homepage
- Please bookmark www.terry.uga.edu/~rsteuer/4000 and
check the homepage frequently for updates and announcements.
- Note
- The course syllabus is a general plan for the course;
deviations announced to the class by the instructor may be necessary.
Last Reviewed November 25, 2012